A recent article by Glenn Ruffenach titled, “Strategies to Max Out Social Security,” tackled the subject of whether to delay enrollment. Ruffenach points out that if one ultimately lives longer then expected (say age 92) and opts to sign up later (say age 70) then he/she will actually collect more in benefits than those who sign up for the program at age 62.
A fair point, but in assessing the value of this notion, some additional questions must be addressed. The article uses “a simple example. Joe and John can begin collecting $1,500 monthly from Social Security at age 62, or $2,640 a month at age 70. Let's say both live to 92. If Joe claims benefits at 62, his lifetime total will be $540,000. If John waits until 70, he'll net $696,960 -- almost $157,000 more.”
Well, the first question is “What is the actual life expectancy of a 62-year-old male?” While it is understood that longevity projections are certainly not an exact science, there is something to be said for using a person’s health history and lifestyle choices as data to narrow the gap. What if the 62-year-old has cancer, high blood pressure, a family history of cardiac disease…?
If we look at Social Security for the information, which only asks for gender & birthdate, we see that a male born on April 1, 1950 (age 62) can expect to live until age 83, a female born on the same day can expect to live to age 85.
Now if we take the same data and utilize a web-based life expectancy tool, we see that the actual age is closer to 92 for a 60-year-old man today. Fine, but just like the SSI tool, these software programs are neglecting to account for individual disease states.
It’s simple: chronic illnesses do affect longevity.
Let’s examine a 55-year-old male with Type II Diabetes. Using HVS Financial's RetireMark Healthcare software, we see that this chronic ailment will shorten his life expectancy from 88 to 77. Obviously this number will have a significant impact not only on when he should begin collecting Social Security, but his lifestyle choices as well.
It is great that more and more people are looking to generate a higher income for themselves in retirement through delaying benefits of Social Security until age 70, but please realize that it can be only be done as Billy Sheehan says “at the luxury of your own health.
A great piece of wisdom from a man who is trying to improve the relationship of physical fitness, productivity, time management and energy in today’s work place environment.