Delay Social Security Benefit until Full Retirement Age? Not really!

I keep hearing from so-called professional urging to delay claiming social security benefits until full retirement age, which is 67 right now, or later. The argument is that doing so would maximize the total benefit one receives over the life time. However, no one seems to care about the income gap this strategy creates during the delaying years. If someone needs to use those money, will the person go on borrowing a loan, or selling stock or withdrawing from IRA/Roth IRA to make up the difference? If so, is delaying benefits still a good strategy given lost opportunities or penalties in filling the gap?

So I set out to do a study, with the help of ChatGPT:

  • Assume all social security benefits are used to invest, with certain total return rate.
  • Then we calculate the total net worth at death assuming different starting ages to claim the benefit with respect to different death ages.
  • Re-examine the above with different total return rate in investment

The Base Case: 8% return, death age 85

The monthly benefit is assumed to $700, although it does not really matter since the total net worth scale proportionally and this amount will not affect the findings about optimal starting. In below calculation, social security benefit is deposited monthly, and investment value is compounded monthly as well.

Below the table to calculate the total net worth at death w.r.t. different starting ages.

We can see that from age 62 to 70, the total amount collected from Social Security is increasing, which is the basis for some to argue the delayed claim. However, in this case we see the compounding investment return is more pronounced for earlier claims and yield more total net worth at the age 85.

Extending the Death Age, 70-100

We now extend our consideration about the death age from 70 to 100, with 5 year jump in-between. Below table lists the optimal starting with respect to various death ages.

Death ageBest start ageNet worth at death
7062$93,708
7562$191,044
8062$336,060
8562$552,112
9062$873,995
9562$1,353,552
10062$2,068,017

Again, the optimal starting is 62 consistent across the board for all death ages.

Extending with Different Return Rates

We now consider 4 possible return rates, 4%, 6%, 8%, and 10%. The optimal starting ages and total net worth at death are listed in below 2 tables

optimal starting age for social security benefits
total net worth at death

Conclusion

Unless you live long and your investment return is low, start claiming SS benefits early!

My Complaints/Wish List for Tesla FSD 12.5.2 (Model Y)

Don’t get me wrong. I love FSD. It is one of the most exciting consumer experiences in the recent years. Last such excitement for me probably goes back more than 10 years when I first put my hand on Apple iPhone 2. For me, FSD changes the perception of distance and mobility. It makes San Francisco symphony concert much more enjoyable than ever.

That said, I still have a lot of complaints of today’s FSD.

  1. Too many unnecessary accelerations, many of which are followed by consequential breakings, which means more discomfort. Note I chose “Chill” profile. Otherwise it is probably even worse.
  2. Acceleration is often too aggressive, especially for local driving. Why so? saving time? There are many other wasted opportunities for saving time. No need to focus on the acceleration aspect.
  3. Phantom breaking, i.e., breaking for no obvious reasons. (discomfort and wasting time)
  4. Non-human breaking pattern, which often breaks too hard at beginning and then, realizing it, relax the breaking. Human often breaks soft, and then, realizing not enough, start to break harder (discomfort)
  5. Don’t remember routine route road conditions. Every road has its own quirks. It is OK for Tesla to be cautious when seeing those quirk if it sees for the first time. However, it does not remember those quirks and repeating driving always feels like first-timer driving on those roads. Human tend to be more relaxed (and thus more smooth) on later repeated driving.
  6. Map sucks and don’t remember my corrections. This is especially annoying for routine routes.
  7. Can’t back to my garage, which is the only way I can charge my Tesla today.

Elon Musk, I hope you can see my wish list.