ArcaMax

Meet Tom, Dick and Harry

There is no question I am asked more frequently than this one: "When should I file for my Social Security?' And then they will frequently follow that up with these additional questions: "Should I take it at 62? Or wait until my full retirement age?" And others will add one more age to the mix. They ask: "Or should I wait until age 70?"

If I'm in a flippant mood, I will answer this way. "Tell me the month and year you are going to die, and I will tell you when to start your Social Security benefits!"

Of course, no one knows the answer to that question, so no one really knows when the best time is to start their Social Security. You simply have to consider factors such as your health and your financial situation and make the best decision you can.

And you might be better off if you make that decision with the help of a financial planner. And I am not one of those. But I will tell you that for years, many financial planners were recommending that you wait until 70 to start your benefits. But over the past five years or so, that advice seems to have shifted. More and more seem to be recommending that you start your benefits at your full retirement age. And very few financial planners will suggest you do what I did: Start your benefits at age 62.

Over the years, I've seen all kinds of tools that people have used to make the "when should I start my benefits" decision. And to be honest, many of those spreadsheets, matrices, etc., just got so darn confusing. At least to me. But I recently saw something on Instagram, of all places, that laid out the information very plainly and simply. And I'm going to present my own version of what I saw online in this column today.

To make this work, I'm going to introduce 3 people. Tom, Dick and Harry. And also to make it work, I'm going to say that they all were born on the same day and that they all have exactly the same basic Social Security benefit. It's what the Social Security Administration calls their "primary insurance amount," or PIA. Although the precise definition of a PIA can get a little messy, for the purposes of today's column it is enough to say that the PIA is essentially your full retirement age benefit amount.

So let's say that Tom, Dick and Harry all have the same PIA, or full retirement age benefit of $4,000 per month. And the full retirement age for all three guys is age 67. And to make our comparison, we will say that Tom takes his benefits at 62; Dick starts his benefits at 67 (the full retirement age for all three guys); and Harry waits until 70 to start his benefits.

So Tom's benefit at age 62 is 70% of his FRA rate of $4,000 or $2,800 per month. Dick's benefit starting at his full retirement age of 67 will be $4,000. And Harry gets a 28% bonus for waiting until 70, so his benefit rate is $5,120 per month.

So now let's start running the numbers and check where these guys come out financially at various age milestones

By age 67

Tom will have received $168,000 in Social Security benefits

Dick will have received $0.

Harry will have received $0.

At this point, Tom is way ahead of everyone in the Social Security money game.

By age 70

Tom will have received $268,800 in Social Security benefits.

Dick will have received $144,000 in Social Security benefits.

Harry will have received $0

At this point, Tom is still ahead of Dick, and way ahead of Harry, in the Social Security money game.

By age 75

Tom will have received $436,800 in Social Security benefits.

Dick will have received $384,000 in Social Security benefits.

Harry will have received $307,200 in Social Security benefits.

At this point, Tom is still ahead of both Dick and Harry in the Social Security money game.

By age 80

Tom will have received $604,800 in Social Security benefits.

Dick will have received $624,000 in Social Security benefits.

Harry will have received $614.400 in Social Security benefits.

Dick has finally passed Tom in the Social Security money game. And Harry is catching up to Dick.

By age 85

Tom will have received $772,800 in Social Security benefits.

Dick will have received $864,000 in Social Security benefits.

Harry will have received $921,600 in Social Security benefits.

Harry is now gloating because his decision to wait until 70 to start his Social Security is really paying off.

I decided to cut off my little comparison chart at age 85 because actuarial tables show that's about the life expectancy for a man who has reached at least age 62. And even if these guys live beyond age 85, I've got a hunch once they've gotten that old, they're more concerned about health issues than about the amount of their Social Security check.

I know this comparison is very simplistic. There are all kinds of other factors that could come into play. But one thing it taught me is that I don't feel so bad about bucking the advice of financial planners by starting my benefits at 62. I'm now 77 years old. And for 15 years now, I've been ahead in the Social Security money game. But in the next couple of years, I will gradually be coming out on the shorter end of the Social Security stick. But guess what? Who cares? My wife (of 52 years) and I are enjoying life. And that's all that's really important.

If you have a Social Security question, Tom Margenau has two books with all the answers. One is called "Social Security -- Simple and Smart: 10 Easy-to-Understand Fact Sheets That Will Answer All Your Questions About Social Security." The other is "Social Security: 100 Myths and 100 Facts." You can find the books at Amazon.com or other book outlets. Or you can send him an email at thomas.margenau@comcast.net. To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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