Tim and others,
Here’s how I did the calculation when I was 62. I don’t remember the exact figures of course. I’m just making them up, but it will give you an idea.
Say my monthly Social Security, taking it at 62, was $1000 a month. That’s $12,000 a year. By the time the guy making it at 65 got started, I’d have $36,000 in the bank (even with no interest, no investment gains, etc). Say that taking it at 65, you’d get $1400 a month, so you’d catch up $400 a month, or $4,800 a year… but you are $36,000 behind!!! At that rate you’d break even in 7.5 years, or when you are 72.5 year old. I didn’t know if I’d even be alive 10 years later at 72, or in a nursing home, or whatever. And that’s just breaking even, catching up with what you postponed!
If the guy with $36,000 invested it and made just 7% per year (less than the S&P average), he’d pull in $2,500 and the fellow starting at 65 would only gain $4800 - $2500 = $2,300 per year. He’d be over 80 before he broke even. Where’s the profit in that? Live until 90 and you’d be a little ahead?
Saul