Jim Sutton’s Weblog

I’m getting close to that time when I need to spend some effort on understanding how to optimize my Social Security and Medicare choices.  In fact, as I read more about Social Security (for example, at Future Years), it appears as if I and/or my spouse should have started Social Security when we turned 62.

There is one school of thought that claims the lower earning spouse should take spousal social security as soon as possible (normally 62) and then go to his/her own Social Security (if any) at “full retirement age” (which may be anywhere from 65 to 67, depending on birth year).  I’m not sure I quite understand the math here, but I’m going to learn about it and continue to write about what I learn.

One thing I have learned is that most of the on line calculators (in fact, all of them that I’ve found so far) intended to help one choose when to start drawing from their Social Security fail to consider the time value of money.  That is, these Social Security calculators calculate the age at which the total dollars earned if you take early Social Security equals the total dollars earned if you start drawing at full retirement age.  The point these calculators miss is that dollars earned sooner are more valuable than dollars earned later–because I can invest the earlier dollars, for example, to increase the total dollars available at the same time.

One might conclude that if you had the discipline to invest and interest rates (or other investment return rates) were reasonably “good”, one might always come out ahead by taking Social Security earlier rather than later.  This is something else for me to explore and report on.

I do know that I need to apply for Medicare before I turn 65 (about a year away).