Help! Why is the total lifetime accumulated Social Security benefit more important than the monthly amount?
It’s been mentioned on HD many times. Rick Connor mentioned it today. I even asked Gemini what was most important, monthly income or total lifetime benefits. Apparently Pipers calculator uses accumulated lifetime benefit as a decision guide.
My monthly pension is most important. I care less what the accumulated amount may be - unless I can become a significant actuarial loss in good health, but it’s financially irrelevant. The fact my pension and SS are both lifetime benefits is important, but that is not the question
The Gemini answer was lifetime benefits are most important for the following reasons which to me have nothing to do with the question. Doesn't this answer support the idea that monthly income amount is most important?
Why Total Lifetime Benefits are More Important:
Longevity Risk: The biggest fear in retirement is running out of money. Social Security provides a guaranteed, inflation-adjusted income stream for the rest of your life. If you live a long life (which is increasingly common), a higher monthly benefit that lasts for more years will result in a significantly larger total amount collected.
Inflation Protection: Social Security benefits receive Cost-of-Living Adjustments (COLAs). A higher starting monthly benefit means your COLAs will be applied to a larger base, leading to even more significant increases in dollar terms over time, further boosting your total lifetime income.
Spousal and Survivor Benefits: Your claiming decision can impact the benefits of your spouse and/or survivors. If you are the higher earner, delaying your own benefit can mean a substantially larger survivor benefit for your spouse if you pass away first. This contributes to the household's total lifetime benefits.
Irreversibility (Mostly): While there are some limited circumstances where you can change your claiming decision (like withdrawing an application within 12 months), generally, once you start collecting, that decision largely locks in your benefit amount for life. You can't easily go back and "undo" claiming early to get a higher future monthly payment.
My monthly pension is most important. I care less what the accumulated amount may be - unless I can become a significant actuarial loss in good health, but it’s financially irrelevant. The fact my pension and SS are both lifetime benefits is important, but that is not the question
The Gemini answer was lifetime benefits are most important for the following reasons which to me have nothing to do with the question. Doesn't this answer support the idea that monthly income amount is most important?
Why Total Lifetime Benefits are More Important:
Longevity Risk: The biggest fear in retirement is running out of money. Social Security provides a guaranteed, inflation-adjusted income stream for the rest of your life. If you live a long life (which is increasingly common), a higher monthly benefit that lasts for more years will result in a significantly larger total amount collected.
Inflation Protection: Social Security benefits receive Cost-of-Living Adjustments (COLAs). A higher starting monthly benefit means your COLAs will be applied to a larger base, leading to even more significant increases in dollar terms over time, further boosting your total lifetime income.
Spousal and Survivor Benefits: Your claiming decision can impact the benefits of your spouse and/or survivors. If you are the higher earner, delaying your own benefit can mean a substantially larger survivor benefit for your spouse if you pass away first. This contributes to the household's total lifetime benefits.
Irreversibility (Mostly): While there are some limited circumstances where you can change your claiming decision (like withdrawing an application within 12 months), generally, once you start collecting, that decision largely locks in your benefit amount for life. You can't easily go back and "undo" claiming early to get a higher future monthly payment.
The post Help! Why is the total lifetime accumulated Social Security benefit more important than the monthly amount? appeared first on HumbleDollar.
No comments have been added yet.
