All right. And Erika, before the next question, I wanted to do a quick follow-up on the Social Security question.
Because I’m in touch with Larry Kotlikoff, and I think Larry would actually agree with Larry Swedroe’s analysis, here’s the thing that Larry Kotlikoff said (he is more of an expert than I particularly on national economic issues and even Social Security itself). He said, “Yes, there’s going to be some changes. Yes, they might make you work longer. Yes, there might be some type of reduction in what you might eventually get, but that’s not most important. And so maybe you don’t want to count on Social Security.” Hopefully, nobody on this call was completely counting on Social Security for their income.
But here is the other thing that Larry said. He said, “They’re still going to reward people who do wait.” So don’t think, “Oh boy, they’re going to change Social Security. I had better take it at 62 because the whole thing is going to go bankrupt, and I’m not going to get anything. So, I might as well grab it now.” And I know that’s a natural reaction, particularly after what Larry Swedroe just said. Larry Kotlikoff and I would agree with him, and yes, there’s going to be changes. Yes, they’re not going to be good for you, but that doesn’t mean that you should necessarily take it early.
In fact, we think that you’re going to be rewarded more if you hold off. So, I just thought I would mention that in the area of Social Security, and now I’m happy to take any other questions that we have in the queue.
Absolutely. And I believe from my reading of Larry Kotlikoff, you’ll have to let me know if this is right Jim, but I think another thing that he said was for older retirees, it’s less likely that any changes to the Full Retirement Age (FRA) or other changes that would impact the level of benefits that you can expect to collect would happen to them. It’s more likely to happen to younger people, right?
Yes, that is right. And just to translate, FRA is Full Retirement Age, which right now, depending on when you were born is I believe age 66 and two-thirds. And what that means is that is the age that is in effect a hundred percent of the Social Security benefit for every year that you wait between that and age 70, you get an 8% raise in your benefit. We’ve mathematically shown that I think the break-even mathematically is somewhere around age 82 or 83. I don’t think there is anything new in what Larry said or the new environment that would change that. And just finally to quote Larry again, even if you accept our analysis and the breakeven is age 82 or 83, and let’s say that you’re not sure of your health. You’re not sure so you say, “Well, gee, am I going to make it to age 82 or 83? Maybe I should just be sure to get the money.”
What he would say is, “Think like an economist, don’t think I can actuary!” And this isn’t even including the benefits of a spousal benefit. But if you include that, the issue isn’t if you and your spouse die early, you’ll get a little bit more money. If you take it early, that should not be your concern because dead people don’t have financial problems. Your concern should be outliving your money. If you live a long time, you are better off waiting to get that guarantee. And the implicit interest rate in you waiting is much greater than you’re going to get with any investment, including anything that we can offer.