Last week's column on Social Security sparked a number of comments. Briefly, rather than take Social Security early at age 62, I argued for a strategy of filing for Social Security benefits later, tapping into retirement savings and working at least part-time instead. I'd like to address some of the challenges to this perspective.

Social Security might be the foundation of retirement for many people, but it's also surprisingly complex. Married couples have 567 options for deciding when and how to file for their Social Security benefits, according to calculations by the Center for Retirement Research at Boston College. Yes, you read that right. Single people have nine.

My point of view is based on an analysis of trade-offs faced by the typical future retiree. But no one's situation is "typical.'' That's why it's so important to run the numbers reflecting your own individual circumstances.

Q  I never understand how come no one or retirement planning sites ever consider the time value of money; that is, a dollar today does not have the same value as a dollar a year from now. I did my calculations using a discount rate of 4 percent (net present value calculation) and this is what I came up with: Total cumulative amount until death at 85. If I started Social Security at 62 -- $281,000. If I started out at 66 -- $302,000. And if I started at 70 -- $302,000. My conclusion -- it seems like it doesn't pay to wait (tax considerations not included in calculations) considering the small difference and that death might arrive earlier than 85.


A An axiom of modern finance economics is that the only way to create an opportunity for making big bucks is to take on more risk. The rate of return on a portfolio of stocks and bonds isn't predestined. You can't earn a 4 percent return on your money without assuming substantial risk. The only place I know where you can count on earning 6 percent on your retirement at zero financial risk is by delaying Social Security from age 62 to 66. From ages 66 to 70 you'll earn an 8 percent benefit increase.

Tax considerations are critical when making a decision, too. For example, if you start Social Security at age 62, "what other assets do you have and how are they taxed?" asks Scot Hanson, certified financial planner with EFS Advisors. "Are they in an IRA?  Or taxable accounts with ordinary income and long-term capital gains considerations?"

Hanson also points out that Social Security is a rich financial safety net combining several attractive features, including spousal benefits and cost-of-living adjustments.

Q Did you consider the "break-even" point? Meaning, if a person takes Social Security at 62, instead of waiting until 66, the amount of money received between 62 and 66 (including cost of living increases, if they occur), when is that amount equal to the payments received starting at 66 and beyond?


A The typical break-even is around 77 to 78 years old. At least one partner needs to live past this point to come out ahead. If both partners live past this age then you're really ahead by delaying. If you both die soon after age 70, the decision to delay was wrong.

"Where do you want to make your mistake?" asks Hanson. "Die too soon or live too long?" A good question to contemplate before filing for Social Security.

Chris Farrell is economics editor for "Marketplace Money." His e-mail is