25% of SS recipients sorry they took payments early...

[wmc1000]

DW and I have decided to take it at 65 so as to coincide with medicare start. Not that we need the money but since ACA will be out of the picture then might as well take the slightly less payout for the maximum number of years. Have run my spreadsheets using a combination of different SS draw dates from 64 to 70. The results at age 95 longevity are relatively miniscule compared to total asset value at the end. In any event none of my projections leave wife out of money even were I to die at any age from 65 on up so all is good.

 

[imoldernu]

AIME...
in 1998, at age 62 the maximum contribution to social security for purposes of SS monthly payout was based on $48K annual income. Today, the amount is $113K.

A look at the chart on this page, will indicate how, and when this amount has grown.

https://www.ssa.gov/oact/cola/examplemax.html

Historical numbers for monthly income at ages 62, 65 and 70 are shown here... based on today.

 

[NW-Bound]

One reason many people l know take SS early is the belief that SS may be cut-off or severely cut back in the not so distant future. They seem to think they will be grandfathered in to their current SS payment since they are already getting a SS check. No cuts for them! At the same time those who waited for SS full retirement age or beyond will be told to 'take a hike' as there is no money left over. IMHO, they are sadly mistaken.

I would not be naive to count on the grandfathering. But the money that you already got and spent, they are not going to make you disgorge it.

Some clauses did get grandfathered in, such as the spousal benefits that they just took away recently.

 

[wmc1000]

I use a 21% SS cut starting in 2034 for my spreadsheet calcs, FIP, Firecalc and I-orp runs, if it doesn't happen then all the better!

 

[haha]

I have been running some projections and it has become more difficult to handle SS COLA since, for all I know, all future COLAs will just transfer funds from the SS Trust Fund to cover increases in Medicare. If so, many people will find that, for planning purposes, SS is not COLAed. Has this occurred to anyone else?

No, that would never occur to any of us bumpkins.

 

[ShokWaveRider]

When we first started thinking about retirement funding an saving etc, how much we would think we may need, how much SS we were going to get, Blah, Blah, Ba-Blah. We made a decision that we did NOT want to have to worry about market volatility at all.

We are 62, 57 resp. DW will take her SS at 62, I will take mine at 65. (Assuming ACA stays the same, or I may take it earlier.

We calculated that with 0% interest on our money our stash + SS will last us 40 - 45 years at our projected and current spending habits, which have actually increased some years. I will NOT live that long for sure based on current health and ancestral data. DW will live to around 90 we hope.

We invest in "Safe" Fixed Income for long periods of time and currently the interest received is more than SS "will" be. (Not Annuities)

 

[misanman]

Data point:

Will start SS based on my record in August (at 70) - $3433/mo.
DW starts spousal in August (has drawn on her record since age 62) - $906/mo.

Efforts to spend down IRA haven't been very successful and RMDs promise to be a problem.

 

[unclemick]

So........75% are happy they took it early.

Yep my retirement portfolio is exceedingly happy and so are my new found pals/best buddies every at the IRS(Think RMD) now that I'm well past 70 1/2.

heh heh heh - Did I run the numbers in hindsight to see if I did good or bad? No.

 

[sengsational]

Decisions , decisions and only 10 years left to come up with the correct decision.

I don't have quite that long, but the same sentiment. I just wish I could stay away from these SS strategy threads since the rules will probably be different by the time I get there. I keep getting drawn back since the planning tools presume or require input concerning the decision. I need to do a sensitivity analysis, as you did, that was smart...make it easier to ignore the whole thing.

 

[NW-Bound]

We have a whole lot less time to wait than Mulligan (who's a youngster anyway ), and I was reading these threads and learned all about the mulligan clause (returning all benefits and resetting the formula at 70), and also the spousal benefit clause when they rescinded all that good stuff.

 

[Mulligan]

We have a whole lot less time to wait than Mulligan (who's a youngster anyway ), and I was reading these threads and learned all about the mulligan clause (returning all benefits and resetting the formula at 70), and also the spousal benefit clause when they rescinded all that good stuff.

Ya, I knew I was screwed on SS long ago...But I was getting all excited about the "spousal benefit"...Hmm, maybe me and the long time GF should get married....Wait, GPO? What the hell is that? Crap that kills that idea. Looks like no marriage plans for me...Wait, hold up....but now if Obamacare keeps flying through the roof, paying for a ring to get that $175 a month spousal health insurance with $200 or so yearly deductible may mean marriage is not permanently off the table yet!


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[NW-Bound]

Yeah, wait till they say "married people can live for the same cost", and cut your SS. They conveniently leave out the "for 1/2 as long".

"Two can live as cheaply as one, for half as long" -- Anon

 

[Mulligan]

Yeah, wait till they say "married people can live for the same cost", and cut your SS. They conveniently leave out the "for 1/2 as long".

"Two can live as cheaply as one, for half as long" -- Anon

I don't think my first boss was much into kids. His favorite reminder to me was "2 can live cheaper than 1, but 3 cant live cheaper than 2".


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[NW-Bound]

That's because of labor laws in the US. In 3rd world countries, they send their kids out on the streets to beg. Kids there are self-sustaining, and bring in money to boot.

 

[Chuckanut]

The choices aren't "take it at 62 or wait until 70"; I can start any month in between them as well.

+1

Very true and sometimes forgotten when people discuss taking SS early versus taking it late. The reality is that we can compromise and take it at full retirement age, for example. Why not do that if it works for you?

For me, I plan to take SS at 70, but, I always have the option of turning on the spigot at any time before that if the need arises.

 

[Blueskies123]

When I ran FIRECalc using my actual stash size and actual SS benefits (not discounting for likely SS reduction in the future), it does not make much difference between me taking at 62 or 70.

If I take it at 62, I will be drawing less from my savings. My savings will support a longer period, due to the lower WR.

If I take it at 70, I will draw down my savings more until 70. And when SS finally kicks in, it will be higher to make up for my savings withdrawal, which will get cut back at that point due to its smaller balance.

The budgets that the two cases support are within 1% of each other, so well within variations of changes in future market returns, tax law changes, benefit cuts due to SS short fall, etc...

If the amount I can spend is the same, why not take it early if the market tanks, or if I fear they may change some laws?

I still have that option to choose. Other people may not.

Another complexity is that right now at age 62 my tax rate is very low - living on low tax savings. If I take SS at 63 all of it will be tax free and I should still be eligible for ACA credits. If I wait until 70 my RMDs will be kicking me into a higher tax bracket. I also think the tax rates will be increased in the future. Since no one can predict the future I am thinking I will split the difference and take SS at 66.

 

[NW-Bound]

Yes, there are many considerations impacting the decision, more than maximizing what you can get from SS. One has to think of what they take back from you. As mentioned earlier, I thought I had a plan until they changed the law. So, I am not going to worry too much about it anymore.

If the market holds out, I may delay SS a bit and not take it at 62. Perhaps I can wait till 65 or so. If the market tanks, then I may not have a choice. A lot of things can happen that throw your plan out of whack. A person can also die anytime, as so many posters here discovered with their sudden cardiac problems.

I can still talk about SS, but will save time to think of more immediate actions that I can control, like what to enjoy for dinner or where to go for the next trip.

 

[Big_Hitter]

AIME...
in 1998, at age 62 the maximum contribution to social security for purposes of SS monthly payout was based on $48K annual income. Today, the amount is $113K.

A look at the chart on this page, will indicate how, and when this amount has grown.

https://www.ssa.gov/oact/cola/examplemax.html

Historical numbers for monthly income at ages 62, 65 and 70 are shown here... based on today.

not to pick nits but today (the taxable wage base) is $118,500 - the calc has a lookback - 48K may have been the 96 TWB I can't remember but we can look it up. Yes it has inflated.

 

[Al in Ohio]

Most of the 75% had no choice, as they had to eat.

Ever read how few of the U.S. population has almost nothing saved up for retirement?

I was bound and determined at a young age that Alpo wasn't going to be in my diet.

You could take a step up to "Fancy Feast".


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[ShokWaveRider]

Another complexity is that right now at age 62 my tax rate is very low - living on low tax savings. If I take SS at 63 all of it will be tax free and I should still be eligible for ACA credits. If I wait until 70 my RMDs will be kicking me into a higher tax bracket. I also think the tax rates will be increased in the future. Since no one can predict the future I am thinking I will split the difference and take SS at 66.

How will SS be Tax free? from the State level maybe.

 

[athena53]

How will SS be Tax free? from the State level maybe.

SS is taxable at the Federal level only if your AGI is over certain thresholds. DH and I paid taxes on his SS till I retired.

My plan is to file for a Restricted Spousal Benefit at age 66 (my FRA); I'm old enough that the recent rollback of that provision doesn't affect me. I plan to wait till 70 to file for mine unless there's a disastrous fall in the market or I see changes in the taxation of SS up ahead that make it better to grab what I can now.

 

[scrabbler1]

In my ER spreadsheets and Fidelity RIP program, I assume my FRA of 67 to begin receiving SS. I do know that after I turn 60 is when my already good financial picture gets even better when my "reinforcements" begin coming in. Those include (1) unfettered access to my rollover IRA, (2) my frozen company pension, and (3) SS. When I can begin tapping into them and the flexibility I have for each one does vary. Blueskies' point about delaying SS until at least 65 so it doesn't interfere with ACA credits is noteworthy.


But one thing which might tempt me to begin taking SS some time early is my recent diagnosis of having (Type 2) diabetes which lowers life expectancy by a few years. Still, my important financial task is to get to age ~60 in one piece which is extremely likely if not a sure thing.

 

[Running_Man]

If you have SS @ 62, annual inflation of 3 percent, investment returns of 7 percent, no cutting of SS benefits and die between the ages of 62 and 85 the difference between how much better your portfolio would have performed by taking SS @62 will be between 25K and 260K. After age 86 the patient ones will have the advantage and by age 95 with 3 percent inflation and 7 percent investment gains will have an advantage of 500K.

To always be better by taking early you need 9 percent investment returns with 3 percent inflation. At 3 percent inflation and 3 percent investment returns you are even at 80 but if you die near age 70 you are 222K to the worse. There is not a right or wrong answer, only different outcomes that for some will prove a point and for others not prove a point.

 

[MikeD]

Did you intend to post this on another thread?

I think he regrets posting it early.

 

[unno2002]

[FONT=&quot]When I took early retirement (2012 – age 57), I went thru my records (packrat that I am) re Social Security (SS). During my total working years the amount that went into SS “on my behalf” was $193,818.88. I did a spreadsheet using the historical interest rates for plain old savings bonds. If, year by year, the money that went to the SS had instead gone into savings bonds and I held those bonds, at my ("early") retirement in 2012 there would have been $406,234.15[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Per the SS statement, supposedly five years later at age 62 I could start to receive $1,692 per month. Of course, if the wife & I die before I turn 62, everything in SS goes “poof”. [/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]When I look at the amount taken in SS tax, I see what could have been the 2012 CASH purchase of four decent small rental units… That would have immediately been paying significantly more than $1,692/month, essentially indefinitely, and leaving a valuable inheritance for the kid…[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]If you want to manually calculate your Social Security yourself, get the documents at:[/FONT]
[FONT=&quot]http://www.socialsecurity.gov/pubs/EN-05-10070.pdf[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]"... In the case of early retirement, a benefit is reduced 5/9 of one percent for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of one percent per month.[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]For example, if the number of reduction months is 60 (the maximum number for retirement at 62 when normal retirement age is 67), then the benefit is reduced by 30 percent. This maximum reduction is calculated as 36 months times 5/9 of 1 percent plus 24 months times 5/12 of 1 percent... "
[/FONT][FONT=&quot]https://www.ssa.gov/oact/quickcalc/early_late.html[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]Our present intent is to turn on SS payment at the earliest possible moment. Our thinking is that if we wait, we’re foregoing whatever cash we might receive, and such investment return those payments would earn. Whenever I’ve ran a spreadsheet based on SS “early” or at full retirement, using returns similar to our existing rental investments, early payments “win”.[/FONT]