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Are Early Claimers Making a Mistake?
Old 08-02-2016, 01:20 PM   #1
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Are Early Claimers Making a Mistake?

This came across my desk today at work. Just like this board, there's a never ending discussion here about when to take Social Security. I have great respect for the Boston College Center for Retirement Research.

Are Early Claimers Making a Mistake? | Center for Retirement Research

There's a link at the bottom to download the full 32-page PDF, if you're so inclined.

Apologies if this has already been posted.
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Old 08-02-2016, 01:41 PM   #2
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So it sounds like most early claimers really need the funds.
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Old 08-02-2016, 02:14 PM   #3
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Based on the abstract the key points are:

- early claimers are often unprepared for retirement. (which makes sense - get an income stream now, because you need it now).
- percentage of early claimers is increasing... I speculate that is because of fear that SS will be messed with/modified in some way that will negatively impact future claimers... so get it now, before they take it away.
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Old 08-02-2016, 02:28 PM   #4
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Well, so I have read on here at least several, if not many, times that lower earning spouse should take at 62, larger earning spouse at 70. Does that lower earning spouse lose? I don't think so, seems like a very astute move to me. Therefore I put it in our plan.
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Old 08-02-2016, 02:54 PM   #5
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I started taking it at 62. I wouldn't say I was unprepared for retirement. With SS, I can easily sustain my lifestyle with a 2.8% WR. I can't remember when exactly the so-called "break even" point is, but isn't it well into my 70s, not counting the time value of money?

I would put myself into rod's group who fears "that SS will be messed with/modified in some way that will negatively impact future claimers... so get it now, before they take it away."
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Old 08-02-2016, 03:16 PM   #6
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This is very subjective. I will be lucky if I live to 80, by then I will probably be happy with sitting at home eating my favorite foods and watching good content (Heck I almost am now). I plan on taking SS at 65 for no reason other than to kep my income lower till Medicare kicks in.

My home will "Still" be fully paid for and my living costs more than manageable.
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Old 08-02-2016, 03:34 PM   #7
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I do not even count SS in my plans, and will wait until 70.
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Old 08-02-2016, 03:35 PM   #8
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We have some pretty decent non-cola'd pensions but not much in the way of a nest egg on the side. We've prepared a strategy to use about half of the pension payments and all the early-claim SS we can get our hands on to maximize the nest egg part of the equation. Projecting $300K or more in savings in 10 years, not counting market gains and dividends. Gives us lots of options...
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Old 08-02-2016, 03:48 PM   #9
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Quote:
Originally Posted by DrRoy View Post
I do not even count SS in my plans, and will wait until 70.
That's great. But if you've had significant income, it leaves a lot out of the equation when your planning to see if ER is a possibility. I put 80% of what SS site says just as a small insurance of decreases or "class warfare" impacts. Have contributed max for quite a while, so it's not a small number.
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Old 08-02-2016, 04:00 PM   #10
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Quote:
Originally Posted by rodi View Post
Based on the abstract the key points are:

- early claimers are often unprepared for retirement. (which makes sense - get an income stream now, because you need it now).
- percentage of early claimers is increasing... I speculate that is because of fear that SS will be messed with/modified in some way that will negatively impact future claimers... so get it now, before they take it away.
it's not only that these are people in a 401k-only world - this is just the tip of the iceberg
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Old 08-02-2016, 05:22 PM   #11
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I'm 23 years from even early claiming, but I think about this quite a bit. If you believe that spending decreases with age, and are in a situation where SS isn't going to be a major impact one way or the other, I don't see why you wouldn't take it early. More money at 62 to spend and/or less money drawing down earlier from your portfolio makes you a bit more secure later on (though not optimally like waiting until 70). But if you're only drawing down 3% or less of your portfolio anyway, why not have the extra money at 62 to enjoy while you're still young enough? If you're comfortable at 3% or less, SS isn't likely to make a big difference in your security later in life anyhow - you're probably set.

Dunno how this will work out for me, but even knowing that waiting is a smarter financial move, I hope to have the game won to the point where it doesn't matter, and if DW and I want $XX,XXX more money to spend while we're young, we can just take it and enjoy a few more years of travel, etc.
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Are Early Claimers Making a Mistake?
Old 08-02-2016, 05:30 PM   #12
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Are Early Claimers Making a Mistake?

I read a "Rescue My Retirement" article- may have been in Money Magazine- profiling several people who were in their 50s and for various reasons were way behind in saving for retirement (e.g. realtors who had a tough time when the housing market collapsed). The financial advisors' recommendations always included working longer and delaying SS but I wonder how many just took it at 62 because they needed the money or the jobs just weren't there anymore.
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Old 08-02-2016, 08:12 PM   #13
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We're taking SS at 62 and preserving the portfolio, since we have more control over that and we can leave that to the kids / charity.
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Old 08-02-2016, 08:29 PM   #14
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I think everyone would be helped if minimum claim age was raised, say to 65.
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Old 08-02-2016, 09:08 PM   #15
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DH will claim at 62. He had the lower income and is convinced he will a shorter lifespan due to VTAC.
I will take a wait & see attitude as to when to claim. I really do want to leave DD some inheritance considering she put up with our LBYM lifestyle.


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Old 08-02-2016, 10:08 PM   #16
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I have a COLA'd pension so I don't need it. I'm also holding off until 70 to take IRA withdrawals. That's because I don't have long-term care insurance and I really would like to be a nice place if I need it
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Old 08-02-2016, 10:33 PM   #17
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Parents on my wife's side: Many times they complained that they were talked into taking SS at 62 and it was a mistake. They would have had a larger payout if they would have waited.

The reality: They didn't really have a nickel to their name, their income stream had dwindled to near zero. They had borrowed money against equity in house and business, and were basically heading for a financial crash. SS was what they could live on. They went through a health crisis, ended up selling all of their holdings and moving into assisted living. Those costs emptied the account within 2 years.

I don't think either of them lived past 74, thus drawing at age 62 was mathematically the correct thing to do.

I think that a lot of folks who are 70 would like to have had the larger payment, but many of them did not have a path that would let them wait much past 62.

This board has many folks who are in a position where they do have a choice. They financially can afford to draw it later. Even with that choice, there is no clear 'correct' decision.
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Old 08-02-2016, 11:40 PM   #18
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Most of our friends were double income with high paying jobs and no kids. Almost all of them took SS at 62. None live extravagantly so I can't imagine it was for financial necessity. I think they just figured it was part of the retirement income and wanted to start it as soon as they could.
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Old 08-03-2016, 04:28 AM   #19
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Originally Posted by daylatedollarshort View Post
We're taking SS at 62 and preserving the portfolio, since we have more control over that and we can leave that to the kids / charity.
+1. After spending too much time analyzing the pros and cons I find it really doesn't make all that much difference. The unknowns far outweigh the results of a current calculation. With two years to go we're taking all we can out of the IRA's (6% w/d to max 15% tax bracket) and plan to take SS at 62. This allows a nice cash flow through our 60's (<3% w/d after 62) and smooth transition to RMD's at 70 1/2. Even with zero portfolio growth the RMD's should equal our current cash flow with a nice adjustment for inflation.
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Old 08-03-2016, 05:21 AM   #20
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I draw the conclusion that in some cases taking early SS is the result of poor planning, but in other cases is part of a well thought out plan.

No real surprises here.
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