Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Collect at 62 or 65
Old 02-20-2005, 09:21 AM   #1
 
Posts: n/a
Collect at 62 or 65

Does it make sence and why to start collecting an annuity and social security that will amout to 40K a year at age 62 or wait until you are 65. I will be retired in 1 year at age 60 and will need about 80K a year income.
__________________
  Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Collect at 62 or 65
Old 02-20-2005, 09:59 AM   #2
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Re: Collect at 62 or 65

I plan to collect mine at 62 since you never know how much longer you will live and if SS will still exist when you turn 65.
__________________

__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-20-2005, 10:09 AM   #3
Dryer sheet aficionado
 
Join Date: Apr 2005
Posts: 49
Re: Collect at 62 or 65

Usually the penalty is 5% per year for both pensions and SS, so your pension and SS payments will be 3 years x 5% = 15% lower (forever) if you start collecting at age 62.

So, for the sake of example, if you were expecting $10,000/ year at age 65, you would receive $8500 at age 62, a $1500 penalty. From age 62-65, you would collect a total of 3 x $8500 = $25,500. $25,500/ $1500 = 16.7 years-- it takes this long to come out ahead taking the payments at age 65.
__________________
Janie is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-20-2005, 10:18 AM   #4
Thinks s/he gets paid by the post
retire@40's Avatar
 
Join Date: Feb 2004
Posts: 2,670
Re: Collect at 62 or 65

This is a no-brainer. 62 (if you can swing the health insurance costs until age 65).

What if you wait until 65 and you die at 64?

You sacrificed enough by age 62 and as Frank Sinatra would say, you're in the autumn of your years.
__________________
No man is free who is not master of himself. --- Epictetus
Enjoy Yourself (It's Later Than You Think). --- Guy Lombardo
retire@40 is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-20-2005, 11:25 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Collect at 62 or 65

Theres a paper out there that looked at this. The payback of waiting until later isnt met until you're in your 80's.

Unless there are further improvements in medical care, most of us wont make it that far.

Hence there is almost no reason to wait. Even if you really, really dont need the money, take it and sock it into a conservative fund.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-20-2005, 04:10 PM   #6
Thinks s/he gets paid by the post
Eagle43's Avatar
 
Join Date: Jan 2005
Location: DFW
Posts: 1,879
Re: Collect at 62 or 65

With glee I can truthfully state, I applied on-line today. I'm 62 in May. I've heard the argument for years that it takes soooo long to catch up that it's silly not to go at 62, particularly if you have good medical insurance.

Wait till 65 if you're working; Otherwise, 62 is the way to go.
__________________
Resist much. Obey Little. . . . Ed Abbey

Disclaimer: My Posts are for my amusement only.
Eagle43 is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-20-2005, 06:10 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Dec 2003
Posts: 1,375
Re: Collect at 62 or 65

Quote:
With glee I can truthfully state, I applied on-line today. *I'm 62 in May. * *I've heard the argument for years that it takes soooo long to catch up that it's silly not to go at 62, particularly if you have good medical insurance.

Wait till 65 if you're working; Otherwise, 62 is the way to go. *
Eagle43: I'm starting on my 6th. year. Trust me, I'm not bragging
My wife was 62 the 16th. of Feb. and gets her first check the latter part of April. Last time she worked was about 40 years ago, so she gets a check about half of mine. (Not bad).
Nice feeling for us. Last check from any source other than investments was 1987.
Here's hoping you collect 40 years worth.
Jarhead
__________________
Jarhead* is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-21-2005, 03:57 AM   #8
 
Posts: n/a
Re: Collect at 62 or 65

Hello Jarhead and all. As time goes by in ER more things become clear to me, even without thinking
them to death which is a habit of mine.

I never considered I would attain my ripe age without
tapping my IRA, yet here I am. I never thought at all
about my DW's SS benefits, but (like Jarhead) they will
be significant and now are only 6 years away. And..........while I still believe that taking your SS at 62
is a "no brainer", I can even see that I probably could stand to wait past 62 to begin. I won't, but I could.
All of these were revelations and absolutely
unthinkable 10 years ago.

JG
__________________
  Reply With Quote
Re: Collect at 62 or 65
Old 02-21-2005, 04:34 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Re: Collect at 62 or 65

We beat this sucker to death a while back on this forum.

Here's my current two cents:

In the old days(1998) when I showed up at age 55 to collect my early pension, a popular option taken by some of my buddies at the plant went along the lines of: take a higher pension payout early(non cola) which drops at 65 or 66 when SS kicks in. ER version would be to spend taxable up front until full SS. Sans the numbers some version of that is an option.

Part two - heh, heh - male and biological - take the money early - try to beat the spread (the 30% ?? jump) between 62 and 66. Or take it early and spend it while you are young and springy.

Paradox - as a liberal Democrat(getting crustier by the year) I'll do my own Bush - take it early, DCA invest and try to beat the spread - individual DRIP stocks for now - although I wish TH would quit mentioning Wellesley - owned it in the the past for many years and it did well.

? Without looking it up - wasn't the bogey to beat around 7% a year if you took SS early

Anywise - for me - the operative phrase is - it's male and biological - gotta putz.
__________________
unclemick is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-21-2005, 05:06 AM   #10
Recycles dryer sheets
 
Join Date: Nov 2003
Location: Charlotte
Posts: 360
Re: Collect at 62 or 65

Seems like a no-brainer to me as well. *Heard just this morning more talk of "means testing" as part of social security reform. *Looking forward to going ahead and getting on the rolls so hopefully negative change to benefits may be less likely.

Also: most often mentioned benefit of taking later is less likelihood of running out of money later in life. *I figure that what I take earlier from SS allows portfolio to grow more during that time. *Becomes a better source of self insurance later on (e.g., long term care) or something left for beneficiaries. *Don't have a target for what we want to leave, but would rather have daughters and grand children have it than for it to evaporate (although we are doing what we can to practice what I read on another thread: "giving with a warm hand"!)... bill
__________________
WilliamG is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-21-2005, 06:07 AM   #11
Thinks s/he gets paid by the post
Eagle43's Avatar
 
Join Date: Jan 2005
Location: DFW
Posts: 1,879
Re: Collect at 62 or 65

Quote:

Eagle43: *I'm starting on my 6th. year. *Trust me, I'm not bragging
My wife was 62 the 16th. of Feb. and gets her first check the latter part of April. Last time she worked was about 40 years ago, so she gets a check about half of mine. *(Not bad).
Nice feeling for us. *Last check from any source other than investments was 1987.
Here's hoping you collect 40 years worth. *
Jarhead
Way to go. Tell me this. I haven't looked into this too much, but my wife is similar in that she has not earned much income. She's about 5 months older than I, so she's gonna get a check 1 march of about $425 or so. But, I hear that once I apply, she can get half of mine. Does that mean that my check is reduced? I was gonna ask SS, but you might know already.
Thanks
__________________
Resist much. Obey Little. . . . Ed Abbey

Disclaimer: My Posts are for my amusement only.
Eagle43 is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-21-2005, 06:24 AM   #12
Recycles dryer sheets
 
Join Date: Nov 2003
Posts: 69
Send a message via AIM to Newell
Re: Collect at 62 or 65

As was stated earlier, we beat this sucker to death a while back on this forum. However, I remain convinced that the social security actuaries have based their payout statistics (life expectancy, present value calculations, etc) on an outdated family model. Remember that when social security was implemented, most families consisted of a single wage earner, single recipient and a spouse with spousal benefits (1/2 of the benefits of the working spouse).

I do not believe the calculations correctly take into consideration the more typical, current family where there may be two wage earners in a family, both eligible for social security. In this case, both collect their respective social security benefits (assuming they are both larger than the spousal benefit option) until one of them dies. One of the benefit streams ends. The survivor then receives the larger of the two benefits for the remainder of their life.

In this example I believe it is statistically beneficial to take the smaller of the two benefits as early as possible and the larger of the two benefits at about age 70. This can be mathematically demonstrated but is also somewhat intuitive. The larger benefit will be collected until both spouses die (a much longer life expectancy than for an individual) and the smaller benefit will end when either of the spouses dies (a much shorter life expectancy than for an individual).

I promise to never bring this up again!
__________________
Newell is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-21-2005, 07:37 AM   #13
Thinks s/he gets paid by the post
 
Join Date: Dec 2003
Posts: 1,375
Re: Collect at 62 or 65

Quote:

Way to go. *Tell me this. *I haven't looked into this too much, but my wife is similar in that she has not earned much income. *She's about 5 months older than I, so she's gonna get a check 1 march of about $425 or so. *But, I hear that once I apply, she can get half of mine. *Does that mean that my check is reduced? *I was gonna ask SS, but you might know already.
Thanks
Eagle 43: Yep. When you apply your wife will be eligable to receive half of your benefit. No effect on your amount. If your wife outlives you, she would be eligable to use your benefit at that point.
__________________
Jarhead* is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-21-2005, 09:53 AM   #14
Thinks s/he gets paid by the post
Eagle43's Avatar
 
Join Date: Jan 2005
Location: DFW
Posts: 1,879
Re: Collect at 62 or 65

Thanks, and we'll be doing just that!
__________________
Resist much. Obey Little. . . . Ed Abbey

Disclaimer: My Posts are for my amusement only.
Eagle43 is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-21-2005, 10:36 AM   #15
Thinks s/he gets paid by the post
 
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: Collect at 62 or 65

Quote:
. . . I do not believe the calculations correctly take into consideration the more typical, current family where there may be two wage earners in a family, both eligible for social security. In this case, both collect their respective social security benefits (assuming they are both larger than the spousal benefit option) until one of them dies. One of the benefit streams ends. The survivor then receives the larger of the two benefits for the remainder of their life.

In this example I believe it is statistically beneficial to take the smaller of the two benefits as early as possible and the larger of the two benefits at about age 70. This can be mathematically demonstrated but is also somewhat intuitive. The larger benefit will be collected until both spouses die (a much longer life expectancy than for an individual) and the smaller benefit will end when either of the spouses dies (a much shorter life expectancy than for an individual).

I promise to never bring this up again!
Don't promise that, Newell. I think you're on to something. I remember the discussion several months back and your ideas almost got lost in the posts. But I listened and have thought it through. I've changed my opinion about the optimum strategy. It just takes people a while to think through new ideas and change their mind.

I used to be in the "take it early, regardless" camp. But now I'm in the "wait till I'm 62 and review the decision" camp. To me the important risks of waiting are the risk that benefits will be cut in the future and that you will live a short life and fail to collect. But if you are healthy and outlive the statistics, higher social security (with COLA) is more valuable than any other investment. So when I reach age 62, if my DW and I are still healthy active and vital, and my finances are still healthy, I'm inclined to use the strategy you describe. Thanks for the analysis and your posts.
__________________
sgeeeee is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-21-2005, 10:54 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Collect at 62 or 65

The idea does bear merit. Besides a pure numbers calc though, I think you can add into the mix some thinking around what you might do with that extra $$$ between 62 and 70 vs 70+.

__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-21-2005, 11:08 AM   #17
Thinks s/he gets paid by the post
Hyperborea's Avatar
 
Join Date: Sep 2002
Location: Silicon Valley
Posts: 1,008
Re: Collect at 62 or 65

Quote:
I used to be in the "take it early, regardless" camp. *But now I'm in the "wait till I'm 62 and review the decision" camp.
It might make sense to wait as "insurance" if you don't need the income at 62. It may cost you in expected return - most of the time you would get more dollars taking the money early. However, if things turn out bad then having a higher "guaranteed" COLA-adjusted income stream could keep you from living under the bridge. I'm not sure about the answer myself but a lot will depend on what the situation (for SS and personally) is like in 20+ years.
__________________
Hyperborea is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-21-2005, 11:16 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Re: Collect at 62 or 65

Yeah, we've already got one guy on the forum that lives under a bridge...

Dang, aint I *minxy* today
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Re: Collect at 62 or 66
Old 02-21-2005, 12:23 PM   #19
Thinks s/he gets paid by the post
 
Join Date: Mar 2004
Posts: 2,083
Re: Collect at 62 or 66

Quote:
I used to be in the "take it early, regardless" camp. But now I'm in the "wait till I'm 62 and review the decision" camp. To me the important risks of waiting are the risk that benefits will be cut in the future and that you will live a short life and fail to collect. But if you are healthy and outlive the statistics, higher social security (with COLA) is more valuable than any other investment. So when I reach age 62, if my DW and I are still healthy active and vital, and my finances are still healthy, I'm inclined to use the strategy you describe.
SG, at the present time this is my strategy. On principal, I would love to get all the money I "invested" in SSA sooner than later but is more important to me to have the future COLA protection that SS will "hopefully" still have. My father has been collecting SS for the past 29 years. He certainly has beaten the odds big time. I have 5 more years before I reach 62 and my 1st initial decision whether to start collecting SS payments.

Besides I don't have anyone to leave my left over "millions" to (no volunteers please) so I want to leave just enough for my funeral and a small chunk for charity when I die at the ripe old age of 150.

MJ
__________________
I look to the present moment because that's where I live my life.
MJ is offline   Reply With Quote
Re: Collect at 62 or 65
Old 02-22-2005, 06:37 AM   #20
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
Re: Collect at 62 or 65

MJ,

I have two kids but have no plan to leave them a fortune when I die.

Spanky
__________________

__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
collect interest or collecting rent question. Enuff2Eat FIRE and Money 17 02-17-2007 02:25 PM
Can you collect unemployment benefit if you're fired? Sam Other topics 11 02-14-2007 09:15 AM
Wait to Age 70 to Collect SS? REWahoo FIRE and Money 77 11-27-2005 03:49 AM
Insurance Agent can't collect on her insurance wabmester Other topics 14 08-24-2005 09:25 PM

 

 
All times are GMT -6. The time now is 09:58 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.