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If SS is there- 70% take it early
Old 11-18-2004, 11:18 AM   #1
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If SS is there- 70% take it early

When you choose to begin receiving your Social Security benefits is an important retirement decision, one you shouldn't take lightly.


Money magazine reports that seven in 10 people opt to receive their Social Security benefits before reaching full retirement age at 65. That's not always the best choice.

You would be well advised to start taking your money out at 62 for the following reasons:

You need the income your Social Security benefits would provide.
Your health is poor. Also consider your family medical history and family longevity. You might not want to gamble on being around to collect higher Social Security benefits.
Your break-even point is a decade or more away, writes Robert C. Carlson in "The New Rules of Retirement." That's the point in time when you would come out ahead by waiting to receive your Social Security benefits -- when those full retirement benefits would eclipse the amount accumulated had you begun receiving benefits at 62. The farther away your break-even point, the less likely you may be to live long enough to benefit from waiting.
On the other hand, you should wait until full retirement at age 65 (or later, if you were born after 1943) for the following reasons:

You are healthy, or if your family has a history of longevity.
Your break-even point is close enough that you could benefit from waiting.
You are still employed. If you are working and collect Social Security before you reach full retirement age, your benefits may be reduced. You could even end up losing money. Carlson estimates that $1 in benefits is lost for every $2 of employment earnings above the Social Security limit. The limit applies only to people taking their benefits before full retirement age, and is adjusted annually based on inflation.
You're counting on future benefits. If you take your Social Security benefits before full retirement age, the amount you receive stays low -- even after you pass full retirement age. That in turn would affect your spouse's survivor benefits, should you pass away first.

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70% might be thinking correctly.
Old 11-19-2004, 10:39 AM   #2
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70% might be thinking correctly.

I don't think Money magazine analyzed another approach for those of us who are healthy, fiscally secure, and hopefully long-lived:

Take it as soon as you can get your hands on it and put all of it in a low-cost stock mutual fund.

Breakeven will be shorter and your surviving spouse will have that bird in the hand to draw down (in addition to survivor's benefits).

But if you're taking it early to spend it on riotous living, then you're probably better off waiting for full eligibility.

Disclosure: my ER puts my age-62 SS benefits at about %9800/year.
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Re: If SS is there- 70% take it early
Old 11-19-2004, 11:28 PM   #3
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Re: If SS is there- 70% take it early

I'll be taking my SS at age 62 in 2041.
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Re: If SS is there- 70% take it early
Old 11-20-2004, 10:05 AM   #4
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Re: If SS is there- 70% take it early

Quote:
I'll be taking my SS at age 62 in 2041.
Yep, and you will probably be living on Mars as part of a 50 year tour of duty with the Galactic Police.

Isn't long range planning wonderful?

Mikey
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Re: If SS is there- 70% take it early
Old 11-20-2004, 07:48 PM   #5
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Re: If SS is there- 70% take it early

But don't you think it's better to take it in 2041, rather than wait until 2046 for full benefits?
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Re: If SS is there- 70% take it early
Old 11-21-2004, 02:40 AM   #6
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Re: If SS is there- 70% take it early

I think the rules will change in the next 40 years. You will probably have to make the decision when you get closer.
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Re: If SS is there- 70% take it early
Old 11-29-2004, 10:59 AM   #7
 
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Re: If SS is there- 70% take it early

"Take it as soon as you can get your hands on it and put all of it in a low-cost stock mutual fund."

This is what my brother - the banker, MBA, CPA suggested we do - the numbers just about even out (depepending on rate of return) but it is your money and that is worth something. You also never know when they are going to change the rules.

My plan is for both my dh and I to retire at the same time - Me at 56 and him at 62 if his company offers an early out package (about 8 more years). We will use the SS money to tide us over until my dh's pension kicks in. Collecting early is what's going to allow us to ER.
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