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Old 09-03-2016, 07:17 AM   #21
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Originally Posted by Accidental Retiree View Post
I am also subject to WEP and GPO; however, a forum member here explained GPO to me somewhat differently.

If my husband were to predecease me (I'm assuming FRA for both of us), I would ordinarily be able to collect his full SS as his survivor. The GPO, though, would reduce those survivor benefits by 2/3 of the amount of my pension, IIRC.


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You are correct about getting full SS if you are the survivor. I was confusing the ordinary spousal benefit, which is 1/2. I will fix my post accordingly.

You are also correct about the 2/3rd GPO reduction. However, in the case of the young wife, 2/3 of her pension will exceed my full SS benefits, even at FRA. So she won't get a spousal benefit before I die and won't get a survivor benefit after.


Here are the appropriate links to the SSA documents explaining all of this.

Spousal benefit
https://www.ssa.gov/pubs/EN-05-10035.pdf

Survivor benefit
https://www.ssa.gov/pubs/EN-05-10084.pdf

Government Pension Offset
https://www.ssa.gov/pubs/EN-05-10007.pdf
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Old 09-03-2016, 07:19 AM   #22
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Originally Posted by Forced to Retire View Post
One more thing:

All the article that tell us we should wait until we are 70 years old to collect Social Security act like we are going to come out ahead and get more money from Uncle Sam. But according the government, they have figured it all out. Their math experts have determined that on average they will not pay out any more or any less if a person retires at age 62, 66, or 70. It's all a wash.

Some people decide to wait until they are 70 to collect and die the next year, while others collect age age 62 and live for years. The government has got it all figured out, what ever age people start collecting, the final cost to the government is going to be the same.

So who are these people who are pushing so hard to try to convince people to wait and and not collect Social Security until you are seventy (70) years old. Are they writing these articles to really help you because they want you to get more money from the Social Security trust fund over your life? I suspect it is the financial service industry, who want you to work longer and put more money into your Fidelity Mutual Fund and 401k, 403B and IRA Accounts.

What do you think?
If I were single I might have taken SS at 62. If I were single and not in great health I would definitely have taken SS at 62. In my case, I was looking out for my stay at home DW and therefore waited until 69. No one size fits all, and to each their own
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Old 09-03-2016, 07:50 AM   #23
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For a couple, there are more variables to consider. Some people are better off collecting early, such as in Gumby's case.

We still have a couple of years, but I think my wife will collect at 62 or soon after. I will hold out until FRA if not 70. It is most likely that I will die before my wife does, and when I do she will get my SS while losing hers. As mine is higher, that will help when she is down to a single SS.

That's the plan, but if the market crashes, I may have no choice but to rush to the SS office.
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Old 09-03-2016, 07:53 AM   #24
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We need two planning dates

As to the (possibly) skewed high opinion of the 'wait until 70' idea, I think it has to do with "wishful thinking" and incomplete analysis.

There are a lot of analyticals on this forum, and most of us are not predicting an early demise. In fact, when planning, most of us are predicting a very optimistic "plan sunset date". This more distant date is good for making sure you don't run out of money, but it gives unduly higher weighting to the idea of delaying Social Security.

As already discussed, if you're not likely to live past average age, you'd be advised to take SS sooner.

So we need to plan with two dates...one "pessimistic" early date for when you are calculating things like the value of social security and pensions, and one "optimistic" later date, for when you're trying to understand if your money will run out. I don't know how to do that, really.

What can be done is to value a lifetime income stream, not based on a single date, but on a set of dates [.1*(pmts thru 64) + .2*(pmts thru 67) + .3*(pmnts thru 70) + .2*(pmnts thru 73) + .1*(pmnts thru 76) + .05*(pmnts thru 79) + .05*(pmnts thru 82)]. So .1+.2+.3+.2+.1+.05+.05 are the chances you'll not be around to collect in those years. You do seven separate calculations (present values) and weight them as above. This would be a much better calculation than presuming you're going to get to age 95 [1.0*(pmnts thru 95)].

I usually just opt-out of this discussion because I'm a long way away from the first decision point at age 62 (I figure the rules won't be the same then, so why bother wasting brain cells on it now). But I've kind of HAD to spend mental energy because all of the planning tools require you to select or at least accept some idea for how SS will play-out.

So when it comes to planning tools, if I can, I try to tone-down the over-weighting of delayed SS benefits if the planning horizon is extended just to make sure the money lasts until the end. But I'm generally in the "cheap longevity insurance" camp, since I do plan to live forever
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Old 09-03-2016, 08:00 AM   #25
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... What can be done is to value a lifetime income stream, not based on a single date, but on a set of dates [.1*(pmts thru 64) + .2*(pmts thru 67) + .3*(pmnts thru 70) + .2*(pmnts thru 73) + .1*(pmnts thru 76) + .05*(pmnts thru 79) + .05*(pmnts thru 82)]. So .1+.2+.3+.2+.1+.05+.05 are the chances you'll not be around to collect in those years. You do seven separate calculations (present values) and weight them as above. This would be a much better calculation than presuming you're going to get to age 95 [1.0*(pmnts thru 95)]...
From what I have seen posted here, people will go through your sensical suggested calculations and say "the chances of me dying at 70, 80, etc... are zero, and the chance of me living till 100 is 100%". Heck, people even thought of life after death, well not quite but something like a head transplant.

So, it's back to their original premise of delaying till 70.
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Old 09-03-2016, 08:10 AM   #26
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I usually just opt-out of this discussion because I'm a long way away from the first decision point at age 62 (I figure the rules won't be the same then, so why bother wasting brain cells on it now). But I've kind of HAD to spend mental energy because all of the planning tools require you to select or at least accept some idea for how SS will play-out.
Same for me. I won't be 62 for another 11+ years. I'm pretty sure there will be significant changes by then, and not for the better. The main question is, will I be old enough to be "grandfathered" out of the watered down deal the younger folks are sure to get when the "reforms" are enacted.

I don't spend a lot of time on it yet. I'm not going to line up to kick the field goal when I expect the goalposts will be moved before I kick the ball. I have, however, tried to consider a few possibilities and make at least a little bit of a plan for them should they occur, so no "blindsides" will make or break me or delay full retirement or change when I take SS.
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Old 09-03-2016, 08:16 AM   #27
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From what I have seen posted here, people will go through your sensical suggested calculations and say "the chances of me dying at 70, 80, etc... are zero, and the chance of me living till 100 is 100%". Heck, people even thought of life after death, well not quite but something like a head transplant.

So, it's back to their original premise of delaying till 70.

I don't think that's true at all from what I've seen. I think people consider the POSSIBILITY of living a long life and then say taking it at 70 is good insurance. I don't really see people assessing the PROBABILITY of living to a ripe old age as high.


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Old 09-03-2016, 08:19 AM   #28
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One of the points missing in this discussion, especially as framed in the OP, is that although Social Security is part pension, it's primary purpose is as pension insurance or supplement. The reason to take it at age 62, is because it is needed.

The reason to defer is that it is not needed at age 62 and, at that age, it takes on an additional attribute, as longevity insurance. The value of that supplement grows, in real terms, from age 62 through 70, which is motive to defer.
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Old 09-03-2016, 08:23 AM   #29
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I don't think that's true at all from what I've seen. I think people consider the POSSIBILITY of living a long life and then say taking it at 70 is good insurance. I don't really see people assessing the PROBABILITY of living to a ripe old age as high.
I was exaggerating there, but many do have a more optimistic outlook of their longevity.

I don't, but will most likely delay mine for the already mentioned reason.

It's OK if people undercollect and they can afford it. It saves SS for people who really need it.
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Old 09-03-2016, 08:24 AM   #30
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I read an entire book on social security by Laurence Kotlikoff and I still find the topic of social security to be complex and confusing.

Based on what we know about the OP, he does not have enough to live off his assets, his prospects for future employment are unlikely, and he has a weight problem. These facts certainly point to a conclusion that claiming at 62 may be wise.

There are so many circumstances that each of us must consider before we make the decision. Whether we have sufficient assets, have a spouse, have longevity in the family, and on and on. There is no right or wrong answer.

And yes, the government consider the decision to be actuarially neutral. But that is because they go by average mortality rates. Each of us must consider our own situations individually, because we do not all fit into the average case.


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Old 09-03-2016, 08:34 AM   #31
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It is true that an overweight person may have a shorter life span, but that is not 100% true. Everyone probably knows an exception. One grandmother was born into a large impoverished family. She was always very overweight. She died at 92, and spent the last ten years in my mother's home. She was very inactive as I recall.
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Old 09-03-2016, 08:40 AM   #32
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Old 09-03-2016, 08:49 AM   #33
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I guess you did not read the reasons people were waiting until 70 or you would not ask... this question has been asked many times and answered many times... the big thing is do you need the money or not...

But, a good number of people have wives.... some wives did not work... some have younger spouses and women tend to live longer... so even if you are the same age it is still the same... taking it when you turn 70 will leave more money for the spouse...

Not the same if the woman is the primary bread winner, but in a way it is since SS does not take sex into consideration on their calculation...
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Old 09-03-2016, 08:50 AM   #34
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You're asking a question in a greatly skewed audience, I believe. Many on this forum have sufficient assets that they can wait for the amount to grow.
+1

Percentage who start collecting SS at:

Age 62: 48 percent of women and 42 percent of men.
Age 63: 8 percent of women and 7 percent of men.
Age 64: 8 percent of women and 7 percent of men.
Age 70: 4 percent of women and 2 percent of men.

Reference: The Most Popular Ages to Sign Up for Social Security | Retirement | US News

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In order to identify the characteristics of individuals claiming at various ages, we use SSA's MINT6 data to examine nondisabled beneficiaries in 2014 who started receiving benefits at age 62, at their FRA, and after their FRA (that is, ages 67 to 70). We find that individuals who claimed benefits at age 62 had lower levels of education than those who claimed at their FRA or later. As Chart 4 shows, 45 percent of individuals who claimed benefits at age 62 had only a high school diploma compared with 35 percent in the older claiming-age groups. In addition, about 40 percent of individuals who claimed at their FRA or later had either a bachelor's or graduate degree, compared with less than a quarter of those who claimed at age 62.

Beneficiaries who claimed at their FRA or later were also much more likely to have had high individual non-Social Security income (Chart 5). Almost 60 percent of beneficiaries in those claiming-age groups had individual income in the two highest quintiles. Because those individuals had other sources of income outside of Social Security (including earnings, defined benefit pension income, and asset income) to help them maintain their standard of living, it makes sense that they would have claimed benefits later. For individuals who claimed at age 62, about 40 percent had individual income in the two highest quintiles. That proportion represents high individual-income persons who could have possibly afforded to wait past age 62 to claim Social Security benefits, but claimed at age 62 anyway.
Reference: https://www.ssa.gov/policy/docs/ssb/v74n4/v74n4p21.html
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Old 09-03-2016, 08:54 AM   #35
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I was the first year I had to wait 2 months to FRA. I just did a quick calculation and found that If I had waited until age 70, the break even point would be at age 82.
But that does not take into account the Present Value of the money I would get at age 65 as opposed to age 70. That would push the crossover point out further.
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Old 09-03-2016, 09:06 AM   #36
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2) If you use your own savings and invested assets to pay for your lifestyle for the eight years from age 62-70, you will have less money to invest and support your lifestyle and needs later in life. (For example, many posters say they are doing a 7-8 percent annual distribution to pay expenses per year from age 62 to age 70 and then plan on cutting it down to 3-4 percent when they start collecting Social Security at age seventy.
I would be hesitant to use such a high initial withdrawal rate, but I don't think most on this forum who will wait until 70 are doing that. It seems that the more common case is starting with something like 4-5% and lowering it to 2-3% at age 70.

Also, there is an underlying assumption in many of the SS discussions on this forum that the goal is to maximize one's expected payout. That is not my goal. My goal is to maximize my chance on not dying broke. If I wait until age 70 to file, and I die before then, I will not receive a single penny from SS, but I will be dead so I won't lose any sleep over it. If, on the other hand, I live until 110, I will be very happy that I waited to file.
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Old 09-03-2016, 09:19 AM   #37
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I read an entire book on social security by Laurence Kotlikoff and I still find the topic of social security to be complex and confusing.
I've said it before: the people who pulled this thing together are truly evil geniuses. The whole set up is so deliciously devious! (but in a good way)

It's one of the most incredible mazes ever built; each door opens to a whole new set of positives and negatives.
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Old 09-03-2016, 09:41 AM   #38
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+1

Percentage who start collecting SS at:

Age 62: 48 percent of women and 42 percent of men.
Age 63: 8 percent of women and 7 percent of men.
Age 64: 8 percent of women and 7 percent of men.
Age 70: 4 percent of women and 2 percent of men.

Reference: The Most Popular Ages to Sign Up for Social Security | Retirement | US News

Reference: https://www.ssa.gov/policy/docs/ssb/v74n4/v74n4p21.html
I will read the referenced article later, but notice that the percentages do not add up to 100%. Many people are not eligible, do not want to claim, or die before they do?

PS. Just notice that the ages between 64 and 70 were missing.

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I've said it before: the people who pulled this thing together are truly evil geniuses. The whole set up is so deliciously devious! (but in a good way)

It's one of the most incredible mazes ever built; each door opens to a whole new set of positives and negatives.
That's the government is really good at.

I once worked with a database that is encoded using a standard in FIPS (Federal Information Processing Standard). Man, it is an extremely convoluted file format to store data that could and should be done in a much more efficient and transparent manner. I spent quite a bit of time to write a program to convert about 100 gigabytes of this data (in Zip'ed form, no less) into a format to which we could readily do random access. This was a huge geospatial database.

Bureaucrats really know how to create work for themselves.

A few years later, found out that even they could hack it no more, abandoned it to use a more straightforward format similar to what I had done myself. I guess other agencies using the same data cried out "who's the fool who came up with this?"

We are now back to SS withdrawal strategies...
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Old 09-03-2016, 10:07 AM   #39
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That's the plan, but if the market crashes, I may have no choice but to rush to the SS office.

Which I posit is, in fact, the optimal time to start SS.


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Old 09-03-2016, 10:13 AM   #40
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You gotta do what is best for you, at that time, in that space. I collected at 62; DH will collect a restricted spousal at 66 and collect on his own earnings at age 70.
YMMV
Different strokes. You have some time to decide what is best for you and a multitude of programs you can run.
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