If you are not working, why would someone wait until 70 to collect Social Security?

[Sunset]

Quote:

Originally Posted by Forced to Retire ...... 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....

Darn, you found me out.
I'm really a shill for the gubermint.
Every time I post and tell folks to wait until age 70 to collect SS, the boys in dark suits show up at my door with another briefcase full of greenbacks.
So please take it at age 70

[samclem]

Much has been written on this board about this issue, you can read it and make your own assessments based on your own situation. Some things to keep in mind:
1) It's not about life expectancy or averages. You need to build a sturdy plan tha will work even if things >don't< go according to the statistically most likely events. In this regard, the two "deviations from expected/historical averages" that can most significantly affect your life are a) living longer than you might expect and b) real (i.e. inflation-adjusted) investment returns that are significantly lower than recent history. Both of these are not exceptionally "freakish, in fact many people believe the latter is now very likely. So, if you don't get the "expected--average" results on these two curves, which SS claiming strategy leaves you better off?
2) It's not about choosing a claiming strategy that results in the highest expected number of dollars. It's about choosing the claiming strategy that results in the best overall "utility". As an example, if you work out your sample budget and the bare-bones number comes out to $2000 per month, then working things so that you can have a guaranteed lifetime inflation-adjusted income of $2K is really important. If you get $500 more than that, it is nice, but if you get $500 less than that it hurts a >lot<. Each dollar above that $2K/mo has "decreasing utility," but each dollar below that has increased utility, and losing them hurts more and more. Just doing the SS math to get the "most expected money" ignores the very real difference in utility cost of being wrong.
3) On a less analytical note: If you die younger than average (and expected), it might have been better --in retrospect-- to have taken SS at age 62 (and you also should have spent all your savings so that your last penny was spent while you were on your way to the morgue). But few of us can predict these things--and once you are dead, there are no regrets. But if you live longer than 80 and started your SS at 62, you >will< be aware of that significantly smaller inflation-adjusted SS check that will be coming in every month. So, the cost of "betting wrong" on the longevity issue is clear only when looking back, but in only one case will you actually be able to do that looking back (and be living with the result), in the other you won't. "If a tree falls in the forest and no one hears it . . . "

[Bestwifeever]

Most retired people collect long before 70 so perhaps there's not much convincing to be done to not collect at 70 and hence not so many impassioned arguments about it (but they definitely are a lot of them on these boards). E.G., almost everyone I know (well off, broke, married, single, financially savvy, economic nitwit) admits when asked that they collected at 62 but they don't talk about it or discuss why they decided to collect early. DH and I collected at FRA (my first deposit to come in 17 days woohoo) because we did. I don't think most people care about what other people do re collecting SS, but there certainly are many factors to consider in one's individual circumstances.

[fritz]

Quote:

Originally Posted by Forced to Retire It would be great if some people who started collecting Social Security at age 62 but did not need the money all that much, could help me defend the concept of collecting benefits at that age. There are tons of posts and articles talking about the glories of waiting until you are seventy. We have already heard those arguments. Help me out, why would someone collect benefits at age 62 if you did not need the money right then?

It all depends on what you'd like to do in retirement. Retirement is as individual as fingerprints. Possibly increase your annual spending - betting on a larger SS check to cover it with the 8% increases, etc, etc, etc......

My wife and I both took SS @ 62. We are very fortunate to not require SS in order to retire. Together we pull close to what I'd get at 70 - this will last until one of us passes (think about that).... She worked very little and 1/2 of my SS is larger than hers. This keeps our investment withdrawals to a minimum. Helps us with the ACA subsidies. Paid little to no Federal taxes for 7 years in retirement so far (but don't pull from retirement accounts). The day will come though, and we have a tentative plan. Not pulling on investments allows us to leave them to accumulate for the future (anticipate inflation, unfavorable SS adjustments, and leaving inheritances). Studies (believe Kitches) have shown that if retirement money is left invested conservatively, while pulling SS early (instead of waiting until 70), the breakeven is beyond 85 years of age. I ran the numbers for us, and our stash should grow to where the withdrawal on those extra accumulated funds will outperform the extra SS we'd get (and we'd still have the extra funds that generate it to pass on to our children when we die (unlike SS that goes away when we do). We all think we're gong to live into our 90's, but actuarial statistics don't favor it.....

[rodi]

For a single, generic person, collecting at 62, FRA, and 70 are actuarily neutral.... Meaning you'll get the same amount of money out, overall, if you die at the statistically average time.

BUT - there are variations and we're not all single and generically neutral.

In our household we chose to have DH take SS at 62 - that's because we have minor children that could also collect on his benefit until age 18. That swayed the actuarily neutral calculations aside and made the math show 62 as best.

In many households one earner had/has substantially higher earnings, while the spouse has no or small earnings. In those cases the spousal benefits will sway the calculations. Others are divorced (after more than 10 years of marriage) and can collect spousal benefits on their ex's data at FRA, giving them more financial resources to grow their own benefit by delaying.

Another factor for those with large #'s in their tax deferred savings (IRA/401k/TSP) is RMDs. It can make sense to spend down the tax deferred a bit before RMDs start - and increase the SS benefit for age 70. SS is taxed at most at 85% - where RMDs are taxed at 100%.... Again - the math has to be calculated on an individual basis.

We, personally, have not decided at what age I'll collect - since it's still 7 years (and 1 month) till I can collect early, and 11 1/2 years till my FRA. A lot will depend on how our portfolio is doing, inflation rates, etc.... We'll relook at things when I'm closer to age 62.

[Sue J]

I will be 62 in 6 months. My plan is to not take SS until I start Medicare at 65 because 16% of my SS would be lost to increased Obamacare premiums in addition to 15% Federal tax on 85% of my SS benefit. Considering that, I can wait 3 years.

So far, we don't need the money to live month to month.


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[Happyras]

This thread was very timely. But I am reading it after I filed electronically today. I turned 61 and 9 months yesterday. No, we do not need the cash flow. Maybe that is why we decided to take it now. Who knows when we will pass, but a few more cruises/year in Suite class is nice without having to liquidate our investments.

Our sub-s business is showing a large net profit (retained earnings) increasing every year that we have to pay tax on. SS is covering part of that liability without taking IRA $$ out at 33% marginal rate, only 85% will be taxed effectively a 28% rate. I also took my first pension early at age 55, but kept working. I am now taking my second pension at 61.75 with no regrets for the reduction in payments. I am holding on my one small pension to 65, as it is small enough at age 65. My wife is doing the same in one year, but she retired 10 years ago.

I have a very complicated and involved spread sheet with a tab for SS benefit cash flows adjusted for an anticipated ROI. Breakpoint is around 4.5% total return adjusted for inflation. At age 95 the difference in accum cash flow is 7.5%, not much of a reward for a lot of risk to dying sooner.

My DW won't look at my calculations, I still am an engineer, and she is a doctor, but we are both retired. The motivation beyond the ROI is really the uncertainty that we would collect either due to passing, or reduced benefits due to NW or income from other sources in the future.

On the other side of this my sister in-law and her husband both took it at 62, but they had no other income to live on, and he is in the hospital a lot more than most. So there are two extremes both leading to the same choice.

[W2R]

(1) Statistics tell us that women often do live longer than men. Yet we are thrown into the same heap and the actuarial data is obtained from that. So, right from the get-go, women may be better off waiting and men may be better off not waiting. I am female.

(2) My mother lived to a week or so short of 98, and we have several in the family who lived to over 100.

(3) If I started divorced spousal SS at 66 (FRA), my own SS could continue to grow until age 70 while I collected divorced spousal SS. This may not be true any more, but it was for me.

(4) Most importantly, for me SS is old age insurance.
It will provide reliable, COLA'd income direct deposited to my checking account like clockwork every month. No need to rebalance or to be concerned about the market. None of us last forever.

As we grow older and move into the dependence of extreme old age, the lowering of risk becomes way more important than the enhancement of yield IMO.

[brewer12345]

DW and I are 19 years out from the earliest collection date. It has been interesting reading all of this, but I cannot help but suspect that I will get the usual "Boomer shaft" when it comes to SS. I now understand the big picture of the rules as they are now, but whether they will remain so for me is a matter for the yarrow sticks and the I Ching. Complicating matters for us is the fact that I have a small pension that I can tap as early as age 50 but which I can use 401k funds to buy additional pension credits whenever I like once I am on payout. I will probably be tempted to hire a pension actuary to figure out the optimal choices when the time comes.

[SteveNU]

I'm 4 years older than DW and have a non cola pension with 100% survivors benefit. My SS at 62 along with my pension will cover our expenses. We are pulling from our savings now to bridge the gap before I can start drawing SS.

When DW turns 62 she can take her SS spousal benefit and we will use that and our investments for fun money. We will just let our savings grow and it will be there for any LTC needs we may have or if not then the kids will get a nice chunk of change when we are gone!

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[jollystomper]

In my situation the decision is simple. If I need the money at 62, I'll take it. If not, I'll delay it until I need the money.

Based on our planned retirement spending Our withdrawals to supplement my pension can taken from cash, without having to touch investments, through the year I turn 63. This is the earlier I would consider taking SS. Based on what our portfolio looks like then will determine if I start taking SS to reduce the amount of the withdrawals. If it looks like they are not needed I will delay. I consider myself VERY fortunate to have a pension that helps give me this flexibility.

Since I made much more than DW over the years, the delay would also be to maximize her spousal benefit. That is what my dad did, he delayed SS until 70 so maximize the spousal benefit for my mom. He died at 72 but mom (who was 6 years younger) lived until 86, so it definitely helped her.

[bclover]

Quote:

Originally Posted by Forced to Retire 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?

Nope,
First the person who thought I should wait until I was as close to 70 as possible was me.

Next, as a general rule I don't stress to much about what the government is going to do or not do 5-10 years down the road . but I do find it interesting that you say you don't trust the government yet use government math to make a case??
Anyhoo, as of right now waiting does increase my benefits about 8% so since I don't need the money, I'll take the increase. Now as long as I don't remarry before 60 I believe, I can collect my old guys benefits and let mine sit until I'm 70.

It really is that simple

[devans0]

I and SO are planning on taking SS at 70.

Longevity and good health runs in both our families.
We are TIRA rich and it will take that long to convert to a Roth IRA ladder and still hold taxes down.
If we did take SS now, we would be giving up much in excess taxes anyway.
We have enough to do quite well until 70.5, and by drawing on taxable 4% SWR returns only.
Healthcare price index is high, and it is a cheap longevity insurance.
SS is always available to draw if early sequence of returns losses. It is catastrophic market loss insurance.
We both have non-COLA pensions. Value will erode over time. SS is COLA insurance too.

Our daughter's SO may well need Roth inheritances for health expenses. We would like to buffer health expenses, so those won't leave grandchildren growing up destitute without education and a good start.

We grew up thinking generationally, not solely focused on our lifetime.

[Chuckanut]

Quote:

Originally Posted by Forced to Retire What do you think?

I think most people are capable of making a judgement on when SS is collected that is best for themselves. We can offer our stories and tell others why we did it this way or that way, and let them make up their own minds.

[OrcasIslandBound]

My DW and I have pretty much decided to take one SS at 62 and the other at 70. The first at 62 (hers) because we want the money (and she doesn't think she'll live that long) and mine at 70 because one of us might actually live a long long time. SS is not vulnerable to market fluctuations like stocks and bonds are. It is a great diversifying asset. The larger SS is preserved if one spouse dies, so it's a good insurance.

I don't buy the hoopla about the US running out of money. Nonsense.


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[Chuckanut]

Quote:

Originally Posted by samclem 2) It's not about choosing a claiming strategy that results in the highest expected number of dollars. It's about choosing the claiming strategy that results in the best overall "utility".

+1

Exactly. SS is one part of how we fund our retirement. Most of us want to be able to enjoy our retirement and not have to worry that some unfortunate event will cause us to drastically reduce our standard of living. If claiming SS at 70 helps to assure a person that their financial future is more secure, then that person can spend more in the earlier years of retirement. If claiming at 62 allows one to allow one's investments to grow to a sizeable sum and thus help insure a better retirement and allowing one to spend as one wishes, then that is the thing to do.

The idea that one's plans for SS have to conform to another person's goals and beliefs is foolish.

[samclem]

Quote:

Originally Posted by Chuckanut If claiming at 62 allows one to allow one's investments to grow to a sizeable sum and thus help insure a better retirement and allowing one to spend as one wishes, then that is the thing to do.

Yes. If I were in the OP's shoes, I think I would probably try to delay SS to get the larger checks (inflation adjusted, for life). But, even saying that, I would stop short of spending down all of my savings to get there. Having $50K or so available in a lump can be a handy thing and can have very high utility in its own right--to move to a new residence, to make a downpayment, to handle a medical emergency, to buy a car or make home repairs without needing to save up the money from monthly cash flow, etc.

[2017ish]

As is clear from above, it is an individual, fact-intensive choice, and married couples are a different kettle of fish than singles.

For us, I'm still, extremely conservatively, estimating "$0" for expected Social, just as I have since the mid-1980s. If the laws don't change, DW is our primary wage earner and will nearly max the SS numbers even though retiring 31 years after graduating. Given that her grandparents all hit 90+, that her parents are quite physically active on the far side of 85, that she has run 5K+ 3-5 days a week since age 30, is presently 5 pounds heavier than before the first of our 3 kids, has never smoked, and has an M.D., it is pretty safe to plan that she'll live past 80.

Thus, she will claim at 70 if we remain eligible. As for me, I don't yet know. We'll see what the laws are in a few years.

[mathjak107]

we are holding out to 70 . we want to have as small a dependency on markets ,rates and sequence risk as we can get on our outcomes .

we will go from a 3.50% draw now to 2% once ss kicks in .

we can also spend a bit more now while delaying since ss has zero sequence risk and no money on that portion has to be held in reserve for poor sequences .

our budget is bigger now by delaying until later .

[misanman]

DW claimed at 62 and I picked up the spousal benefit at 66. Then I switched to my full benefit at 70 and she switched to a spousal benefit on my record. (I realize that this approach is now restricted).

We have a substantial TIRA so have been trying to spend it down while delaying SS. I have looked at it as purchasing an annuity at attractive rates. Also wanted to "shift" income to SS because of it's tax advantages.

Also doing Roth conversions as we are able.

Not sure how well this has worked since TIRA balance has "balooned" and RMDs will still be an issue. I guess at least it's been minimized to some extent.

My SS benefit is $3450/mo and DW's is $906.

I guess I'm happy with how this worked out but only time will tell if it was the optimal solution.