MOST middle class folks who plan to retire early need to take SS at 62

[LRDave]

The only guaranteed result I can see for sure is that every day that I am not retired early is one more day that I did not get in early retirement.


I'm sort of planning to wait until 70 but I will revisit my assumptions every year (as I am sure everyone will). I am more-and-more thinking I will err on the side of loosening up the purse strings in the 60-67 years. I think the "cat food at 100" argument is specious, but hey that's just me perhaps........

 

[gerntz]

The typical person's health goes down hill in their late 60s.

While true, it's also true for anyone over 30, & what happens in late-60's is unique for each of us.

But since you firmly believe the late-60's will result in significant negative health impacts to you, not sure why you're here asking questions rather than acting on this belief.

 

[Fedup]

We need a definition of health goes downhill. Is that mean you are popping pills? What does it exactly mean?

 

[mountainsoft]

Statistically, "most" people DO start collecting social security before their full retirement age:

https://www.fool.com/retirement/gen...the-average-american-start-collecting-so.aspx

My wife and I are both planning to collect ours at 62. We plan to retire when she is 55 (me 60). For the first few years we'll live off her pension and withdrawals from my IRA. As we each reach 62, we will collect SS and cut back on our IRA withdrawals.

We'll be hitting my IRA hard the first seven years, between 15% and 25% withdrawal rates. Once our SS kicks in, the IRA withdrawal rate will basically drop to zero, other than the Required Minimum Distributions when I reach 70.5.

I've run the numbers and delaying SS even a year or two would put my IRA balance dangerously low. We really only need my IRA for the first seven years, but unknowns happen so I want to make sure there's a decent balance in the IRA if something goes amiss.

That said, I'm only estimating a 5% return on my IRA. If it performs better over the next six years we'll have a larger balance that may allow us to delay SS for a year or two. If not, we'll start SS at 62.

 

[RunningBum]

... I think the "cat food at 100" argument is specious, but hey that's just me perhaps........

How about being able to crank the heat up to warm your thin blood, and be able to pay people to do things for you that you can no longer do yourself? Not to mention being able to live in a safe and secure place.

 

[Chuckanut]

Sorry to rain on your parade but less than 1/2 of 1% of Americans live to be 100. 5% WR at 62 will be fine for a large majority of people. Nothing wrong with planning to live to 100, just know that you will likely leave a massive pile of money for someone else to spend.

A recent column in the WSJ made your point. The column was encouraging retired people to spend more. One reason was that very few of us would live into our 90's much less reach 100.

People don’t judge their lifespans very well—a miscalculation that can leave them once again underspending in retirement.


According to data from the Social Security Administration, a man reaching age 65 today can expect to live, on average, until age 84.3. A woman turning age 65 today can expect to live, on average, until age 86.6. About one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95.


A study of people’s beliefs reveals, however, that while young people underestimate their longevity, older people overestimate it. For instance, 68-year-old men have a 71% chance of living to 78 but believe, on average, that they have an 82% chance of reaching that age. Such overestimation means that people also overestimate how much money they will need in retirement—and underestimate how much they can spend.

 

[RunningBum]

A recent column in the WSJ made your point. The column was encouraging retired people to spend more. One reason was that very few of us would live into our 90's much less reach 100.

I don't think it makes the point for taking SS early though.

I'm going to spend money the same whether I take SS at 62, 70, or somewhere in between.

If I die at my break even age, it's totally a wash, by definition. I've broken even. If I die earlier, I gamed the system better by taking SS early, and left more to my heirs, but really, whether I took SS at 62 or 70, I had enough to live on as planned, which is what's most important to me.

But if I died past my break even age, I'll probably* have more money by deferring taking SS at 70. Note that I didn't work any longer, or spend any less, but rather I simply waited until 70 to take SS, and now I've covered that small chance of living into my 90s or 100s better.

*I say probably, because reductions to SS benefits could be coming, and if they are unfair to those who have deferred, it clearly throws off the balance (in favor of those who grabbed it right away). Also, I might have made more by leaving more money to invest when I took SS early, especially if I time it to start taking SS after a downturn, with more to invest in the bounce back.

Real life story, my dad retired at 62, and I'm pretty certain he started SS right away. He'll be 83 this month, and is looking at his IRA balance and starting to think about how many more years they can stay in the nice community they live in before it runs out. They can't live there on SS alone. Had he waited on SS, he's now at about the break even point (or at least getting close to it) so the IRA balance would be about the same, but those larger SS checks would cover a greater % of their expenses, and his outlook for not outliving his money would be brighter.

 

[dvalley]

The OP makes a good point. I came to the same conclusion for myself when I did my own research. Hopefully I'll have at least $1M + when I retire but most likely I'll also take SS at 62 for multiple reasons. Regardless, what's with calling him a troll just because his opinion differs from your's...I guess we've all been trolls from that point of view then. What's the saying? when you point a finger at someone the other three are pointing back?

 

[Blue Collar Guy]

If you are middle class, have less than a million in investments, and plan to retire before you are 63, it is necessary for you to start collecting Social Security at age 62. Here is why:

If you retire at age 62 and don't have a regular paycheck anymore, to continue your middle-class lifestyle between ages 62 and 67 (the regular SS age), you should limit your annual withdrawals to 4-5%. Unless you have a million dollars or more, or a pension, you can't live that middle-class lifestyle until your Social Security checks come in.

Here is my real life example:

Assets $600K in my 401k, IRA and taxable accounts total.

I have no other income such as a pension, annuity, real estate or other money making products.

A 4% withdrawal of that is $24K a year or $2000 a month. (Not enough to continue my middle-class lifestyle and pay the bills.)

But if I collected Social Security at age 62, I would get another $1500 a month in income which would give me $3500 a month. Enough for my middle-class lifestyle and pay my bills.

If I stop working at age 62, there is no other option than collecting SS early.

my theory is take it as soon as possible .ill never get back the $226,000 me and my employer paid in

 

[RunningBum]

The OP makes a good point. I came to the same conclusion for myself when I did my own research. Hopefully I'll have at least $1M + when I retire but most likely I'll also take SS at 62 for multiple reasons. Regardless, what's with calling him a troll just because his opinion differs from your's...I guess we've all been trolls from that point of view then. What's the saying? when you point a finger at someone the other three are pointing back?

He didn't present it as an opinion, he said there is only one option.

 

[braumeister]

The OP is also long gone from here.

 

[dvalley]

He didn't present it as an opinion, he said there is only one option.

I saw that too but sometimes people have a tendency to do that when they're are sure about something but would like to see what others have to say about it. Still no reason to attack people just present your counter-argument and stay on topic or don't post (not saying it to you in particular, just others that had nothing to add to the topic). May be I'm getting old and see these things are childish but I know some people enjoy stirring things up then sit back and watch the drama unfold.

 

[braumeister]

I know some people enjoy stirring things up then sit back and watch the drama unfold.

Isn't that pretty much the definition of a troll?

 

[RunningBum]

The OP is also long gone from here.

Ah, hadn't noticed that he had "gone traveling". I may have had 3 fingers pointing back, but the one sticking out was in the right direction!

 

[dvalley]

Isn't that pretty much the definition of a troll?

It is, but it wasn't the OP who created the drama. He posted something specific to what is usually discussed here. Then someone chimed in calling him a troll, then more dogpiled on that. Even though several respectable members offered good arguments and viewpoints that I was enjoying reading like pubuski, Haha, Imoldernu et al but folks with too much time on their hands just kept on with the useless attacking. This is becoming more and more common around here by certain specific people, they are the trolls in my opinion.

 

[REWahoo]

It is, but it wasn't the OP who created the drama. He posted something specific to what is usually discussed here. Then someone chimed in calling him a troll, then more dogpiled on that. Even though several respectable members offered good arguments and viewpoints that I was enjoying reading like pubuski, Haha, Imoldernu et al but folks with too much time on their hands just kept on with the useless attacking. This is becoming more and more common around here by certain specific people, they are the trolls in my opinion.

I have to disagree with you on this. The OP is/was the source of the problem.

Although I didn't participate on this thread, I've been watching it with interest. The "gone traveling" OP's first post on the forum did seem both odd as to subject matter plus familiar to me and obviously to others as well. RunningBum nailed it when he identified the OP as a previously banned member here: http://www.early-retirement.org/for...d-to-take-ss-at-62-a-86730-2.html#post1879873.

Drama or not, once banned for trolling there is no means of re-entry.

 

[dvalley]

I have to disagree with you on this. The OP is/was the source of the problem.

OK, may be I missed it then, what problem did he create?

 

[REWahoo]

OK, may be I missed it then, what problem did he create?

Looks like he was banned (probably for trolling?) last year. See the linked thread above and maybe reading it will shed some light - or not, depending on how many of his posts the mods deleted.

 

[dvalley]

Looks like he was banned (probably for trolling?) last year. See the linked thread above and maybe reading it will shed some light - or not, depending on how many of his posts the mods deleted.

I saw a healthy discussion of the pros/cons in both threads. Anyway, I'm done here, just don't enjoy seeing people making things personal and attacking the posters- enjoy your afternoon

 

[RunningBum]

OK, may be I missed it then, what problem did he create?

IMO, presenting misleading information, specifically, stating that there is only one option. There is nothing to be gained by someone coming on here with a tone of expertise and declaring that their way is the only way.

That wouldn't have gotten him banned. I don't think speculating on the reasons is permitted here, but if you look at the OP of the other thread I looked at, you'll see that the person created a lot of drama with fabricated stories. Again, that serves no good purpose.

 

[REWahoo]

I saw a healthy discussion of the pros/cons in both threads.

What we see is what remains after the mods sent in the clean-up crew to decontaminate the thread. The posts that got the OP (in his first incarnation) banned were almost certainly deleted.

You have a nice day, too.

 

[haha]

Isn't that pretty much the definition of a troll?

++++

 

[frankbrenowitz]

OK, may be I missed it then, what problem did he create?

Early SS, aka Forced to Retire, spontaneously appeared on this forum last year with a very convincing tale of financial woe that garnered hundreds of compassionate, well reasoned and thoughtful responses, all of which he steadfastly resisted. It was eventually discovered that he had used this same story on another website with similar effect. About this time, all of his problems vanished as a wealthy aunt, whose money he and his brother had often dreamed about, passed away, leaving him a million dollars. Now, with a perpetual smile on his face and a spring in his step (his words, not mine) he announced he was 'gone travelin'. That's the problem he created. And If calling out a new incarnation of a previously banned poster is considered a personal attack and piling on, then guilty as charged.

 

[Fedup]

Somebody who doesn't do early retirement well. They are bored.

 

[RunningBum]

Early SS, aka Forced to Retire, spontaneously appeared on this forum last year with a very convincing tale of financial woe that garnered hundreds of compassionate, well reasoned and thoughtful responses, all of which he steadfastly resisted. It was eventually discovered that he had used this same story on another website with similar effect. About this time, all of his problems vanished as a wealthy aunt, whose money he and his brother had often dreamed about, passed away, leaving him a million dollars. Now, with a perpetual smile on his face and a spring in his step (his words, not mine) he announced he was 'gone travelin'. That's the problem he created. And If calling out a new incarnation of a previously banned poster is considered a personal attack and piling on, then guilty as charged.

As I understand it, "gone travelin'" means he's been banned.