Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
New Social Security study on claiming it too early
Old 06-28-2019, 02:39 PM   #1
Thinks s/he gets paid by the post
 
Join Date: May 2008
Posts: 4,119
New Social Security study on claiming it too early

So a "money management firm" for retirees generated a report finding that retirees missed out on additional money by taking it too early:

Quote:
The report is based on about 2,000 households that participated in a long-running University of Michigan study. To calculate ideal filing years, United Income estimated retirees’ spending and longevity and ran about 500,000 possible scenarios for each participant, including various market conditions, for a total of about 1.1 billion simulations.

Only 4% of U.S. retirees are waiting until age 70 to claim Social Security; some 57% should be doing so, the report calculated. Meanwhile, more than 70% start taking checks before turning 64, a time when—ideally—only 6.5% of retirees should be cashing checks. The lost income from these less-than-optimal decisions amounts to about $111,000 per household, the researchers estimate.

The United Income analysis finds little rhyme or reason in Americans’ claiming decisions. If you’re healthy and expect to live a long time, you should maximize benefits received late in life by delaying. But the report finds that people don’t do this: Those who ended up dying before 75 were just as likely to have claimed early as those who died after 85. (There is a way to claim benefits, then suspend them until later, but it’s kind of complicated.)
https://www.bloomberg.com/news/artic...urce=applenews

No mention of balancing longevity risks or opportunity cost from not claiming earlier, which would require having other financial resources to pay for living expenses before claiming at age 70.

Specifically, how are you suppose to determine the bolded?

But 2000 households took part in a long Univ. of Michigan study!
__________________

explanade is offline   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!

Old 06-28-2019, 02:51 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,014
There are no guarantees of course. If you have no major health issues and longevity runs in the family, those would be my indicators.
__________________

jebmke is offline   Reply With Quote
Old 06-28-2019, 02:54 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: St. Charles
Posts: 1,274
Did you catch this "recommendation". Looks like Big Brother should help.

Quote:
One way to solve the problem of retirees pulling the trigger too early, the researchers say, is legislation.

“Early claiming should be made an exception, and reserved for those who have a demonstrable need to claim benefits before the full retirement age,” the report concludes.
__________________
If your not living on the edge, you're taking up too much space.
Never slow down, never grow old!
CardsFan is offline   Reply With Quote
Old 06-28-2019, 03:02 PM   #4
Thinks s/he gets paid by the post
Red Badger's Avatar
 
Join Date: Jan 2017
Location: Piedmont Region
Posts: 1,593
For some of us, its not about milking the last dime. DW, who is older than me, will file at FRA. I will file early. We want to grab that cash and p!ss away a lot of our portfolio in our go-go years. SS, pensions, and great health care will be enough when were at go-slow, no-go, and sliding closer to the 6 foot ditch. We'd like to leave a little of our egg behind, but its not a priority.
__________________
Never let yesterday use up too much of today.
W. Rogers
Red Badger is offline   Reply With Quote
Old 06-28-2019, 03:08 PM   #5
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 3,487
Quote:
Originally Posted by jebmke View Post
There are no guarantees of course. If you have no major health issues and longevity runs in the family, those would be my indicators.
Also, statistically there are correlations between wealth, educational attainment, and longevity.

In addition to your actual current health, your health practices would come into play. Healthy individual 1 who doesn't go to the doctor, doesn't get preventative screenings, and doesn't eat well won't last as long as healthy individual 2 who goes for annual checkups, gets screenings and vaccines, eats well, exercises, etc. (Of course both individuals if they're healthy at SS claiming age are likely doing a lot right already, or are just lucky gene pool winners.)

I'm single and planning on 70.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is offline   Reply With Quote
Old 06-28-2019, 03:08 PM   #6
Thinks s/he gets paid by the post
 
Join Date: May 2008
Posts: 4,119
Yeah I wonder if that firm is telling their clients to work until 70.

Including those who may be able to retire by taking their SS earlier.
explanade is offline   Reply With Quote
Old 06-28-2019, 03:28 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,014
If you need to take it to make the numbers work, it doesn't make sense to delay. The delay game is for those who can afford to bridge the gap.


We are doing the "optimized" strategy. Spouse will take benefit at FRA (hers is lower than mine) and i will take spousal until 70 then start mine.


If I don't live long enough to make up for the delay, money is the least of my worries at that point.
jebmke is offline   Reply With Quote
Old 06-28-2019, 03:42 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: St. Charles
Posts: 1,274
Quote:
Originally Posted by jebmke View Post
If you need to take it to make the numbers work, it doesn't make sense to delay. The delay game is for those who can afford to bridge the gap.


We are doing the "optimized" strategy. Spouse will take benefit at FRA (hers is lower than mine) and i will take spousal until 70 then start mine.


If I don't live long enough to make up for the delay, money is the least of my worries at that point.
I don't know your ages, but that loophole has closed for anyone born after Jan.1 1954.
__________________
If your not living on the edge, you're taking up too much space.
Never slow down, never grow old!
CardsFan is offline   Reply With Quote
Old 06-28-2019, 04:38 PM   #9
Full time employment: Posting here.
davebarnes's Avatar
 
Join Date: Dec 2015
Location: Berkeley, Denver, CO, USA
Posts: 654
Quote:
Originally Posted by explanade View Post
Specifically, how are you suppose to determine the bolded?
Well, my parents both died at 90.5.
My father was relatively healthy up to 94+. And, he read the Wall Street Journal every day and bought/sold individual stocks up until 95.3 (his 2017 return was better than the S&P).
My mother had dementia beginning at 90. And was relatively healthy.
So, I am planning on 95.
__________________
Dave Barnes
Old (70.7) Fart Nerd
AA 72/22/5, WR=3.6%, 91.6% retired, still working 1/2ish hrs/day
davebarnes is offline   Reply With Quote
Old 06-28-2019, 04:42 PM   #10
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: St. Charles
Posts: 1,274
Quote:
Originally Posted by davebarnes View Post
Well, my parents both died at 90.5.
My father was relatively healthy up to 94+. And, he read the Wall Street Journal every day and bought/sold individual stocks up until 95.3 (his 2017 return was better than the S&P).
My mother had dementia beginning at 90. And was relatively healthy.
So, I am planning on 95.
Typo?
__________________
If your not living on the edge, you're taking up too much space.
Never slow down, never grow old!
CardsFan is offline   Reply With Quote
Old 06-28-2019, 04:56 PM   #11
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,977
There are a few life expectancy calculators that try to include a few important factors. One that has been mentioned on E-R is:

https://livingto100.com/

All you need is an average or better life expectancy to make it reasonable to delay SS. Pretty easy if it wasn't for opportunity cost or some of the other oddball features.
Animorph is offline   Reply With Quote
Old 06-28-2019, 05:07 PM   #12
Thinks s/he gets paid by the post
 
Join Date: Jan 2018
Location: Tampa
Posts: 3,787
No exact correct answer, but at the very least if one delays to 70 as one example, one should at least be able to substitute other monies to live on between 62 and 70 and not cut down on the lifestyle without of course not draining too much of the other investments.

The other popular choice of taking it at 62 for example to help support a higher cost lifestyle in the go go years is a more difficult choice at least for me.
__________________
TGIM
Dtail is offline   Reply With Quote
Old 06-28-2019, 05:24 PM   #13
Recycles dryer sheets
 
Join Date: Aug 2010
Location: Cedar Bluff
Posts: 449
To us, GPO is a game changer. DW will get NO survivor benefits. The way I read this, we are better off with me taking early the preserve to nest egg as much as possible.
__________________
"Time wounds all heels...." - Groucho Marx
LRDave is offline   Reply With Quote
Old 06-28-2019, 06:58 PM   #14
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,014
Quote:
Originally Posted by CardsFan View Post
I don't know your ages, but that loophole has closed for anyone born after Jan.1 1954.
1953. We just made it in under the wire.
jebmke is offline   Reply With Quote
Old 06-28-2019, 07:05 PM   #15
Full time employment: Posting here.
 
Join Date: Jul 2017
Location: Long Island
Posts: 970
Only 4% of U.S. retirees are waiting until age 70 to claim Social Security; some 57% should be doing so, the report calculated. Meanwhile, more than 70% start taking checks before turning 64, a time when—ideally—only 6.5% of retirees should be cashing checks. The lost income from these less-than-optimal decisions amounts to about $111,000 per household, the researchers estimate.

The United Income analysis finds little rhyme or reason in Americans’ claiming decisions. If you’re healthy and expect to live a long time, you should maximize benefits received late in life by delaying. But the report finds that people don’t do this: Those who ended up dying before 75 were just as likely to have claimed early as those who died after 85. (There is a way to claim benefits, then suspend them until later, but it’s kind of complicated.)

This doesn't address the H&W scenario, when it is recommended that the lower earner claim at 62 and the higher at 70.

As the second statement about file and suspend. Why just post "it's complicated." That is not informative - it is lazy.
__________________
Use it up, wear it out, make it do or do without.
MarieIG is offline   Reply With Quote
Old 06-28-2019, 07:07 PM   #16
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: St. Charles
Posts: 1,274
Quote:
Originally Posted by jebmke View Post
1953. We just made it in under the wire.
Good for you. I'm jealous.
__________________
If your not living on the edge, you're taking up too much space.
Never slow down, never grow old!
CardsFan is offline   Reply With Quote
Old 06-28-2019, 07:10 PM   #17
Recycles dryer sheets
FIREchief's Avatar
 
Join Date: Aug 2016
Posts: 132
While "If you’re healthy and expect to live a long time" is kind of silly; the opposite is not. There are unfortunate folks out there with chronic health conditions that are fairly certain that they will not make it to the actuarial break even point for early claiming. If maximizing a survivor benefit is not part of the equation, some of them can easily justify claiming at the earliest age possible.
__________________
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
FIREchief is offline   Reply With Quote
Old 06-28-2019, 07:26 PM   #18
Thinks s/he gets paid by the post
 
Join Date: Mar 2015
Posts: 2,828
Quote:
Originally Posted by jebmke View Post
If you need to take it to make the numbers work, it doesn't make sense to delay. The delay game is for those who can afford to bridge the gap.
Or if you need it, work longer and delay. That way, there will be no gap.

For many, that is the best strategy.
__________________
Old enough to know better.
joeea is offline   Reply With Quote
Old 06-28-2019, 07:26 PM   #19
Recycles dryer sheets
 
Join Date: May 2013
Posts: 253
Asked my oncologist if my "aggressive" Stage 2 cancer* will impact my longevity. She said no. (This seems counter-intuitive to me, but...she's the expert.) I've also had a serious auto-immune disorder since age 40.

DM died at 68 (but she didn't quit smoking until 40). DF died at 74, despite taking excellent care of himself. DM had several relatives who lived into 90's (and her sister is still going at 88).

At what age would you take SS in my shoes? At 61, my current plan is waiting until FRA unless I develop another serious medical issue in the meantime....

*Treatment ended three years ago. Have religiously taken post-treatment meds, work out 5x / week, eat healthy diet and have never smoked.
footenote is offline   Reply With Quote
Old 06-28-2019, 07:33 PM   #20
Thinks s/he gets paid by the post
 
Join Date: Mar 2015
Posts: 2,828
Quote:
Originally Posted by CardsFan View Post
Did you catch this "recommendation". Looks like Big Brother should help.
Did you read the report?

They also say " an easier place to start would be to change how the Social Security Administration frames claiming age options to the public. Instead of portraying age 62 as the “early eligibility age,” for instance, claiming at age 62 could instead be labeled as the “minimum benefit age” while age 70 could be labeled as the “maximum benefit age.”"
__________________

__________________
Old enough to know better.
joeea 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
Agressive SS Claiming Strategies Under Review? DFW_M5 FIRE and Money 19 07-01-2015 03:05 PM
News articles claiming Obamacare enrollee population is too small and mix is too old Mulligan Health and Early Retirement 16 01-16-2014 02:15 PM
Claiming Your Wife's Inheritance After She's Dead Amethyst Other topics 27 08-20-2013 02:05 PM
More on SS claiming strategies walkinwood FIRE and Money 9 08-03-2013 04:00 PM
Why would some get a trust vs. giving away assets and claiming against the lifetime x rec FIRE and Money 15 11-11-2007 03:32 PM

» Quick Links

 
All times are GMT -6. The time now is 10:20 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.