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Newly retired and need SS advice
Old 01-14-2013, 12:33 PM   #1
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Newly retired and need SS advice

Hello to all,

I am currently retired and collecting a teacher's state retirement pension with an unlimited cola. My current pension is adequate but I am tempted to dip into savings to finance travel and trips abroad. As I am rapidly approaching my sixty-second birthday, I am faced with the decision on when to start my social security benefits. I realize that most of the financial experts recommend waiting until 66 or 70, but the additional benefits would allow me the luxury to enjoy a fuller retirement without the need to work. The possibility of me doing full time work that would put me over the social security income penalty is remote. In addition, I could let my modest 403b savings accumulate without the temptation to draw them down if I apply at 62. Also, if I were to die early, more money would be available for my three children. Health Insurance is not an issue because I am covered until I reach Medicare eligibility age. Since this is such an important decision, any ideas would be greatly appreciated. Thank you.
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Old 01-14-2013, 02:02 PM   #2
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Hello to all,

In addition, I could let my modest 403b savings accumulate without the temptation to draw them down if I apply at 62. Also, if I were to die early, more money would be available for my three children. Health Insurance is not an issue because I am covered until I reach Medicare eligibility age. Since this is such an important decision, any ideas would be greatly appreciated. Thank you.
It's nice that you are thinking of your children.......but I'd argue that you've been doing that for a long time already and you should put yourself first when it comes you your retirement money. Deferring SS until 66 or 70 is the thing to do if you have sufficient pension, 403b and other taxable money to support your lifestyle. The SS will grow predictably and spending down the 403b will reduce the size of your RMDs and tax bill past 70.5. Also having a larger COLA'ed income later in life will be good.
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Old 01-14-2013, 02:09 PM   #3
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Originally Posted by johnrlawjr View Post
Hello to all,

I am currently retired and collecting a teacher's state retirement pension with an unlimited cola. My current pension is adequate but I am tempted to dip into savings to finance travel and trips abroad. As I am rapidly approaching my sixty-second birthday, I am faced with the decision on when to start my social security benefits. I realize that most of the financial experts recommend waiting until 66 or 70, but the additional benefits would allow me the luxury to enjoy a fuller retirement without the need to work. The possibility of me doing full time work that would put me over the social security income penalty is remote. In addition, I could let my modest 403b savings accumulate without the temptation to draw them down if I apply at 62. Also, if I were to die early, more money would be available for my three children. Health Insurance is not an issue because I am covered until I reach Medicare eligibility age. Since this is such an important decision, any ideas would be greatly appreciated. Thank you.
Hello, John...

I found myself in the position of NOT needing the SS money to meet my expenses. I don't expect to need the SS money to meet my expenses after I'm 70, either. It sounds like you are in a similar position. If so...

I decided to take my SS money now for a few reasons.

First, once I've got it, it's mine and I've taken "government risk" off the table for that money.

Second, since I don't have to spend it, I'm happier adding that money to my reserves than having it hanging in the air. I would also be happy spending it to increase my enjoyment of life now, than having it out there hanging in the air.

Third, in my case anyway, it would have taken 10 years of payment increases after age 70 to come up even with the cummulative amount I will have taken by age 70 taking reduced benefits now. For me, it was a slam-dunk to take the money now... and run.

Alex in Virginia
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Old 01-14-2013, 02:37 PM   #4
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Hello, John...

I found myself in the position of NOT needing the SS money to meet my expenses. I don't expect to need the SS money to meet my expenses after I'm 70, either. It sounds like you are in a similar position. If so...

I decided to take my SS money now for a few reasons.

First, once I've got it, it's mine and I've taken "government risk" off the table for that money.

Second, since I don't have to spend it, I'm happier adding that money to my reserves than having it hanging in the air. I would also be happy spending it to increase my enjoyment of life now, than having it out there hanging in the air.

Third, in my case anyway, it would have taken 10 years of payment increases after age 70 to come up even with the cummulative amount I will have taken by age 70 taking reduced benefits now. For me, it was a slam-dunk to take the money now... and run.

Alex in Virginia
Thanks for the prompt reply. So 80 years is about the break even point if I take the money early?
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Old 01-14-2013, 02:38 PM   #5
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The ideal strategy depends on a number of factors:
1) life expectancy- how long did your father and grandfather live? The longer you expect to live the better off you are delaying benefits.
2) married or single- if your benefit is greater, she would get your benefit for the rest of her life if you predeceased her. Also, you could consider collecting a spousal benefit for awhile while your own benefit accumulates and then switch at 70 (you must be full retirement age for this strategy). If you are not married, of course these issues don't apply.
3) current level of need for income

Also, if you can manage without the benefit for awhile, less of your retirement income would be subject to income taxes, since Social Security isn't 100% taxable.

Personally, I wouldn't worry much about "government risk" at your age. You are not a target for benefit reduction; it's the the younger population (under 50) that should make adjustments in their retirement planning.
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Old 01-14-2013, 02:45 PM   #6
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Welcome to the site

The most recent thread discussing when to take SS was started a couple of weeks ago, and you may like to browse through some of the posts.

Taking Social Security early vs. not
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Old 01-14-2013, 02:47 PM   #7
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Old 01-14-2013, 02:52 PM   #8
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No advice...just what we did. We were already retired for nearly 10 years, and the healthcare expenses were getting pretty high. We took SS at 62 and never looked back. Taxwise, it worked out fine, and we'd do it again.

Of course we never expected to live as long as we have, either.
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Old 01-14-2013, 03:27 PM   #9
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Old 01-14-2013, 08:50 PM   #10
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William Bernstein states that if you do not have a pension, you should buy one. And the cheapest one to buy is delaying the start of SS.

I've put my feelings about this in many posts; I am convinced, I did it and waited until 70. People give a million reasons why some other idea is better, and these arguments never make any sense to me other than the argument that boils down to "you can't trust the government". But one thing I have learned, it is pointless to debate this stuff, everybody has his/her own pet idea, as starting at age 70 is mine.

But OP did ask, and I see it as my duty to state what I think is best.

Ha
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Old 01-14-2013, 09:27 PM   #11
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My preference - take it asap. Bird in the hand....

Also, keep in mind that **generally** the younger years of your retirement will be the more active years. Spend while young. Go, enjoy and if it takes collecting the ss to do that, enjoy your retirement = you worked for it.


as in all things, ymmv and free advice is worth every penny.
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Old 01-14-2013, 09:46 PM   #12
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John,

DH and i are taking the path which you are considering. Both have teacher pensions and withdrawing from 403b almost exclusively for travel. Have not been abroad since retirement, but that is in the plans.

We are relative newbies to retirement, and we may be doing stupid, but it makes sense to us now. Travel, and finance the travel, while we feel like actually travelling. We are 57 and 59yo.

We plan to start taking SS after age 62, but it certainly won't be too far past 62. We want to keep enough in 403b for car replacements, new roof, etc.
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Old 01-14-2013, 11:01 PM   #13
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oh, yes... Agree. Michele and I retired 12/2009. Since then, several trips to Europe (to see daughter & g/kids) - while there.... took western Med Cruise (out of Barcelona); 10 days in the Holy Land; Side trip to the Low Countries. Also took trips to Yellowstone, Grand Canyon, all the way to Key West, spend a month a couple of winters ago in AZ [these in our little trailer], took a cruise to the western Caribbean. And we are standby for a 28 day cruise out of San Diego to Hawaii and French Polynesia. We both say - go while you can. We will both be 59 this spring.
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Old 01-15-2013, 03:52 PM   #14
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I'm 65 and my wife is 64, we're waiting.

I don't know how long we'll live, but I figure we'll want more money (in total) if we live a long time than if we die early. SS matches that unknown need.

For single retirees who don't "need" their SS benfit, there really isn't a "wrong" choice because the early/late retirement adjustments are roughly actuarially correct.
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Old 01-15-2013, 03:56 PM   #15
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Originally Posted by Alex in Virginia View Post
Hello, John...

I found myself in the position of NOT needing the SS money to meet my expenses. I don't expect to need the SS money to meet my expenses after I'm 70, either. It sounds like you are in a similar position. If so...

I decided to take my SS money now for a few reasons.

First, once I've got it, it's mine and I've taken "government risk" off the table for that money.

Second, since I don't have to spend it, I'm happier adding that money to my reserves than having it hanging in the air. I would also be happy spending it to increase my enjoyment of life now, than having it out there hanging in the air.

Third, in my case anyway, it would have taken 10 years of payment increases after age 70 to come up even with the cummulative amount I will have taken by age 70 taking reduced benefits now. For me, it was a slam-dunk to take the money now... and run.

Alex in Virginia
I was in precisely the same position as John and I made the same decision as Alex did for pretty much the same reasons. The only thing that makes me regret the decision occasionally is this: assuming I predecease my wife (and the actuaries say I probably will), she will get a lower SS Survivor benefit than if I had waited until 66 (I'm 67 now) or if I had waited until 70 (an age I hope to reach.)

My wife will be well provided for; she just would be better provided for if I had waited.
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Old 01-15-2013, 06:37 PM   #16
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I don't have much advice re: SS, just wanted to wish you a warm welcome to the board.
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Old 01-15-2013, 08:10 PM   #17
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Thanks for all the kind replies.
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Old 01-15-2013, 11:08 PM   #18
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Wait a while and size things up. Your annual SSI will increase about 8% per year from age 62. If you are doing less return than that in your investments you should defer another year, and so on. Kudos to you! Joe
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Old 01-16-2013, 06:07 AM   #19
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Actually there have been a few discussions around here on this topic. The SS check is supposed to be actuarially fair. Some recipients will prefer to have one bird in the hand.

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Originally Posted by heeyy_joe
Wait a while and size things up. Your annual SSI will increase about 8% per year from age 62. If you are doing less return than that in your investments you should defer another year, and so on. Kudos to you! Joe
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Old 01-16-2013, 12:50 PM   #20
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Originally Posted by johnrlawjr View Post
Hello to all,

I am currently retired and collecting a teacher's state retirement pension with an unlimited cola. My current pension is adequate but I am tempted to dip into savings to finance travel and trips abroad. As I am rapidly approaching my sixty-second birthday, I am faced with the decision on when to start my social security benefits. I realize that most of the financial experts recommend waiting until 66 or 70, but the additional benefits would allow me the luxury to enjoy a fuller retirement without the need to work. The possibility of me doing full time work that would put me over the social security income penalty is remote. In addition, I could let my modest 403b savings accumulate without the temptation to draw them down if I apply at 62. Also, if I were to die early, more money would be available for my three children. Health Insurance is not an issue because I am covered until I reach Medicare eligibility age. Since this is such an important decision, any ideas would be greatly appreciated. Thank you.
sounds like you dont have a large porfolio and you want to leave something to your children. those 2 "facts" may make taking SS ASAP a better choice for you. the benefit to delaying SS is for those who want/need more longevity insurance, want to spend as much as they safely can after age 62 and who dont really care to leave an estate. to increase your allowable spending by delaying SS to age 70, you need a portfolio large enough to cover that increased spending between the years of 62 - 70.

now, my analysis may not fit your sitiation but it is the best i can do without more info on your financial and personal situation (i.e. with the info you provided)
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