Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Question about taking SS before full retirement age
Old 02-20-2014, 03:22 PM   #1
Thinks s/he gets paid by the post
Ally's Avatar
 
Join Date: Feb 2011
Posts: 1,190
Question about taking SS before full retirement age

My husband finally decided to retire at 62, while I will still work a couple more years. He will have a state funded pension and they also paid into social security at his job, so he will have that in the future. If he did take social security before age 66, I know they reduce it for any amount of earned income over the $14000+ annually. However, if he was to take it at say age 65, then would they look at my earned income to reduce his SS, since we file married? Or would they only look at him and any earned income he has?

Thanks for any help you can give, I tried staying on the line with the SSA, but gee whiz! I can't stay on the line all day.
__________________

__________________
Ally 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 02-20-2014, 03:27 PM   #2
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,136
In this situation SS only looks at the earned income of an individual, not their spouse.
__________________

__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 02-20-2014, 03:59 PM   #3
Thinks s/he gets paid by the post
Ally's Avatar
 
Join Date: Feb 2011
Posts: 1,190
Thanks so much! I don't know that he would want to take it early, because he has some PT things he wants to do to make a little money, but if he got sick or something happened, it's nice to know. He has worked 30 years at a terribly stressful job and seen so many people die early from heart attacks, cancer, etc. I keep telling him that he should retire. So today he went to work and found out that another man younger than him has cancer and isn't expected to live more than 3 months. By 9 am, he had gone and picked up the packet to put things in motion.
__________________
Ally is offline   Reply With Quote
Old 02-20-2014, 06:47 PM   #4
Dryer sheet wannabe
 
Join Date: Feb 2014
Location: Philadelphia
Posts: 16
try www.ssa.gov

this is an excellent site and should address all of your questions concerning social security benefits
__________________
memejipakid is offline   Reply With Quote
Old 02-20-2014, 07:12 PM   #5
Thinks s/he gets paid by the post
Ally's Avatar
 
Join Date: Feb 2011
Posts: 1,190
Thanks so much!
__________________
Ally is offline   Reply With Quote
Old 02-21-2014, 08:39 AM   #6
Confused about dryer sheets
CyberBob's Avatar
 
Join Date: Feb 2014
Posts: 9
I like author William Bernstein's thoughts about taking Social Security early at 62, versus waiting until 70:

Quote:
There are two possible goals with SS: 1) buy the optimal amount of longevity insurance for a given input, or 2) optimize your total amount of SS benefits. Both are valid goals, but let's assume you want to prioritize the former.

The clearest way to think about this is to imagine a pair of 62-year-old twins, both of who are entitled to $3,000 per month at age 70, which, coincidentally, is also their living expenses.

Twin A defers SS to age 70, when he will get $3,000 monthly benefits. He must thus cover 8 years of living expenses to get to age 70, costing $288,000 in real terms ($36,000 x 8). After he pays that liability, he's home free.

Twin B also has $3,000 per month living expenses, but decides to take $1,705 in SS at age 62. Thus, he has a $1,295 per month of shortfall until he dies. To cover this with a joint-survivorship inflation-adjusted fixed annuity costs approximately $438,000.

The difference between the two is $150,000. That's not chopped liver.

I'd even go so far as to recommend that if twin A runs out of money a year or two before 70, he should max out his credit cards to make it there.

Best,

Bill
Bob
__________________
CyberBob is offline   Reply With Quote
Old 02-21-2014, 09:37 AM   #7
Recycles dryer sheets
Jager's Avatar
 
Join Date: Jul 2012
Posts: 103
Quote:
Originally Posted by Ally View Post
I don't know that he would want to take it early, because he has some PT things he wants to do to make a little money, but if he got sick or something happened, it's nice to know.
Be aware that there are some pretty grievous tax consequences to drawing SS while earning extra income between 62 and 66 (or whatever a person's full retirement age is).

I had originally planned on taking SS at age 62. But, like your husband, I expect to make some money in retirement (in my case, from my writing and photography avocations). Because of the tax implications, I'll now be waiting until age 66.
__________________
Jeff
Jager is offline   Reply With Quote
Old 02-21-2014, 02:58 PM   #8
Full time employment: Posting here.
 
Join Date: Mar 2005
Location: Punta Gorda, FL
Posts: 666
Quote:
Originally Posted by CyberBob View Post
I like author William Bernstein's thoughts about taking Social Security early at 62, versus waiting until 70:


Bob
The big problem I have with these assumptions is I don't know how long I'll live. If you die at 75 who comes out ahead? This is if you have enough money to live on either way and don't plan on buying a annuity.

How many years do you have to live to come out ahead. I'm saying if you don't need the money, its just extra. You invest the money starting at 62 and how much would that be worth in 8 years.
__________________
dm is offline   Reply With Quote
Old 02-21-2014, 03:12 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,327
Quote:
Originally Posted by dm View Post
The big problem I have with these assumptions is I don't know how long I'll live. If you die at 75 who comes out ahead? This is if you have enough money to live on either way and don't plan on buying a annuity.

I agree. Also if you want to leave money to your kids, they get more if take SS early and die at 75. You can maximize for longevity insurance or not draining the portfolio, but you can't maximize for everything, and longevity insurance is just one aspect.

If one spouse needs nursing home care at 69, the extra money saved up from taking SS at 62 may come in handy.

Also, I think if anything the future holds higher taxes / less benefits for higher income retirees, so I prefer a take the money and run approach. The only reason I'd delay is because of taxes / part time work income.
__________________
daylatedollarshort is offline   Reply With Quote
Old 02-21-2014, 03:29 PM   #10
Full time employment: Posting here.
 
Join Date: Mar 2005
Location: Punta Gorda, FL
Posts: 666
Here is my quick math, see if this seams correct. $1705 invested monthly with a 5% return comes out to about $200,000 in 8 years.

3000-1705= 1295 or $15540 per year short. 200000/15540= 12.9 yrs.

So assuming the $200,000 keeps up with the cost of living adjustment you will be 82.9yrs old before it makes a difference.

Of coarse the big if is there is any changes to SS in the future. I'm not sure I want to count on us wealthy savers not being means tested in some way.
__________________
dm is offline   Reply With Quote
Old 02-21-2014, 03:31 PM   #11
Full time employment: Posting here.
 
Join Date: Mar 2005
Location: Punta Gorda, FL
Posts: 666
Quote:
Originally Posted by daylatedollarshort View Post
I agree. Also if you want to leave money to your kids, they get more if take SS early and die at 75. You can maximize for longevity insurance or not draining the portfolio, but you can't maximize for everything, and longevity insurance is just one aspect.

If one spouse needs nursing home care at 69, the extra money saved up from taking SS at 62 may come in handy.

Also, I think if anything the future holds higher taxes / less benefits for higher income retirees, so I prefer a take the money and run approach. The only reason I'd delay is because of taxes / part time work income.
Kind of what I'm thinking
__________________
dm is offline   Reply With Quote
Old 02-21-2014, 08:23 PM   #12
Recycles dryer sheets
 
Join Date: Dec 2011
Posts: 388
Quote:
Originally Posted by daylatedollarshort View Post
I agree. Also if you want to leave money to your kids, they get more if take SS early and die at 75. You can maximize for longevity insurance or not draining the portfolio, but you can't maximize for everything, and longevity insurance is just one aspect.

If one spouse needs nursing home care at 69, the extra money saved up from taking SS at 62 may come in handy.

Also, I think if anything the future holds higher taxes / less benefits for higher income retirees, so I prefer a take the money and run approach. The only reason I'd delay is because of taxes / part time work income.
This analysis is incorrect in nearly every respect.

The people, like you, who focus on maximizing the legacy are always excessively concerned with the risk of dying relatively "young" and failing to "break even" on the decision to delay taking SS. But you have ignored the risk of living longer what that would do you to the inheritance you wish to leave. At whatever age you are now the median life span is greater than 75, unless you have some known, serious health risk. The earlier you take SS the less you receive per month and the greater the likelihood that you are living at a monthly deficit which will require funding by depleting your portfolio/future legacy. The problem that delaying SS at least partly solves is the longevity risk, the possibility of outliving your assets. Those who advocate taking SS early should propose an alternative method of funding extreme and expensive very old age. But, like you, they never do. They just assume that they won't have that problem because they will die before then.

Let's consider the second example: one member of the couple goes into a nursing home at age 69, but has been receiving SS benefits from age 69. This couple has not needed to spend all the SS benefits received, some of which has been saved. However, depending on the couple's assets, increasing their cash at the expense of future SS benefits may be a detriment, not an improvement. This would be the case if the couple were to apply for Medicaid to pay the nursing home expenses at some point. Medicaid would consider the liquid assets (i.e. not including the house) to be available to pay the nursing home after setting aside a fixed amount (roughly $110,000) for the benefit of the "community" spouse, i.e. the one not in the nursing home. If, instead of receiving SS early and building up cash asset that Medicaid would take to pay nursing home expenses, the couple had deferred SS until age 70 thereby building up future SS payments rather than cash, the community spouse would get those payments for the rest of his or her lifetime after the nursing home spouse had died. In other words, Medicaid would not get the increased SS benefits.

I find all of the analyses by the advocates of taking SS early to be emotionally based like this one who wants to "take the money and run." Not a good way to do financial planning. If you plan carefully you have to provide for funding life at an advanced age. The take-it-and-run types never do this planning. So if you consider how to pay the bills at age 95 or more, you are very likely (unless you are pretty rich) forced to reach the conclusion that you have to reduce current consumption and save for that eventuality. This reduced consumption will also increase the likelihood of leaving a legacy, but at the expense of spening less from now on. This is why deferring SS until 70 (or buying an annuity) gives a benefit even if you were to drop off unexpectedly early. By deferring SS and increasing your eventual lifelong SS benefits you would reduce (or possibly eliminate) the necessity of reducing your current consumption to save for your advanced old age. That means, to the extent of your higher benefits, you could increase your current spending even though you don't know how long you will live. The take-the-money-and-run types don't acknowledge this benefit because they don't recognize the problem that life annuities like SS solve: funding advanced old age.
__________________
Khufu is offline   Reply With Quote
Old 02-21-2014, 08:41 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Khufu,
I agree with the content of what you wrote. I think it would have been more effective if the tone had been a bit less "us-them." This isn't religion, just people trying to figure out how to maximize their happiness.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 02-21-2014, 08:43 PM   #14
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,136
Quote:
Originally Posted by samclem View Post
Khufu,
I agree with the content of what you wrote. I think it would have been more effective if the tone had been a bit less "us-them." This isn't religion, just people trying to figure out how to maximize their happiness.
+1
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 02-21-2014, 08:51 PM   #15
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
Quote:
Originally Posted by dm View Post
The big problem I have with these assumptions is I don't know how long I'll live. If you die at 75 who comes out ahead? This is if you have enough money to live on either way and don't plan on buying a annuity.

How many years do you have to live to come out ahead. I'm saying if you don't need the money, its just extra. You invest the money starting at 62 and how much would that be worth in 8 years.
Quote:
Originally Posted by dm View Post
Here is my quick math, see if this seams correct. $1705 invested monthly with a 5% return comes out to about $200,000 in 8 years.

3000-1705= 1295 or $15540 per year short. 200000/15540= 12.9 yrs.

So assuming the $200,000 keeps up with the cost of living adjustment you will be 82.9yrs old before it makes a difference.

Of coarse the big if is there is any changes to SS in the future. I'm not sure I want to count on us wealthy savers not being means tested in some way.
The bold sections are important.

IF I have enough money that SS just increases my estate, then it really doesn't matter. I don't know how long I'll live, I don't know what future investment returns will be. I can flip a coin for all it matters. My heirs will be happy to get the money. (If I'm in this position, I might have more fun sending them my SS benefit every month while I'm alive, when they are young enough to use the money.)

I'm guessing that the couple in the OP is not in this position.

Regarding the 5%, remember that needs to be 5% plus the CPI, because SS benefits are CPI indexed.
__________________
Independent is offline   Reply With Quote
Old 02-21-2014, 08:56 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,327
Quote:
Originally Posted by Khufu View Post
I find all of the analyses by the advocates of taking SS early to be emotionally based like this one who wants to "take the money and run." Not a good way to do financial planning.
You might try thinking a bit outside the box beyond your own financial situation. Maybe being a little more polite and tolerant of ideas different than your own might be something to consider as well.

Does it matter when Bill Gates takes his Social Security? If he takes it at 62 would that be poor financial planning on his part?

Does it matter when a widow with a low income and no savings takes Social Security? Do Bill and the widow have the same goals, needs and financial planning criteria?

Most of us here are going to fall somewhere on the continuum between Bill and the low income widow, with varying SS and longevity insurance needs.

Do you think everyone here needs Social Security benefits to cover basic living expenses in retirement? Maybe I'll have low retirement expenses, happily living off grid in a yurt with solar power and a compostable toilet. Or maybe we'll build an earth ship -

http://southcoastenergychallenge.org...stainable-home

live off grid and and grow our own food.
__________________
daylatedollarshort is offline   Reply With Quote
Question about taking SS before full retirement age
Old 02-21-2014, 10:18 PM   #17
Thinks s/he gets paid by the post
Ally's Avatar
 
Join Date: Feb 2011
Posts: 1,190
Question about taking SS before full retirement age

Lots of interesting ideas, thank you. I don't believe we have to have the early SS, because with his pension and my salary, we should be fine, unless something unforeseen happens. We should be able to continue to save at the same rate, but we will need to check out some things we can cut to be able to do so. Haha, dry cleaning and buying nice clothes for work is one thing we can cut! Oh, yes, forgot to mention that our two children are doing way better financially that we did. I bet they each earn over twice as much as we do and they both live modestly.
__________________
Ally is offline   Reply With Quote
Old 02-22-2014, 06:05 AM   #18
Recycles dryer sheets
 
Join Date: Apr 2013
Location: Beach and Mountain
Posts: 244
Quite a common topic: "Take SS early?" Answer is always dependent on facts and circumstances, individual discipline and risk. Method that requires least discipline and assumes least risk is to take SS as late as possible.
__________________
Z3Dreamer is offline   Reply With Quote
Old 02-22-2014, 07:31 AM   #19
Recycles dryer sheets
 
Join Date: Dec 2012
Posts: 225
Interesting thread: My variables would hinge on the following.
1. Means testing by the political leaders. This is a crap shoot.
2. Taxation results of getting max SS at 70 and also receiving RMD simultaneously. I suppose you could remedy this by drawing down IRAs prior to 70.5 or ROTH conversions.
3. Longevity based on familial history.
4. Spousal survivor SS benefits.

All of these are different for everybody, so you have to do the math. I'm leaning toward waiting until I'm 70 for spousal survivor benefits.
__________________
davismills is offline   Reply With Quote
Old 02-22-2014, 08:18 AM   #20
Thinks s/he gets paid by the post
OAG's Avatar
 
Join Date: Jun 2006
Location: Central, Ohio, USA
Posts: 2,598
I took SS at 62 as my DW did (she is 2 years 9 months older). In 2008 I repaid about $83,000 in SS benefits (which were my benefits of 6 years and her Spousal benefits which were added to her benefits when I took SS). I was one of the last people to be able to do the "repay & reset". At the time my ultimate goal was to increase potential benefit for my spouse and I intended to wait until age 70 then reapply. However I guess I got "cold feet" in late 2008 and restarted effective at 67.5 years. I believe I did the right thing and think I may even make the breakeven point shortly. Waiting longer IMO would only make the tax situation worse than it already is (RMD time).
__________________

__________________
Vietnam Veteran, CW4 USA, Retired 1979
OAG 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
FIRECalc- Part-time work before full-time retirement nico08 FIRE and Money 8 02-17-2014 11:51 AM
Finally taking our business to the next level- nervous about taking a step backward thefed FIRE and Money 16 11-01-2010 12:32 PM
So, do you feel your age? Act your age? Like your age? vickko Life after FIRE 84 04-10-2010 02:47 PM
Taking time off before permanent retirement Pegasus Young Dreamers 4 12-20-2008 11:08 PM
Keeping group health insurance in FIRE before "full retirement age"? maddythebeagle FIRE and Money 4 11-02-2006 10:09 AM

 

 
All times are GMT -6. The time now is 08:10 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.