Re: Social Security Benefit Strategies

[unclemick]

Well - mine should be simple single age 60 with breakpoints at 62, 66, 70 and (30% ?? spreads). I have to pick when to croak (exactly) and how much my investments will earn - ie whether I can 'beat' the spread and live long enough to enjoy it. Right now, plan to take SS at 62 - without benefit of attempting to calculate the trade offs.

[Michael]

I am considering waiting until age 70, when benefits max out. This would be a bet on a long life, and would allow Social Security to act as an emergency back up plan in case all else fails. Of course, this is still 23 years away, so I will make the final decision when I get closer. Things tend to change over the course of a couple of decades.

[Nords]

... on Bud Hebeler's Analyze Now! website.

He spends a lot of time visiting "Social Security widows" who wish their deceased spouses had waited longer to take their benefits.

Coulda been Scott Burns too. He has a real fixation on SS topics.

Of course that longer wait for full benefits wouldn't "benefit" those who didn't survive 14 years to the break-even point, but it would have awarded their spouses a 20-25% bigger SS monthly check.

So if you don't need the money, perhaps it makes more sense to wait for max benefits. When Congress finally gets around to "fixing" the system, I doubt it'll affect those close to their first withdrawal.

OTOH you should see how big those max benefits would be. My puny pre-ER earnings history will "only" give me $9800/year (today's $$) at age 62, and that includes the military service credit offset.

But, hey, I'm planning to hang around at least 14 years after I start withdrawals, just to see if I can withdraw as much as I've put in!

Hi Nords! Interested in your take on SS and esp.
when to take it. With my mind set, I wouldn't
consider waiting past 62, even if the "breakeven"
point was much less than 14 years. In fact, I am not
sure any lesser BE point would entice me to wait.
I think I will get around $14,400/yr. We've made
it all this way without any SS, so this will be a huge
transfusion. Two years, 2 months and 28 days to go.

John Galt

[unclemick]

One yr, one month to 62. The men in my family tree historically die young (heart). Soooo- take the money put it in hobby stocks - try to beat the dealer. Spend as the mood/opportunity strikes along the way. I.e. having made it this far without SS - the addition will be to the travel/entertainment/adult toy part of the budget(not core). My SO has her SS and an independant portfolio plus a Weird five yr full cut of my pension and half my IRA(one sister) should I croak with money left on the table. Of course I will rehash the numbers/options at 62 and make the final decision then.

[WilliamG]

Questions about breakeven points:
Is the growth in non-SS assets included; i.e.., when taking SS early you will NOT be drawing down your other assets this amount, including what may be in your tax deferred accounts.
Also, there is state tax consideration. I live in NC and our state income tax is in the 7% range. SS is NOT taxable at this rate; another advantage it has over traditional IRA withdrawal.
Regards, Bill

[unclemick]

WilliamG

Good point. And throw in inflation effects(on non SS assets) - you are dealing with a lot of 'squishy' inputs. Breakpoint calc.'s are just a start - in the end it's a judgement call based on your individual ER situation.

[unclemick]

Yep.

My yearly SS statement says no disability. At least they don't say - WE KNOW YOU'RE AN ER AND WANT YOU BACK AT WORK. Heh, heh, heh.

[indymom]

Has anybody experienced how SS works if one has been a federal employee for most of a career? Husband was involuntarily retired after 30 odd years under CSRS, thus getting a reduced pension. He is trying to get 40 credits to qualify for at least minimal SS. We have both tried to understand the offset rules without success.

[Nords]

Scott Burns seems to be the most educated & pragmatic writer on the SS debate. I'm taking most of my numbers from his articles, including the presumption that delaying benefits until age 65 involves a 14-year payback to age 79. (I've seen other numbers but this one is the longest.) I have no idea what the payback is if I delay until age 70 but if it's less than 90 I’m probably still in the game.

First, I'm still 19 years away from a SS decision and no doubt I'm going to flipflop at least once before then.

Second, I'm in excellent health from a long-lived male line. My grandfather made it to 97 (although the dementia kicked in at 84) and my father shows every sign of doing the same (hopefully without the dementia). My other ancestors either worked hard at killing themselves (alcohol, smoking) or lived into their 90s. Being trained as a nuclear engineer, I tend to obsess a little over my lifestyle & nutrition in order to optimize my chances. (That's a lot easier in retirement than on deployment.) I also have a loving spouse and a kid who are proud to nag me as much as it takes to stay the course. (It's hard to believe that this makes a statistically-significant difference, but they assure me that it does.)

Third, at this point in my life it's hard to imagine that the small amount of SS that I'd collect between ages 62-70 will make a difference in my life. Sure, it's 27% of my pension now but when I'm eligible for SS my spouse will be drawing a heckuva pension of her own. My SS will only raise our income by 8-10% before taxes. It'll certainly be a taxable difference, and an investable one as well, but it won't change our lifestyle.

Fourth, all of us know that we should grab whatever money as early as we can, invest it wisely, and let it compound for decades in low-cost low-turnover stock index mutual funds. We also know that we could take the gov't's return of our hard-paid tax money and fritter it away on longboards. I doubt that most of us survive that cognitive dissonance to actually follow through on the more appropriate course (whatever that is). I, of course, will make the financially correct choice, no matter how nicely that custom longboard would carve on the waves. Sure.

Fifth, I see a lot of spouses who take themselves out of the workforce to raise a family while blindly trusting their working spouses to "take care of them". (Some of these people are men, most are women.) Given my fourth opinion, I feel that those families have to seriously consider delaying SS benefits. Especially if the working spouse doesn't outlive the 14-year payback, their nonworking spouses will probably earn far more in higher survivor benefits than their deceased spouse would ever have drawn.

Sixth, I think that further SS reform will pass by the boomer generation (birthdates as late as 1964). In other words I think that "I got mine." The system can't survive its present mutations, but the only people with reason to fear are our kids. If I do see a change coming, I'll have plenty of time to change my decision (and to try to have AARP get my elected politicians to change theirs).

So what am I gonna do? Today I'm going to grab every penny as early as I can and invest it. If nothing else it'll self-insure my LTC costs. Hopefully by 62 I'll have matured enough to have given up my hobby stocks (including shorting & options) and I'll put it all into a good stock index fund.

No doubt the closer I get to your point, the more I'll feel as you do. Unless technology makes some incredible longboard advances in the next two decades?

[Nords]

... I may be reading too much into your post, but it gives the impression that veterans can enter SS numbers right off our W-2s or SS estimate statements. For military between 1957-2002, all of those numbers are LOW.

The SS website's answer ID #454 explains special military service credits. Essentially it's an extra $1200/year added to SS earnings to compensate for lower military pay rates (and to acknowledge the military's tax-free non-SS allowances). That might not seem like much in 2002 but it was a big deal in 1957. It's not part of our SS earnings history and it's not shown on our SS statements. So we all have to exhume our DD-214s and haul them into our first visit to the SS office, or bring up the issue to get the money paid retroactively.

http://ssa-custhelp.ssa.gov/cgi-bin/...PTQ1NA**&p_li=

[charlie]

FWIW, I started collecting SS at 62. Figured "bird in
hand worth 2 in bush". Lyn did same at 62 last year.

Cheers,

Charlie

[indymom]

"If you qualify, wouldn't he be entitled to benefit based on half yours?"

He probably would, but mine aren't that great. We were trying to figure out what he might get on his own, since he is almost at 40 quarters. CSRS retirees' SS is docked according to a formula that makes my eyes cross. That is what I have been trying to figure out. Suppose he could call the SS office, but they haven't been too helpful in the past.