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Six Social Security Myths
Old 06-25-2008, 03:31 PM   #1
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Six Social Security Myths

This piece seems to address some of the most pressing questions about SS and the choices that we need to make. Maybe not new stuff, but a number of issues that are good to ponder.


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Finally, the breakeven point usually isn't the most critical issue in making the start-date decision. If you don't need the income to support your lifestyle from age 62 through 66, it's often best to wait.

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For individuals who live a very long time, any decisions to start benefits early at permanently reduced levels will reduce the longevity protection of lifetime benefits and the inflation protection of the COLA. Therefore, individuals who are in good health and have "longevity genes" in their families should carefully consider the long-term cost of starting benefits early. Keep in mind that the current COLA is not guaranteed and could be changed by Congress in the future.
Top 6 Myths About Social Security Benefits (Page 3 of 3)
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Old 06-25-2008, 04:06 PM   #2
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Finally, the breakeven point usually isn't the most critical issue in making the start-date decision. If you don't need the income to support your lifestyle from age 62 through 66, it's often best to wait.
This article says a lot of helpful things, and to me the above is one of the most helpful. The answers we get depend on the questions we ask. The question I want to ask is:

"What strategy will make me most secure in an adverse environment?"

I think it is clear that waiting as long as you can is best to fulfill this goal.

Ha
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Old 06-25-2008, 05:35 PM   #3
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Thank you Ha for showing the correct use of 'adverse' ... not to be confused with 'averse' as in 'risk averse' ...

Peter
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Old 06-25-2008, 05:59 PM   #4
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Thank you Ha for showing the correct use of 'adverse' ... not to be confused with 'averse' as in 'risk averse' ...

Peter
What is it about this forum that brings out all the closet grammarians?

BTW, the correct usage is 'risk-averse.'

Back on topic, I agree that the answer depends on the questions you ask. I think Burns and many others have pointed out the potential value of social security as a government-guaranteed annuity. My plan is to have my wife take hers when she reaches 62, then convert to the spousal when she reaches 66, which will be more. I will likely wait until 70, unless we really need the money.

Of course, all this depends upon what changes might be made in the interim.
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Old 06-25-2008, 06:33 PM   #5
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Originally Posted by haha View Post
This article says a lot of helpful things, and to me the above is one of the most helpful. The answers we get depend on the questions we ask. The question I want to ask is:

"What strategy will make me most secure in an adverse environment?"

I think it is clear that waiting as long as you can is best to fulfill this goal.

Ha
I guess we all have different definitions of "adverse environment".
For me, one definition is a future situation where SS is taxed or means-tested to the extent that it loses most of its value for anyone with more than twenty five cents in his pocket.
I took it at 62, will consider the payback option at 66 and 70 if still available. Until then, "a bird in the hand..."
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Old 06-25-2008, 06:39 PM   #6
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I have decided that SS is the last card we have to play, and we will continue to evaluate our situation and play that card when we are in need. It's not like you have to make a decision ahead of time, and then live with it. they even give you a mulligan.
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Old 06-25-2008, 11:49 PM   #7
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My MIL has been debating whether or not she should take SS at 65 or wait as long as possible as she starts taking it (Right now she doesn't need SS, she receives a large alimony check each month and will continue to receive that check until she reaches the age of 70). Her retired friends all say she should take SS ASAP (don't leave any money on the table!), I think she should wait...

First she would pay a huge amount of taxes on those SS benefits if she took them right now (she is in the 25% tax bracket this year because of her large alimony income). Then, even if she invested what's left, which is doubtful, when the alimony payments stop only 25% of her income would be guaranteed (in the form of SS benefits) and she would have to rely on her portfolio to produce the other 75% of her income. If she waits until the alimony payments stops before taking SS, then 50% of her income would be guaranteed and she would have to rely on her portfolio for only 50% of her income. With that second option she might receive less money overall from SS over her lifetime, but she would be financially more secure in retirement.

We'll see what she ends up doing. I wouldn't be surprised if she took SS sooner rather than later.
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Old 06-26-2008, 06:30 AM   #8
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Depends on her tax situation. If low, she could take the SS now and invest it. That way, if she kicks the bucket young you get an inheritance. At age 70 if her health is good she can reapply for SS (form 521 per Burns), pay back what she took out with no interest, and restart at the higher benefit rate.
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Old 06-26-2008, 08:02 AM   #9
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DW and I took it at 62 and now that we’ve turned 65, we do not regret it. We are investing what is the equivalent of one of the SS checks each month. This investment should provide the increased value that waiting would have provided. I know we’re paying taxes on the early SS. OTOH, I have not taken a dime out of my investments since I retired (4+ years). They are growing, too.

My definition of an adverse environment is anything that takes money away from me.
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Old 06-26-2008, 08:06 AM   #10
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I would say if she doesn't NEED it now, it simply is best to wait. You are fine NOW without it... does she know she will be fine in 6 years with the smaller amount of SS? Does anyone have any stats or any knowledge about the average age or the distribution of age for people taking SS? I thought I read somewhere that about 55% of Americans take SS at age 62.
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Old 06-28-2008, 09:04 PM   #11
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Quote:
Originally Posted by haha View Post
This article says a lot of helpful things, and to me the above is one of the most helpful. The answers we get depend on the questions we ask. The question I want to ask is:

"What strategy will make me most secure in an adverse environment?"

I think it is clear that waiting as long as you can is best to fulfill this goal.

Ha
It may depend on your marital status.

Make the Most of Social Security - Kiplinger.com
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Old 06-28-2008, 09:15 PM   #12
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my plan is to marry an young indigent lesbian late in my life so the gay community can benefit from social security too but i notice that wasn't mentioned in the article.
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Old 06-28-2008, 09:43 PM   #13
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There are LOTS of social security myths. About half the people I talk with think SS payments are dependent only on your last 5 years salary.
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Old 06-29-2008, 11:50 PM   #14
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I highly suspect/fear that down-the-line SS will be severely means tested (meaning if you make more than 50K -( 2008 dollars) in other income, you don't get any)

I'm guessing I'll take start taking mine at 62 if it's still avail to me then & I haven't been totally screwed by the system, (somebody said something about never leaving any money on the table) but I'll see how things are then - that's still 12 years off for me.
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