Social Security at 62 - Yes or No

[Dtail]

Way too much emotion / opinion on the topic for me. I'll take at 62 and DW at FRA (both of which will occur in 2019). On three separate occasions, I had an option to take a payout early or later. I chose early each time because I was there to choose - - and it's worked out fine. Will do same for SS. Yeah, if I assume room temperature first, DW will end up with a little less, but it'll still suffice. Her and the new guy will be comfy enough.

Leaving a stash for our heirs is secondary to DW and I enjoying our retirement. Gonna blow some of that dough! :dance:

My hats off to Robbie B (and others) for influencing and balancing out this forum somewhat on spending.

 

[explanade]

Because both are still alive- 4 years later — and able to pay for the very fine facility where they live, the monthly fee is 5k per month, but that includes one extraordinary good meal per day, transportation for taking them to the doctor — a bank office open one day per week to discuss needed banking - and a independent beautiful apartment which is cleaned and maintained for them which they never could physically hold if they could not afford the payments for someone to do all this for them. And on site full time care available at no additional cost if one or both of them become unavailable to be capable of providing basic care to themselves in the apartment. Yes one of them did have heart surgery four years ago, right after the Cubs won the World Series for the first time in his life. He joyfully is still living to remember that day.

So are you saying they took it later and that allowed them to pay for this $5k a month retirement facility?

 

[WestUniversity]

Yes. I want every penny back those jokers in DC took from me...[emoji12]

 

[Perryinva]

I believe he means that they are still alive and glad to have the higher income the COLA annuity provides for that cost. Delaying from 62 to 70 can be an extra $20k/yr income for one person. Not having to take an extra COLA 20k/yr from investments from age 70 & up allows them to grow pretty good for the rest of your life if you even make it to just 84.

 

[pompanobeach]

Yes. I want every penny back those jokers in DC took from me...[emoji12]

Exactly !!

 

[Running_Man]

So are you saying they took it later and that allowed them to pay for this $5k a month retirement facility?

No I am merely stating that a higher level of SS payments which are indexed for inflation, are noticeably helpful from what I have seen when people live to an old age.

I calculate the value I see SS providing and it seems very valuable from a long term point of view, since when one turns 80 there is little you can do to change the financial course you are on. Now I am by nature a very conservative person, which may influence my outlook on possible downsides greater than others.

 

[Chuckanut]

In my situation, if I take Social Security at age 63...... <snip>

You are basing your decision on your personal situation!!!!!

Obviously, Archman has joined the group of dangerous radicals who infest this site.

 

[joeea]

I chose early each time because I was there to choose

Because if you weren't there to choose, you would have chosen to delay?

 

[KenZ71]

Am I correct in assuming the phrase "actuarially equivalent" is also assuming our esteemed politicians don't cut benefits?

Lots to think about, but I certainly dont count on anything from government besides a tax bill.

 

[FI_RElater]

Because your wife is impacted by GPO, it would be to her benefit if you started SS at 62.

Actually, I’m going to ask the counterintuitive question: “would you get anything of HER retirement if she were to pass earlier?”
... if you DON’T get anything, then you need to consider if you can be good enough without her contributions... if your withdrawal afterwards (only you, no spouse, no other supplement) is low enough (4% or lower) then you can take anytime. If you would need more, then you probably need to delay until SS + (x%)portfolio is adequate

(as she didn’t put anything in, the GPO would likely eliminate ALL of survivor benefit if you pass early. Thus, as noted above, it’s really like your case is that of a single individual: so depending on how long your investments could tide you over, you could delay, but I would suspect that you would be better to take at 62-FRA, so as to leave the portfolio to her if you pass early)

 

[RunningBum]

Am I correct in assuming the phrase "actuarially equivalent" is also assuming our esteemed politicians don't cut benefits?

Lots to think about, but I certainly dont count on anything from government besides a tax bill.

There's no guarantee of that. I used to assume it would happen. After all, fair is fair, and one shouldn't be penalized by not taking benefits at 62, right? The longer this gets kicked down the road, the less likely I see a "fair" solution coming.

There are two ways I see to make it fair:

1) Grandfather anyone 62 or older in, whether you've started taking benefits or not. If you're 61, tough luck, you get reduced benefits either way, but if you're 62 or older, you're in the old system. Perhaps they'd phase in so 61 year olds get small cuts, 60 slightly larger, and so on to 55 or whatever.

2) Reduce benefits for all, but figure out how to make them equivalent. So if they have to reduce by 25%, for those already 62 or older, you would take a 25% reduction if you had or will start benefits at 67. If you started earlier, you would take a larger than 25% reduction, because you've already received some benefits under the old payment. If you started later, or haven't yet started, you'd take less than a 25% reduction, to make your overall lifetime benefit (based on average time remaining) equivalent to someone who already got some full time benefits.

The math wouldn't be simple and I'm not going to try to figure it all out, but I'm sure it could be done. The concept is, if I'm 70, and haven't yet collected and a 25% cut comes, they would make up for the 8 years I could have been getting money before the cut, by only reducing my benefit by 20% (that's totally a guess). If I'm 75 and started at 70, I would've gotten 5 years before the cuts, so maybe they reduce my benefit by 22%. If I'm 82 or whatever the crossover point is, and started at 70, I take the full 25% cut because I'm even with someone who started at 62.

Likewise for someone taking at 62, they would take the largest cut if they are 70 and had already collected for 8 years. The cut would be reduced as they approach the breakeven point.

All people who have reached the breakeven point or beyond would take the 25% cut.

#1 seems possible to me but I'm not saying it's likely. #2 seems unlikely as few would be able to comprehend the math and be convinced that it really is fair to all.

 

[KenZ71]

No denying cuts need to happen. Maybe it could be part of a larger adjustment.

That is if student loan debt is forgiven you get less social security. After all, the theory is student loan leads to Education & better job.

 

[Red Badger]

Because if you weren't there to choose, you would have chosen to delay?

Nope. There is a modest but real chance that I'll be dead and get diddly squat. In each earlier occasion, there was a carrot of more $$ if I delayed. So, as in the past choices, if I'm here next year (not guaranteed), I'll waddle up to the trough and take my share of the SS hog slop.

Unlike some others here, I'm fortunate that my larger pension is COLA'd (55% survivor), and my smaller pension, though not COLA's is 100% survivor. Between those, SS, and our portfolio, DW and her new boy toy will do just fine once I'm pushing up those daisies.

 

[Archman]

You are basing your decision on your personal situation!!!!! .......

Duh. The first three words I said was "In my situation...."

 

[explanade]

There's no guarantee of that. I used to assume it would happen. After all, fair is fair, and one shouldn't be penalized by not taking benefits at 62, right? The longer this gets kicked down the road, the less likely I see a "fair" solution coming.

There are two ways I see to make it fair:

1) Grandfather anyone 62 or older in, whether you've started taking benefits or not. If you're 61, tough luck, you get reduced benefits either way, but if you're 62 or older, you're in the old system. Perhaps they'd phase in so 61 year olds get small cuts, 60 slightly larger, and so on to 55 or whatever.

2) Reduce benefits for all, but figure out how to make them equivalent. So if they have to reduce by 25%, for those already 62 or older, you would take a 25% reduction if you had or will start benefits at 67. If you started earlier, you would take a larger than 25% reduction, because you've already received some benefits under the old payment. If you started later, or haven't yet started, you'd take less than a 25% reduction, to make your overall lifetime benefit (based on average time remaining) equivalent to someone who already got some full time benefits.

The math wouldn't be simple and I'm not going to try to figure it all out, but I'm sure it could be done. The concept is, if I'm 70, and haven't yet collected and a 25% cut comes, they would make up for the 8 years I could have been getting money before the cut, by only reducing my benefit by 20% (that's totally a guess). If I'm 75 and started at 70, I would've gotten 5 years before the cuts, so maybe they reduce my benefit by 22%. If I'm 82 or whatever the crossover point is, and started at 70, I take the full 25% cut because I'm even with someone who started at 62.

Likewise for someone taking at 62, they would take the largest cut if they are 70 and had already collected for 8 years. The cut would be reduced as they approach the breakeven point.

All people who have reached the breakeven point or beyond would take the 25% cut.

#1 seems possible to me but I'm not saying it's likely. #2 seems unlikely as few would be able to comprehend the math and be convinced that it really is fair to all.

Or they could just eliminate or raise the cap on earnings which are used to generate the SSI taxes.

 

[RunningBum]

Or they could just eliminate or raise the cap on earnings which are used to generate the SSI taxes.

Sure, but I was responding to a post which asked about neutrality if benefits were cut. Certainly there are other possibilities than cutting benefits which could keep things neutral.

 

[Archman]

We need to be weaned slowly from having Social Security. People who have it now will get what was originally due. There will have to be scale for people in the workforce. The newest workers will not get Social Security nor will they pay into it. They should invest that money. It'll be good for the stock market.

 

[Chuckanut]

Duh. The first three words I said was "In my situation...."

Exactly. That is something many people fail to take into account when they pontificate on how others should take SS. It seems to be a radical idea to some. Through humorous exaggeration I was showing my agreement.

 

[Bir48die]

Since now we're all talking of solutions to SS the simple and obvious one is to take the income limits off. Yes some may call it redistribution of wealth but we're already there now.

 

[Independent]

I beg to differ.

A. If the Social Security money is not needed. Simply take it and invest it and let it grow until you do need it. If you should die, at least your ears will have that nest tag nest egg that you saved up with Social Security.

On the other hand, if you did not take the Social Security at 62 and you died before age 70, Uncle Sam gets to keep it all and no family member will ever get anything. Thats the way I see it.

B. Why would you want more money later in life and not less earlier in retirement where you can at least spend it on vacations and something you like rather than hospitals and pharmacy bills.....

PB, Fla

I think you're talking about two possibilities here:

A. I will never spend the money, it's just a windfall to my heirs or charity. In that case starting early will leave more money in more than half the investment/mortality scenarios.

B. I am planning to spend the money. In this case, I can spend as much or more in the early years of my retirement by deferring. If I think the 4% SWR makes sense, the numbers favor deferring. If I use FireCalc with a 95% confidence level, the results will favor deferring.

 

[Independent]

Way too much emotion / opinion on the topic for me. I'll take at 62 and DW at FRA (both of which will occur in 2019). ..

Leaving a stash for our heirs is secondary to DW and I enjoying our retirement. Gonna blow some of that dough!

As mentioned in the post above, deferring SS may allow us to spend more money early in retirement. It depends on the specific situation.

 

[Independent]

Yes. I want every penny back those jokers in DC took from me...[emoji12]

Those jokers used the money they took from you to pay benefits to the people who were retired when you were working. Those people may or may not have included your parents or grandparents.

If the gov't sends you a SS benefit, the money will come from the people who are working when you are retired. Those people may include your children or grandchildren.

 

[Independent]

We need to be weaned slowly from having Social Security. People who have it now will get what was originally due. There will have to be scale for people in the workforce. The newest workers will not get Social Security nor will they pay into it. They should invest that money. It'll be good for the stock market.

If the new workers don't pay SS taxes, but the earlier generation of workers are collecting benefits, who will pay the taxes that support those benefits?

If you do the math, you'll discover that "gradual transition" doesn't solve that problem.

 

[WestUniversity]

Those jokers used the money they took from you to pay benefits to the people who were retired when you were working. Those people may or may not have included your parents or grandparents.



If the gov't sends you a SS benefit, the money will come from the people who are working when you are retired. Those people may include your children or grandchildren.

What the program was originally intended to be and what it has eventually become are quite different. If the jokers had stuck to the original plan they would not have to rob Peter to pay Paul...

 

[travelover]

What the program was originally intended to be and what it has eventually become are quite different. If the jokers had stuck to the original plan they would not have to rob Peter to pay Paul...

How was it supposed to work originally? It seems like it has been chugging along with the recipients being paid by the currently working since day one. The ratio of workers to recipients has changed as the population growth plateaued.