Social Security at 62 - Yes or No

[joeea]

In the case of your mother, as you told the story, she should receive generous welfare benefits from the gov't, not retirement benefits.

Sorry, Mom. The government says you have to go on welfare rather than Social Security. And of course that means you'll have to work too, since welfare is now subject to a work requirement. Good luck with those "generous" benefits though. No retirement for you I guess. Thanks for playing! This hypothetical future is run (for some).

Mixing and blending social welfare aid and retirement benefits is one of the causes of today's SS funding crisis.

Your Social Security is already welfare, just with a name that allows you to feel better about it

And I don't see how you solve "today's funding crisis" by moving benefits from one program to another.

 

[Cut-Throat]

So, today's numbers aren't pointing to an upcoming "crisis" in funding and potential cut in benefits? Great! I wonder why we keep discussing how to fix "the problem?"

It's Politics! .... When does our government worry about fixing a problem that 'Might' Happen 20 years from now? They seemed to have no problem just passing a Tax Cut that put us another 1.5 Trillion in the hole Currently.

 

[joeea]

It's Politics! .... When does our government worry about fixing a problem that 'Might' Happen 20 years from now?

The last major "fix" to social security in 1983 happened after knowing about the problem for years. It came only after years of Social Security running a deficit and dwindling down the trust fund.

https://www.fool.com/retirement/2018/07/09/the-1-thing-nearly-everyone-forgets-about-reagans.aspx

I'm not expecting any major changes in the near future.

 

[MissMolly]

I may be rethinking my strategy. If I start taking SS at 62 and something happens to me, DW will only get 100% of my REDUCED benefits at her FRA. If I wait to my FRA she'll get 100% of my FRA. If I don't reach FRA, she still gets 100% since I never started withdrawing. She is getting disability which will switch over to normal benefits and spousal survivor benefits at her FRA.

"If the person who died was receiving reduced benefits, we base your survivors benefit on that amount."

https://www.ssa.gov/planners/survivors/ifyou.html

I'm not so sure about this. If you die prior to FRA and prior to claiming any SS I believe your spouse will only be entitled to what you would have been eligible for on the date of death (when talking about survivorship amounts, not spousal). And not sure what you mean by spousal survivor.

 

[haha]

Another low hanging fruit would be to totally eliminate spousal benefits. Each person collects based on their own record, period. End the games.

I guess that would work if at the same time we admit that our long term plan is to import the following generations. I know that appears to be our de facto plan, but we might as well make it obvious for the demographic math challenged in out population.

Ha

 

[pb4uski]

Not sure if someone pointed this out, (I may have missed a post) but Social Security is not SS. It is SSI. The "I" means Insurance. So when I see people talking about "getting" their money back it ignores the Insurance part of the equation. In particular disability insurance. All those years of paying in are not just building your old age benefit, they are "buying" you disability insurance. Insurance premiums are not something you get back So don't forget to subtract out yearly disability insurance premiums while calculating how much you "should" be getting back.

and life insurance too... if you die your survivors get benefits. Between life and disability, I figure that accounts for ~20% of what you pay in.... read it somewhere.

 

[Crabby Mike]

I'm not so sure about this. If you die prior to FRA and prior to claiming any SS I believe your spouse will only be entitled to what you would have been eligible for on the date of death (when talking about survivorship amounts, not spousal). And not sure what you mean by spousal survivor.

IIRC, if you die before claiming, your survivor gets either what you were already receiving (if you were), or what you would get if you filed the day you died ... except, if you hadn't claimed yet, and are below FRA, they get your FRA amount. I could be wrong, but it's all spelled out on ssa.gov.

 

[rayvt]

A few years ago I created a spreadsheet for SS. The survivorship rules are complicated and scattered all over the SSA website. There are actually two sets of rules that interact, one for the widow's "base" and one for reduction.

Survivor rules
He *did* file before death. Note: "Early" means before FRA (normally 66).
Filed early Larger of his reduced benefit OR 82.5% of his FRA amount
Not early: Her reduced spousal benefit (based on her age) applied to his increased amount

He did *not* file before death:
Died early: His FRA amount
Not early: Her reduced spousal benefit applied to the amount he would have gotten if he filed at date of death.

Widow benefit base:
If he filed early His reduced benefit., but not more than 82.5% of his FRA benefit. ( 13 months of reduction)
If he filed not early His benefit (perhaps bumped up.)
Not filed, died early His FRA benefit
Not filed, no die early His benefit at date of death (perhaps bumped up.)

Widow benefit reduction, based on her age vs. 66
Widow benefit base reduced by # of months before she is 66.
No increase past 66.

 

[VanWinkle]

A few years ago I created a spreadsheet for SS. The survivorship rules are complicated and scattered all over the SSA website. There are actually two sets of rules that interact, one for the widow's "base" and one for reduction.

Survivor rules
He *did* file before death. Note: "Early" means before FRA (normally 66).
Filed early Larger of his reduced benefit OR 82.5% of his FRA amount
Not early: Her reduced spousal benefit (based on her age) applied to his increased amount

He did *not* file before death:
Died early: His FRA amount
Not early: Her reduced spousal benefit applied to the amount he would have gotten if he filed at date of death.

Widow benefit base:
If he filed early His reduced benefit., but not more than 82.5% of his FRA benefit. ( 13 months of reduction)
If he filed not early His benefit (perhaps bumped up.)
Not filed, died early His FRA benefit
Not filed, no die early His benefit at date of death (perhaps bumped up.)

Widow benefit reduction, based on her age vs. 66
Widow benefit base reduced by # of months before she is 66.
No increase past 66.

Thanks for the effort rayvt, but still clear as mud.

 

[Independent]

Another low hanging fruit would be to totally eliminate spousal benefits. Each person collects based on their own record, period. End the games.

First, change the "own record" for married people. If one earns $90k and the other $30k in 2018, then the 2018 SS earnings record for each of them would show $60k.

 

[Perryinva]

That would have a snowballs chance in hell of being changed to.

 

[pb4uski]

I think that ^^^^ is optimistic.

 

[Independent]

And we could separate the welfare type benefits of SS from the retirement benefits. Use ongoing SS revenue to fund retirement benefits. Create new taxes (screwing whoever seems appropriate) to fund the current welfare type benefits that SS pays (such as disability benefits).

I'm not sure what you mean by "separate". The DI system already has it's own revenue, benefits, and trust fund.

See Section III, 1 and 2 here: https://www.ssa.gov/OACT/TR/2018/trTOC.html

And, I don't know why the DI benefits are any more "welfare" than the retirement or survivor benefits.

 

[Independent]

That would have a snowballs chance in hell of being changed to.

Yep.

AFAIK, every change to SS that might reduce the future gap between revenue and benefits is politically unpopular. That's why we continue with the system we have.

(The only possible exception is raising the taxable cap. I believe I've seen at least one poll where that got more than 50% support.)

 

[pb4uski]

Even when I was working and would have paid more I favored eliminating the cap to help the survivability of the program.

 

[CardsFan]

(The only possible exception is raising the taxable cap. I believe I've seen at least one poll where that got more than 50% support.)

Well, of course! Any one already retired, or working for significantly less than the cap, would be all over that one.

In all seriousness, even when working and hitting the cap, that was one change I could see happening and be able to support. Sure, it was nice to get that little raise every fall, but my plan would not have changed much without it.

That, combined with an increase in the tax rate and FRA are what we are likely to see, but not until we are closer to the tipping point.

Edited to add: I also expect to see 100% of SS taxed. They must do that so that those already on it have SOME skin in the game, even though it probably would not be much money.

 

[pompanobeach]

Even when I was working and would have paid more I favored eliminating the cap to help the survivability of the program.

I agree. I also favor lifting the cap. I get a small “raise” every year around November or so. That’s when i hit the cap so they stop taking SS deductions from my check at that time.

PB, Fla

 

[Cut-Throat]

What I find amusing or dismaying is that a lot of time and effort is being spent to 'Fix' the only Government Program that is currently running a surplus. Which is currently over $2.5 TRILLION Dollars....



While the rest of the Government Budget is in debt and going further down. The Dept. of Defense being the biggest offender. Maybe we could have a discussion of how to fix the Real Problems of Government instead.

 

[samclem]

AFAIK, every change to SS that might reduce the future gap between revenue and benefits is politically unpopular. That's why we continue with the system we have.

I wonder how much support there might be for a down-the-road conversion to a true pay-as-you-go system. Use the SS "trust fund" to gradually (over 20-25 years?) transition to a system where annual payments to current recipients would be determined by the SSI taxes paid by workers. Every dollar collected would be paid out, but no more inter-generational borrowing or lending. When the economy is prosperous, there would be more money for seniors. When the economy takes a dip, seniors would have less to spend. Sprinkle in some things to make it more palatable (continued progressive payout schedule based on lifetime earnings, remove income cap on taxes, maybe 5 year smoothing of benefit amounts to allow folks time to adjust to needed cuts, etc).

Such a system would be automatically indexed for inflation (wage inflation), would assure that any needed sacrifices/cuts are made in real time (no more kicking the can down the road to make it someone else's problem), and would be a "social contract" relatively immune from "meddling" for short-term expediency. A long transition time gives everyone a chance to make preparations and get used to the idea.

 

[pb4uski]

Well, of course! Any one already retired, or working for significantly less than the cap, would be all over that one.

In all seriousness, even when working and hitting the cap, that was one change I could see happening and be able to support. Sure, it was nice to get that little raise every fall, but my plan would not have changed much without it.

That, combined with an increase in the tax rate and FRA are what we are likely to see, but not until we are closer to the tipping point. ...

+1 IIRC when SS was first established and the retirement age was 65 someone would be expected to collect retirement benefits for 13-15 years... by 1980 that had increased to 15-19 years... so in response, the FRA was changed to 67 in 1983 .... this brought the years that one would collect back to 13-17 years... however, medical advances have significantly improved mortality since 1983 and IMO an increase in FRA to reflect those improvements in mortality are long overdue. IOW, make occasional changes to FRA to reflect mortality improvements so on average people collect for 13-15 years after they retire as one way of preserving the system.

 

[pompanobeach]

See below. A nice article on the subject

https://www.yahoo.com/amphtml/finance/news/3-great-reasons-social-security-171500408.html

 

[pompanobeach]

I am 61 and the wife is 59. We both have upcoming birthdays, so I am facing the “do I take SS early or not”. I think it is a good move based on the following:



•Our annual expenses less travel are $60K

•Wife has a state teacher’s pension of $30K per year (no SS contributions)

•My SS at 62 would kick in about $24K per year for a delta of $6K

•Her health is good. I had bypass ten years ago (runs in the family), but still doing great

•A 3% withdrawal rate would easily cover the balance ($30K) and travel if no SS taken



Can you think of any reasons not to take the money and run?

See this article
https://www.yahoo.com/amphtml/finance/news/3-great-reasons-social-security-171500408.html

 

[CardsFan]

+1 IIRC when SS was first established and the retirement age was 65 they would be expected someone to collect retirement benefits for 13-15 years... by 1980 that had increased to 15-19 years... so response, the FRA was changed to 67 in 1983 .... this brought the years that one would collect back to 13-17 years... however, medical advances have significantly improved mortality since 1983 and IMO an increase in FRA to reflect those improvements in mortality are long overdue. IOW, make occasional changes to FRA to reflect mortality improvements so on average people collect for 13-15 years after they retire as one way of preserving the system.

Agreed! maybe if you and I and a few more here could get elected to congress, we could get a reasonable proposal pushed along.......Nah, that sounds too much like a J*b.

 

[golfnut]

Has mortality increased since 1983?

 

[mamadogmamacat]

well it looks like it has,longevity that is, to 19 to 22 yrs, from the SSA website:

• A man reaching age 65 today can expect to live, on average, until age 84.3.
• A woman turning age 65 today can expect to live, on average, until age 86.7.

https://www.ssa.gov/planners/lifeexpectancy.html