SS at 62 or 70?

[mathjak107]

You cannot take social security and stop it and start later. You can stop it the first year and pay back the $ withdrawn. And then start later.

One consideration is one's health. If it's bad, you may want to start withdrawals early. If health is good and you have a decent cash flow, putting making any withdrawals up to age 70 may be equivalent to getting a good ROE.

you sure can stop it any time after fra and let the benefit resume growing again .

you cannot pay it back and make everything retro after the first year . but you can do start stop at any time after fra and the benefit starts growing from that point in time .

 

[brucethebroker]

When are you going to die?

It's pretty much an actuary table. It all comes out about the same regardless of when you start taking it.

My feelings exactly.
It would be much easier to decide if you knew you were going to die before the break even point or not.....

 

[mathjak107]

we don't really care about break even . we care about being as little dependent as we can be on markets , rates and sequence risk .

for those who want to cut back those risks the 69% bigger check at 70 than 62 cuts dependency a lot . ss has no sequence risk and no inflation risk either .

 

[grasshopper]

you sure can stop it any time after fra and let the benefit resume growing again .

you cannot pay it back and make everything retro after the first year . but you can do start stop at any time after fra and the benefit starts growing from that point in time .

Is the benefit increase the same as from fra to 70 8%?

 

[mathjak107]

yes

 

[euro]

This has been discussed several times with dozens of perspectives. Each perspective is valid because there are so many variables. A lot of "YMMV".

My own math comes out to about age 84 as well. In my personal case, taking SS at 62 was a winner because 1) that money would otherwise come from my tax deferred accounts 2) My state doesn't count SS as income (a 5.1% gain right there) 3) My Fed tax is lower 4) the money I keep in my portfolio continues to grow. 5) If I'm lucky enough to live to 'break even' I will be thrilled to be 'losing money' at that point.

I figure I'm putting about $4K in my pocket each year from now until age 70.

As noted YMMV.

#5 is what clinches it for me too! Not entirely scientific but good enough for me

 

[exnavynuke]

we don't really care about break even . we care about being as little dependent as we can be on markets , rates and sequence risk .

for those who want to cut back those risks the 69% bigger check at 70 than 62 cuts dependency a lot . ss has no sequence risk and no inflation risk either .

For me, this is one of the reasons I'm planning on taking SS at 62. Expected SS payments + pension should equate to ~92% of spending if I'm still spending at my current rate (minus the mortgage which will be paid off at that point). The 8% it won't cover is well into the discretionary spending and can be cut without a significant change in lifestyle. So, at that point, investment income is just a "bonus" to have fun with. Toss in the likelihood of reduced spending in later years and it should more than cover my anticipated spending at 70+.

 

[pb4uski]

I look at it a little differently. From 62 on I have an option to start SS. If investment results continue to be decent then I'll ride on them and take advantage of the opportunity to buy inflation adjusted longevity insurance on the cheap, if investment results lag then I'll start SS and ride out the storm.

 

[REWahoo]

... if investment results lag then I'll start SS and ride out the storm.

Been there, done that - and I take full credit for the market turnaround right after I started SS in early 2009!

 

[Dawg52]

Been there, done that - and I take full credit for the market turnaround right after I started SS in early 2009!

Thank you. What can you do to get us to DOW 40k?

 

[pb4uski]

Been there, done that - and I take full credit for the market turnaround right after I started SS in early 2009!

But then once you reach FRA you always have the option to suspend benefits and get the original flexibility back.

 

[btdt22]

No brainer for me. Wife is/was full time homemaker and five years younger. Her side seems to live forever while my side dies around 70. She will get cola adjusted $3000k/month well into her 90's because I chose to wait for SS until 69 and she is waiting until 66 for half of mine.

 

[Big_Hitter]

So, unless my math is wrong, I would have to live to 84 yo before the take ss at 70 option makes more monthly $ than taking it at 62 and saving it until 70?

Does this make sense?

I got something around there last time i did a breakeven calc

 

[Golden sunsets]

When are you going to die?

It's pretty much an actuary table. It all comes out about the same regardless of when you start taking it.

I always wonder why people say this. It is only actuarily neutral if one dies on the crossover date. If one dies earlier than the crossover date then it would have made sense to take SS early. If one lives to a ripe old age into one's late nineties, then it would be better to defer taking SS until 70. Determining the crossover date and all of the variables that go into such a calculation - that is open to debate. Mathjack has made some very good points in other posts on assumptions regarding reinvestment of proceeds, growth of portfolio if one claims early and the tax affects of leaving one's nest egg intack that make the debate interesting.

 

[Chuckanut]

Something that's been at the back of my mind about this controversy is the requirement to pay Medicare premiums starting at 65. I wonder if there is any benefit to taking the annuity early to get three years of full payments before the Medicare premium is subtracted out. It's probably not significant, just another wrinkle.

I can't imagine any significant benefit except convenience. Money is fungible so whether they take the Medicare premium from the SS payment, or you write Medicare a check, the money is still gone.

 

[joeea]

I look at it a little differently. From 62 on I have an option to start SS. If investment results continue to be decent then I'll ride on them and take advantage of the opportunity to buy inflation adjusted longevity insurance on the cheap, if investment results lag then I'll start SS and ride out the storm.

That's basically my feeling as well.

For those of us not riding close to the edge financially, it's less likely that a storm would force us to start claiming social security benefits. But even then, we always have the option should the need arise.

And if it doesn't we have some terrific longevity insurance being built up.

 

[REWahoo]

But then once you reach FRA you always have the option to suspend benefits and get the original flexibility back.

I'm so past FRA I can't even see it in my rear view mirror.

 

[Bir48die]

I look at it a little differently. From 62 on I have an option to start SS. If investment results continue to be decent then I'll ride on them and take advantage of the opportunity to buy inflation adjusted longevity insurance on the cheap, if investment results lag then I'll start SS and ride out the storm.

+1

So after reading a number of SS threads I thought I would go back and do some calculations. We all know under their assumption that we work until retirement. So, I put in my earnings history and zeroed out the 4 1/2 years till I hit 66.2. The first was how much I lose by not working right up until retirement and it's about $120/month. No big deal.

So I started inputting 63.2 year, 64.2 years, etc to see the yearly difference. So it showed the following monthly increases by year:

+$128 (63.2)
+$169
+$152
+$171
+$51 (67.2)
+$205
+$205
+$228

Total is $1,431 from 66.2 to 70 which doesn't jive with $1,309 showed above. Obviously a glitch and ran it several times but weird anyway. So assume 66-67 years will adjust up more than $51.

My goal is to stay out until FRA but I am one that's in the camp of if we have an apocalyptic event I will pull the trigger earlier.

 

[RunningBum]

5) If I'm lucky enough to live to 'break even' I will be thrilled to be 'losing money' at that point.

#5 is what clinches it for me too! Not entirely scientific but good enough for me

Funny, I always think just the opposite. If I die before the 'break even', I really doubt I'll care that I didn't start early. I just can't imagine that if I'm on my death bed at 75, I'll be gleefully saying "Take that, SSA! I won!" But if I do live longer, I'll be thrilled to be still living, and also to have a larger check every month.

Deferring is only my default plan. Like some of the others on here, if the market does lag quite a bit while I'm between 62 & 70, I'm very likely to start taking SS then to keep more of my money in the market during the recovery.

 

[joeea]

Funny, I always think just the opposite. If I die before the 'break even', I really doubt I'll care that I didn't start early. I just can't imagine that if I'm on my death bed at 75, I'll be gleefully saying "Take that, SSA! I won!" But if I do live longer, I'll be thrilled to be still living, and also to have a larger check every month.

Deferring is only my default plan. Like some of the others on here, if the market does lag quite a bit while I'm between 62 & 70, I'm very likely to start taking SS then to keep more of my money in the market during the recovery.

LOL!

The good news is that almost everyone is happy with whatever choice they make regarding when to start collecting - early or late.

I know lots of folks who started at 62 and are very pleased. I know some who started at 65 and are very pleased. I know a few who started at 70 and are very pleased.

I supposed it's a bit of confirmation bias. Still unless you are financially close to the edge, it's usually a choice between "good" and "gooder".

The only folks I know who aren't pleased are the very few that have run out of money at an older age. They wish they had more money coming in and wish they didn't have to be a burden on their family (although they don't typically see how they could have managed to make that happen).

 

[flyingaway]

In all the calculations, did you assume working from 62 to 67? I think that may make a difference.

 

[daylatedollarshort]

My thoughts are there is more SS money after around age 84 or so but less chance of living long enough to collect it for myself or my heirs. We'll be living below our means with SS at 62, pensions at 55 and without downsizing, so for us longevity insurance is not a priority. The current plan for our circumstances is to claim at 62.

 

[xdafly]

Couple links that may be known to all
SSAnalyze - Bedrock Capital Management

Larry Kotlikoff interview by James Lange (there is a mp3 version also)
The Secrets to Maxing Out Your Social Security

For a couple that uses the file and suspend plus the section on husband dying at 70 without ever having collected, then full benefits being paid to wife (now widow) makes for some good thinking points.

Finally, the BH Wiki on related topic
https://www.bogleheads.org/wiki/Taxation_of_Social_Security_benefits

Due to how combined income and SS may be taxed, based on 2017 rules, it takes quite a few strategies and modeling to come up with a best case or a few optional best cases.

 

[marko]

#5 is what clinches it for me too! Not entirely scientific but good enough for me

If I may add #6 to my previous post:
6) You never know when the rules might change. Take the money and run!

 

[Fedup]

I think you have to plan SS as a couple. I mean milk the system to your best advantage. That sounds bad but at least I'm honest. My husband started at 64.50, which allows him to retire at 64.50 and not waiting until FRA, I'm a lot younger, so it will be a while before I get to it. But I decide to wait until I'm 70 because I'm planning to use it as long term care insurance. I'm planning 6-fiugure LTC after age 80. The money will be there to cover this. If something happens to my husband and I'm at least 60, I will get survivor's SS. The only problem is if I'm younger than 60. Hence I keep the life insurance until then. All this so we don't have to touch our retirement money. Also the one thing that makes a difference is conversion to Roth before RMD. That throws the tax situation out of whack too. I rely on Turbotax for this. So when I get closer to my FRA, I will recalculate again to see what makes sense. Even if I want to take it early, I might have to give it all back.