youbet
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Yep. That's the real wild card and it's tough to account for.
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SS at 66 or 70 - not such an easy question?
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Yep. That's the real wild card and it's tough to account for.
Chuckanut
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If one delays SS to 70 once can always change one's mind before 70. So, if one decides at 65 she needs the extra money, just file the claim and collect the checks.
If one decides to collect SS at 62, is it possible to reverse that decision if at 65 one decides it would have been better to wait? IIRC, there used to be a provision for paying back SS earnings and getting a larger benefit later, but, I thought that was ended.
If one decides to collect SS at 62, is it possible to reverse that decision if at 65 one decides it would have been better to wait? IIRC, there used to be a provision for paying back SS earnings and getting a larger benefit later, but, I thought that was ended.
If one delays SS to 70 once can always change one's mind before 70. So, if one decides at 65 she needs the extra money, just file the claim and collect the checks.
If one decides to collect SS at 62, is it possible to reverse that decision if at 65 one decides it would have been better to wait? IIRC, there used to be a provision for paying back SS earnings and getting a larger benefit later, but, I thought that was ended.
The cancel and repay option was stopped a few years back.
I believe it's still possible within the first 12 months of receiving a benefit.
Throwdownmyaceinthehole
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That's my quandary. If we take SS at 66, we can have 4 years untaxed until RMD kick in. Or we can not take it and pull out of our 401k and lower our RMD base. Mine and hubs SS are almost equal, so I'm thinking one takes at 66, the other at 70. That covers the longevity issue with surviving spouse. Guess I'm going to have to do more maths on the taxes.
Pbkmaine
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Survivor benefit includes credits for delaying SS.
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pb4uski
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Unless the tax savings are compelling that sounds like a good play to me.
How far should one deplete their portfolio in delaying SS? We are both retired and I will be 62 in march '16 and DW will be 58 in April '16. Hoping to delay to 66 and DW will draw her benefit at 62. Collecting a non cola pension at present but will need to draw down portfolio by 30% due mostly to an RV purchase (Truck & TT). After we start drawing SS, our income should exceed our expenses and allow us to rebuild our portfolio. Was planning to delay till 70 by using the Spousal option but now that that has gone poof, I will reassess the situation at 66. I guess my biggest worry is if inflation heats up & returns or so-so, I have no other option but to delay and take even larger withdrawals or tighten up the expense budget.
Theseus
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That is the $64,000 question. We are in a very similar situation, with non-COLA pension, future SS estimates, and savings to fill the gaps. I've run several FIRECalc scenarios and found that looking at three basic strategies; we both take SS at 62, both at FRA, or both at 70 the best case appears to be both at FRA. In building spreadsheet models I sensed that spending down savings to delay SS would increase exposure to sequence of return risk, and I verified by plugging in the numbers for each and running the FIRECalc "Investigate" tab "Spending Level" searching for a 100% success rate. Claiming at FRA offered an increase in spending level over age 62 as expected (2.7%), but stretching that out to age 70 resulted in a reduced spending level even lower than age 62 (-6%). I'm sure it is very much a YMMV thing, as everyone's assets and future income sources are highly variable. Increasing future benefits by delaying makes sense, but decreasing savings makes one more vulnerable to future benefit changes. I'd rather try to keep three three legged stool somewhat in balance, at least as long as inflation doesn't eat up the non-COLA pensions too early we stand a better chance of that.
Souschef
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Take it now
Mine was the first year 1938, that I had to wait 2 months after 65 to get the full retirement. I took it then, because a lot of people do not figure in the present value of money.
My wife took hers at 62, and passed away at 68. We would have missed out on 3 years of payments if she took it at 65
The crossover point between 62 and 65 is at age 78.
I was still working, and had to pay tax on part of it, but I still got 5 years of payments rather than waiting until 70.
As they say YMMV (your mileage may vary), in other words, every situation is different.
Mine was the first year 1938, that I had to wait 2 months after 65 to get the full retirement. I took it then, because a lot of people do not figure in the present value of money.
My wife took hers at 62, and passed away at 68. We would have missed out on 3 years of payments if she took it at 65
The crossover point between 62 and 65 is at age 78.
I was still working, and had to pay tax on part of it, but I still got 5 years of payments rather than waiting until 70.
As they say YMMV (your mileage may vary), in other words, every situation is different.
The portfolio is sort of your emergency fund at this point. Anything you need to pay for that exceeds your income might be a problem if the portfolio gets too low. Long term care might have a fairly high burn rate for an extended period. Or a sudden big house repair, a new car, helping a son or daughter, a big health insurance deductible payment.
I'd think about what portfolio level you feel comfortable with considering potential emergencies (and their likelihood). Start SS if your portfolio drops to that level.
mathjak107
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not any harder than accounting for how long you and a spouse will live . we either take on market risk or longevity risk , take your pick is what the bottom line is .
for us more and more i think 65 is a good balance .
i want to be covered under the hold harmless law once i start medicare . we are giving up 4200 a year in additional adders to my wife's early benefit for every year i wait to file since she can't get the adder until i file.
we are living off our own assets as well as not getting checks so i think 65 is a good point to tirn it on . i am 63 now.
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Pbkmaine
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The fact that you will draw down your portfolio by 30% with an RV purchase is what concerns me. RVs are a quickly depreciating asset. Is there a less expensive way to do this?
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REWahoo
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+1
jd0850, we were in a similar circumstance and purchased an RV after retiring but prior to drawing SS. The purchase price dinged our portfolio by only 6% but Mr. Market quickly took away another 30% (this was in 2008/09).
If your purchase depletes your portfolio by 30% and the market takes a dive, you could see 50% or more of your life savings evaporate, at least for a while. Could you live with this?
Senator
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You need to evaluate your health, and determine if you are healthier than average, or maybe not quite as much. SS is actuarially neutral. BUT, you have insider knowledge about your own health, than can help you plan.
If you are a smoker, or a heavy drinker, take it at 62, you will not make it past the break even stage. There are a lot of other health issues that if you have them, you know you should take it as soon as possible.
There are still many unknowns. By taking your health into account, you can put the odds in your favor, similar to a card counter at a blackjack table. Or doubling down on a great blackjack hand. Just because you are holding a pair of aces, doesn't mean you always win.
If you are a smoker, or a heavy drinker, take it at 62, you will not make it past the break even stage. There are a lot of other health issues that if you have them, you know you should take it as soon as possible.
There are still many unknowns. By taking your health into account, you can put the odds in your favor, similar to a card counter at a blackjack table. Or doubling down on a great blackjack hand. Just because you are holding a pair of aces, doesn't mean you always win.
pb4uski
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I'm no expert on RVs but I think they are similar to boats or timeshares... there is a robust used market and much better values in the used market. Like boats, people buy new ones with great intentions and then things don't work out as they planned/hoped and they get hosed when they sell or trade.
I've had many boats and a couple RVs (but the tent camper type) and have/would never buy new as the value proposition stinks.
The challenge is finding the sweet spot where you get the best value.
Independent
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Regarding the bold: Many people here have an asset allocation built for a long retirement. They need significant equities for the long run.
But, the sort run says you should have more bonds. So, to me, deferring SS means changing the AA appropriately. I planned to have enough money in CDs and I-Bonds to provide the early SS-bridge money. That reduces sequence of returns risk. And, since I'll spend it in the short term, I'm not taking any long term risk.
Regarding Firecalc, I think it depends on the starting age I give it. If I say I'm 55 today, and I look at 62 vs. 66, it may lean toward starting earlier. But, it I say I'm 62 today, it may lean toward deferring. Of course, the "I'm 62 today" is the more relevant analysis.
That's true if I were talking about the benefit my wife could receive as my non-working spouse. The confusion is between "spousal benefit" (capped at 50% of other spouse's benefit at FRA - so, for example, non-working spouse gets 50% of working spouse's benefit if both wait until FRA) and "survivor's benefit" (not capped, so widow gets 100% of whatever benefit husband was receiving when he died or would have been eligible for when he died - i.e., she could get 100% of his delayed age 70 benefit if he delayed).
Since this can be a critical consideration in deciding whether to delay, I think it's important to get it right.
After weighing all the knowns and unknowns, I'm now leaning toward applying now (FRA).
Senator
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Another reason to delay, maybe... I believe the spouse can also collect the full age-70 survivor's benefit at 60, not at 62 or FRA. If you have at least 10 years difference in ages, that is a big difference in amount collected.
And you only have to be married for 9-10 month's for the survivor's benefit.
The surviving spouse can take the survivor's benefit at 60, but there is a reduction if she takes it before her own FRA. The SS site shows the reduction for a survivor whose FRA is 66 as being .396% per month. ("Monthly reduction percentages are approximate due to rounding. The maximum benefit is limited to what the worker would receive if he or she were still alive. Survivors benefits that start at age 60 are always reduced by 28.50%.")
Lawrence of Suburbia
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I'm trying to delay collecting 'til 70 (or 'til my body gives out, doing my rather physical job)... I see it as accumulating an ever-larger income annuity which, if I can stand the next decade or so of working, will pay about 2/3rds of my monthly expenses; leaving me free to only take dividends from my balanced portfolio.
mathjak107
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my wife got a letter that if she was not collecting ss already her medicare premium would have jumped from, 104.50 to 389.00 per month .
the same would have happened to me if i was of medicare age and delaying .
the reason is back in 2014 we sold some commercial lease rights in Manhattan.
since we wouldn't be covered under hold harmless everything would be based on 2014 taxes since 2015 isn't filed yet and the high income would have killed us for medicare .
instead of 104.50 x 2 under hold harmless we would be paying 389 x 2 per month .
something to consider while delaying .
you can try to get a reduction with this form
https://www.ssa.gov/forms/ssa-44.pdf
so just a heads up , you may be in the lowest tax bracket with little taxable income delaying ss when you retire but if you earned big dollars prior and delay taking ss you can be in for a whopper of a medicare payment even though retired since they use the prior year actually FILED unless they modify you based on the form above . .
the same would have happened to me if i was of medicare age and delaying .
the reason is back in 2014 we sold some commercial lease rights in Manhattan.
since we wouldn't be covered under hold harmless everything would be based on 2014 taxes since 2015 isn't filed yet and the high income would have killed us for medicare .
instead of 104.50 x 2 under hold harmless we would be paying 389 x 2 per month .
something to consider while delaying .
you can try to get a reduction with this form
https://www.ssa.gov/forms/ssa-44.pdf
so just a heads up , you may be in the lowest tax bracket with little taxable income delaying ss when you retire but if you earned big dollars prior and delay taking ss you can be in for a whopper of a medicare payment even though retired since they use the prior year actually FILED unless they modify you based on the form above . .
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WestLake
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Ha. My philosophy as well. Only the decision for me is either 62 or 66. So I will probably go with 64.
That's me LOL
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