SS facts WOW...

[aknowhow78]

Hi everyone,
I attended a retirement seminar this week and they had person from the Social Security Administration present. Here is the fact that she stated:
if you take your SS at 62, you will get 75% of you entitlement, FRA=100%, at 70 yrs 132%. if this fact I decided to work the #.

let say a person will get 1000.00 at FRA (67yrs of age) and will live until 90 years of age.
if one take SS at 62:
(90yrs-62 yrs= 28yrs of total collection; 750/month(this is the 75% value) X 12 months =9000/yr. 9000/yr X 28yrs of collection=252,0000

if one take SS at FRA (67 for now)
90 -67= 23 yrs of total collection; 1000/mth(100% value) x12 mths= 12000/yr. 12000/yr X 23 yrs=276,0000

if one take SS at 70:
90 -70 = 20 yrs of total collection; 1320/mth(132% value) x12 mths= 15840/yr. 15840/yr X 20 yrs=316,800.

As one can see waiting is not only beneficial in terms of per month payout also overall payout amount. DH and I have discussed this and to make sure that our investment last and leave some for the kids, maybe one of use taking it at 62 and the other waiting until 70.Here is our plans and please we welcome your input:
I am currently 47 and DH will be 49 this year with 2 kids (3 and 13yrs old). I am Active duty and plant to retire 2021 (52 yrs with 30yrs of service) I will have pension payment (COLA) starting upon my retirement at 52 (75% + disability=apprx 7800/month 94k/yr +full medical carriage via Tricare).

Current expense with kids 10k/mth and will remain so as we have young kids. DH will continue to work until at 59 1/2 (current salary is 110K/year). We currently have everything max out (max contribution to 401k, TSP, Roth IRA (backdoor), and we able to put 36k/yr in after tax accts (emergency, kids college funds, etc..). the 36k will drop in 2021 to 20k/yr until DH retires in 2026.

Upon his retirement at 59 1/2 we plan to withdrawal from his 401k for 3 yrs until he turns 62, take his SS and stop distribution from 401k (and let it grow 8 more yrs). Restart at 70 + my SS at 70 + TSP distribution + pension. Firecal reports 100%. Any input or other consideration we have missed?
much obliged
Nana

 

[Senator]

let say a person will get 1000.00 at FRA (67yrs of age) and will live until 90 years of age.
if one take SS at 62:
(90yrs-62 yrs= 28yrs of total collection; 750/month(this is the 75% value) X 12 months =9000/yr. 9000/yr X 28yrs of collection=252,0000

if one take SS at FRA (67 for now)
90 -67= 23 yrs of total collection; 1000/mth(100% value) x12 mths= 12000/yr. 12000/yr X 23 yrs=276,0000

if one take SS at 70:
90 -70 = 20 yrs of total collection; 1320/mth(132% value) x12 mths= 15840/yr. 15840/yr X 20 yrs=316,800.

Now, refactor at age 84 max. That is the average lifespan.

Then, factor in someone that needs the money to fulfill their life's dreams at 62, rather than 70. Or the average lifespan of someone that has already had a by-pass, stent or heart attack. Or diabetes. Or a heavy smoker. Or a couch potato.

I am waiting until 70, unless I decide different. If I was in one of the above groups, I would start at 62, or even sooner.

 

[Souschef]

Nana,
Your calculations do not take into account the present value of the money, for one thing. Also the senator brought up some good facts about life expectancy.
My wife took hers at 62 and passed away at 68.

 

[wrigley]

It's no secret the longer you wait to take it the more you will receive monthly AND........the longer you live the more you will accumulate.

I wonder what percentage of those that were hell bent on waiting until they were 70 to start collecting.........never made it to 70!

I'm taking mine at 62 and I'm also spending everything I saved over the years. My kids can fend for themselves.

Mike

 

[marko]

What Senator said.

There've been endless discussions on this forum about this and the bottom line is "it depends"

OP has 21 looong years before age 70. One can only guess what changes will be made to SS during that time. My vote was to 'take the money and run' at 62

 

[athena53]

I agree it's not that simple and you need to consider your own circumstances, but it's good public policy to encourage people to wait. In theory, it doesn't matter to SS when people collect (the increased benefit at later ages factors in the likelihood that many people who wait that long will never collect). For many people with little additional savings, though, what you get at age 62 isn't enough to live comfortably, especially as you get older and have increased out-of-pocket medical expenses, dental, vision and hearing aid costs not covered at all by Medicare, and have to hire out tasks such as yardwork.

 

[2017ish]

...
I am currently 47 and DH will be 49 this year with 2 kids (3 and 13yrs old)....

The system may change in the next 13-15 years. I'm sure not counting social security chickens, and we are 56/55 right now.

But yeah, Senator is right. If one of a dual-income married couple is likely to live to 84 or beyond, highest earner should delay. Population wide, the system is designed to be actuarially neutral--although it may be a little slanted in favor of delaying right now.

 

[daylatedollarshort]

We also take into account the program is not fully funded - only 75% of benefits after 2035. This may change, but it is the default option. There may be less benefits or higher taxes in the future for those with other assets. We're putting more emphasis on preserving our portfolio because we have more control over those funds.

There has been much talk of SS and chained CPI, which in reality is just another name for a reduction in benefits.

 

[jollystomper]

For me the bigger factor will be when we need the money based on our retirement income and expenses. My planning uses getting Social Security at 63, but since I'm fortunate to also having pension, savings, and investments, I will see what my finances are at that time before making a decision.

I have two older brothers over 65, both in good health. One planned his overall finances well and plans to take it later, primarily to maximize the benefit for his wife. The other older brother who did not plan well and had to take it as soon as he could.

 

[dixonge]

and for those who can manage to not *need* the SS income for just paying the bills, you would need to factor in the rate of return on the money, which would tilt things significantly toward a much longer break-even timeframe.

 

[marko]

and for those who can manage to not *need* the SS income for just paying the bills, you would need to factor in the rate of return on the money, which would tilt things significantly toward a much longer break-even timeframe.

And if that money is in an IRA, you need to factor the taxes paid on your W/D during that wait time. If you're below the threshold on Fed and your state doesn't tax SS, you could be pocketing a lot more vs W/D out of your IRA.

In my case (as SS isn't taxed at the state level) I put about $4K in my pocket each year in taxes avoided vs an IRA W/D.

 

[Chuckanut]

There are many factors that go into the decision of when to take SS.

For me one factor is LTC. I don't have LTC insurance as I am suspiciouis of the insurance companies and their ability to raise rates until one is priced out of the insurance (usually as the potential need for it is getting higher).

So, I figure that by taking SS at age 70, I can use the extra money to help pay for some of the costs of LTC. I am also accumulating years of extra $$'s not paid to the LTC insurance companies.

Does this make sense? I think so given my current financial and health history. YMMV.

 

[athena53]

There are many factors that go into the decision of when to take SS.

For me one factor is LTC. I don't have LTC insurance as I am suspiciouis of the insurance companies and their ability to raise rates until one is prices out of the insurance (usually as the potential need for it is getting higher).

So, I figure that by taking SS at age 70, I can use the extra money to help pay for some of the costs of LTC. I am also accumulating years of extra $$'s not paid to the LTC insurance companies.

Does this make sense? I think so given my current financial and health history. YMMV.

I'd agree with that. My great-grandmother, who never had a colonoscopy, a Pap smear or statins, died at 93. Her son, my grandfather, lived to 95. My parents are 85 and Mom probably won't last till the end of the year because her breast cancer has recurred and metastasized, but it's all a clear indication that I better plan for a long life if I'm not run over while riding my bicycle. I have also avoided buying LTC for the reasons you mentioned and figure that the SS I'd collect at 70 (currently estimated at $36K/year) will pay a good chunk of LTC and investment income should cover the rest. I've read that many nursing homes will accept whatever you're getting from SS (leaving you a little for personal expenses) and I'll have a bigger bargaining chip since my SS is a lot higher than the average.

 

[kaneohe]

Nana,
Your calculations do not take into account the present value of the money, for one thing. ......................................................

don't they? SS is cola'd but the calculations use a fixed $ amount......kind of
like constant $?

 

[youbet]

There've been endless discussions on this forum about this and the bottom line is "it depends"

+1

Whatever you do with SS, prefectly reasonable outcomes in your personal circumstances can come into play and make your decision turn out to be anywhere from perfect to a disaster. If you have the choice, that is you can live without the SS income until 70, your best decision is to do whatever makes you personally feel most comfortable. This assumes, of course, no overriding circumstances such as a spouse impacted by GPO, etc.

 

[youbet]

There are many factors that go into the decision of when to take SS.

For me one factor is LTC. I don't have LTC insurance as I am suspiciouis of the insurance companies and their ability to raise rates until one is priced out of the insurance (usually as the potential need for it is getting higher).

So, I figure that by taking SS at age 70, I can use the extra money to help pay for some of the costs of LTC. I am also accumulating years of extra $$'s not paid to the LTC insurance companies.

Does this make sense? I think so given my current financial and health history. YMMV.

Are you saying that NH's have a preference for SS dollars over FIRE portfolio generated dollars?

 

[youbet]

and for those who can manage to not *need* the SS income for just paying the bills, you would need to factor in the rate of return on the money, which would tilt things significantly toward a much longer break-even timeframe.

Yep. For some reason, folks tend to leave returns on the early SS money out of the calculation. Perhaps because they prefer a larger annuity free of the need for investment management during their elder (and possibly dementia ridden) years? Or perhaps because you have to make some assumptions regarding what the returns will be?

 

[Dawg52]

Sixty two is fast approaching for me(mid summer). As of now, I'm thinking about pulling the SS trigger early next year. Males in my family just don't have a good track record for longevity. My mom lived to 95, but that has not been the norm. I have a cousin who retired 3 years ago with a great pension plan and SS benefits. Today he is in the final stages of his battle with ALS. Just 2 years go he looked great and seemed perfectly healthy. Of course we all know of cases like this.

It probably comes down to me basically being one of those 'bird in the hand' kind of guys. If I live past the break even point, I'll gladly kick myself.

 

[2017ish]

Sixty two is fast approaching for me(mid summer). As of now, I'm thinking about pulling the SS trigger early next year. ...

It probably comes down to me basically being one of those 'bird in the hand' kind of guys. If I live past the break even point, I'll gladly kick myself.

Better hope you are still having GOOD years at 84/85; that other thread is not heartening regarding being able to count on kicking yourself anywhere that requires much flexibility.

 

[Looking4Ward]

If I'm not spending SS dollars from the ages of 62 to 70, then I'm spending my own. And if I'm spending my own, those are dollars that are no longer invested. I'm not exactly sure what sort of amortized return I could expect on those invested dollars over the 8 year period but it does factor into the equation.

 

[aknowhow78]

If I'm not spending SS dollars from the ages of 62 to 70, then I'm spending my own. And if I'm spending my own, those are dollars that are no longer invested. I'm not exactly sure what sort of amortized return I could expect on those invested dollars over the 8 year period but it does factor into the equation.

Yes this is our point..my own money upon my death can be given to our adult children but SS cannot..so why not spend that down and save your own until you have to take distribution?

 

[aknowhow78]

Now, refactor at age 84 max. That is the average lifespan.

Then, factor in someone that needs the money to fulfill their life's dreams at 62, rather than 70. Or the average lifespan of someone that has already had a by-pass, stent or heart attack. Or diabetes. Or a heavy smoker. Or a couch potato.

I am waiting until 70, unless I decide different. If I was in one of the above groups, I would start at 62, or even sooner.

so our plan to split it--one wait until 70 and the other take at 62 is good..right. my DH will get 55% of my pension for life if i upon my death. so taking the higher SS should help with the gap.

 

[RunningBum]

Yes this is our point..my own money upon my death can be given to our adult children but SS cannot..so why not spend that down and save your own until you have to take distribution?

Because if you're going to live longer, you can leave your kids more by deferring SS and getting more out of your system (unless you're a really good investor). If you're going to die early, save your own money and take SS now so that you leave more of yours behind.

Bottom line, there is no right or wrong answer, unless you know when you will die. Your probably also need to know your future market returns. In other words, there is no right or wrong answer. The best someone can do is take an educated guess based on their health and family history, and maybe do a bit of market timing--if the market tanks, that may be a good time to take SS and leave more money in the market to recover, and if it seems due for a fall, defer SS so that you'll take more off the table to live on while it's high. Married couples should also consider the high/low income strategies, which don't apply to me so I don't even know what those are.

 

[Gone4Good]

If one of a dual-income married couple is likely to live to 84 or beyond, highest earner should delay.

Wouldn't it make the most sense for the person most likely to live the longest to delay, which I think would normally be the female spouse if both are healthy or the healthiest of the two otherwise?

 

[LuckyDog]

My thought is that the highest earner in a couple should wait longer to collect. That way, if one of them dies, the remaining spouse will collect the higher of the two SS checks.