SS facts WOW...

[papadad111]

Yes. The point about return that could be generated by taking the $ earlier is a good point

Another good point is quality of life - money at 63 often can be enjoyed a lot more than money at 70 and beyond.

The state (and tax payers) are indeed wise to suggest taking money later from their own self preservation perspective -- For those that take money earlier and then fall really short, will require incremental demands on the social safety net (Medicaid etc) and the government (taxpayer) will likely need to kick in more money to cover the gaps. Tax payers will ultimately pay for that.

 

[Marc]

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.

A common error; if your full retirement age is 67, waiting until 70 only gets you 124% versus 132%. It grows at 8% per year; actually 2/3% per month.

Also, spousal benefit is max 50% of FRA so your max for both would be 174%. When this was pointed out to me, I had to lower my expected payment from 132+66 = 198 to 128 (my FRA is 66 and 6 mos) + 50 = 178. Quite a big difference.

Marc

 

[samclem]

Y
Another good point is quality of life - money at 63 often can be enjoyed a lot more than money at 70 and beyond.

If a person has some retirement savings, isn't your point an argument for waiting to take SS? Waiting to start SS (until FRA or age 70) provides a higher monthly check when SS is begun, and that's a check that will be inflation adjusted and can't be outlived. For many, this would enable them to significantly reduce the size of the nestegg required to provide spending money in their later years--they don't know how long they'll live, so they have to plan for a long life= a conservative withdrawal rate. Also, because they need this money for spending, volatility is a problem, so they will be invested conservatively (= lower expected returns). With the higher SS check they'll get by waiting, they can spend more of their nestegg when they are young and can enjoy it. There's no inflation-adjusted annuity that can be purchased cheaper than the benefit increase obtained simply by delaying SS.
In concrete terms: If a couple's combined SS benefit increases by $500/mo by waiting until 67 to take it (which would not be very unusual), that couple could get by with a nest egg $109K smaller when they finally do start SS (Assumption: they'll use a 5.5% WR). That $109K could buy some nice vacations when they might still be young enough to get around. As a bonus, they can spend the dough right up front, no need to "save up" SS checks. This $109K is more than the value of the SS checks the same couple would have gotten between age 63 and 67.

Now, this assumes that we trust all the promises made by the government/SSA, but that's another subject.

 

[NW-Bound]

This subject has come up every so often.

When I ran FIRECalc with my savings and SS, I found that what I can spend varies less than 1%, whether I take SS at 62, FRA, or 70. This is for a 30-year run. YMMV.

 

[cyber888]

Well, if I invest the money I took from 62 - 67 and made that grow, that would negate the difference between $276K and $252K.

And if I took the money from 62 - 70 and invested it, that would probably grown bigger than a straight calculation.

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

 

[cyber888]

Regarding what you said about promises by the government ....
The government disappoints and have broken their promise on SS. I can no longer file and suspend, they just eliminated that. So, the US government can change SS rules anytime and there's nothing that could be done once they decide to change it.

If a person has some retirement savings, isn't your point an argument for waiting to take SS? Waiting to start SS (until FRA or age 70) provides a higher monthly check when SS is begun, and that's a check that will be inflation adjusted and can't be outlived. For many, this would enable them to significantly reduce the size of the nestegg required to provide spending money in their later years--they don't know how long they'll live, so they have to plan for a long life= a conservative withdrawal rate. Also, because they need this money for spending, volatility is a problem, so they will be invested conservatively (= lower expected returns). With the higher SS check they'll get by waiting, they can spend more of their nestegg when they are young and can enjoy it. There's no inflation-adjusted annuity that can be purchased cheaper than the benefit increase obtained simply by delaying SS.
In concrete terms: If a couple's combined SS benefit increases by $500/mo by waiting until 67 to take it (which would not be very unusual), that couple could get by with a nest egg $109K smaller when they finally do start SS (Assumption: they'll use a 5.5% WR). That $109K could buy some nice vacations when they might still be young enough to get around. As a bonus, they can spend the dough right up front, no need to "save up" SS checks. This $109K is more than the value of the SS checks the same couple would have gotten between age 63 and 67.

Now, this assumes that we trust all the promises made by the government/SSA, but that's another subject.

 

[Katsmeow]

If

Now, this assumes that we trust all the promises made by the government/SSA, but that's another subject.

I'm not sure it is. Note, I am not at all suggesting that the government/SSA are lying to anyone. But, stuff changes. As mentioned file and suspend happened. I had been toying with the idea of taking spousal at 66 (DH is 68 and already on SS) and then letting mine (the larger by a small amount) grow until 70. But, I was 61 when that change was made so I can't do it.

So, that is OK. I knew about that before I turned 62 so that is fine. But, I can just imagine deciding to not take because of all these reasons to wait until FRA or even age 70 and then suddenly see benefits cut (or changed) just as I got ready to take them.

Note I am not at all saying that having already taken the benefits would protect me from the changes. But many people decide not to take benefits at less than FRA because of the amounts they expect to get at FRA or age 70.

A big factor for as to why I will probably take them before FRA (I recently turned 62) is because I figure that I can't believe that those benefits at FRA or 70 are necessarily what they are proposed to be. So, I tend to take the benefits that I can take now (I actually will probably wait until the first of the year) and then at least I am getting now what I am expecting to get. That may change in the future but it won't change what I already got.

 

[daylatedollarshort]

The reality is that the only thing we know for sure now about the future of SS benefits is that without program changes, per the SSA web site, "Currently, the Social Security Board of Trustees projects program cost to rise by 2035 so that taxes will be enough to pay for only 75 percent of scheduled benefits."

This may change, it may not, maybe SS benefits will even be made higher, but the possibility that future benefits will be cut is not only nonzero, it is the status quo. That is a nontrivial consideration some of the "when to take SS" financial articles address and some do not.

 

[garyt]

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.

Exactly. No offense to the OP, but who cares what the total amount you wring out of SS? What if you spend your last 5 years in a nursing home and all that extra money goes there? What if you're fine but you lose your significant other and have no one to share that money with?
Take your SS when it will do the most to help you enjoy the years you have left, total amount be damned. I'm not sure what that will be for me, but leaning towards taking it early.

 

[garyt]

Regarding what you said about promises by the government ....
The government disappoints and have broken their promise on SS. I can no longer file and suspend, they just eliminated that. So, the US government can change SS rules anytime and there's nothing that could be done once they decide to change it.

I'm glad they got rid of "file and suspend". I don't think people should be gaming the system. Make no mistake, if it was still legal, I'd do it too but I'm glad they got rid of it.

 

[marko]

Exactly. No offense to the OP, but who cares what the total amount you wring out of SS? What if you spend your last 5 years in a nursing home and all that extra money goes there? What if you're fine but you lose your significant other and have no one to share that money with?
Take your SS when it will do the most to help you enjoy the years you have left, total amount be damned. I'm not sure what that will be for me, but leaning towards taking it early.

+1 +1

After all the miles of comments on "when to take SS" I think this is the most clear and profound analysis.

Disclaimer: I took SS at 62; didn't need to but did.

 

[RunningBum]

Exactly. No offense to the OP, but who cares what the total amount you wring out of SS? What if you spend your last 5 years in a nursing home and all that extra money goes there? What if you're fine but you lose your significant other and have no one to share that money with?
Take your SS when it will do the most to help you enjoy the years you have left, total amount be damned. I'm not sure what that will be for me, but leaning towards taking it early.

Money is money. If you want more money early, taking SS early is not the only way. You can take more out of your retirement account, knowing that you have a larger SS check coming.

 

[dallas27]

SS for (healthy) lbym types should be used and viewed as market insurance, delay until the portfolio takes a hit, then use the SS to minimize portfolio draw. It's the best long term outcome.


Sent from my iPhone using Early Retirement Forum

 

[eytonxav]

As mentioned file and suspend happened. I had been toying with the idea of taking spousal at 66 (DH is 68 and already on SS) and then letting mine (the larger by a small amount) grow until 70. But, I was 61 when that change was made so I can't do it.

Why do you think you can't file at 66 (your FRA) for 1/2 of your DH's who is older and already receiving SS, and then claim your own at 70. Unless I had a brain dump which is entirely possible, that option is still available.

 

[Chuckanut]

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

No.


The worst decisions are made when angry or impatient.

 

[athena53]

Why do you think you can't file at 66 (your FRA) for 1/2 of your DH's who is older and already receiving SS, and then claim your own at 70. Unless I had a brain dump which is entirely possible, that option is still available.

She noted that she's 61. That option was retained only for people who were 62 by year-end 2015. Fortunately, I made it in under the wire (turned 62 in 2014), so will be applying for a Restricted Spousal benefit at age 66, after carefully verifying that the law will still allow me to collect my own at 70.

 

[Bigdawg]

Please don't sign up for survivor benefit plan. A term policy is much cheaper. Not to mention statistically you will out live him. SSB is not cost effective IMHO. Run your numbers. See what you think.

 

[Chuckanut]

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.

Of course, we must keep in mind that any plan needs to evaluated from time to time. One can choose to turn on the SS spigot anytime from age 62 onwards. It's not an age 62 or wait to 70 decision.

Here's a radical thought: Compromise and turn on SS at one's full retirement age, thus getting a bigger SS check for the remainder of life, and preserving capital that would have otherwise been spent waiting until 70. I may yet do this.

 

[eytonxav]

She noted that she's 61. That option was retained only for people who were 62 by year-end 2015. Fortunately, I made it in under the wire (turned 62 in 2014), so will be applying for a Restricted Spousal benefit at age 66, after carefully verifying that the law will still allow me to collect my own at 70.

Yes, but what she described is not the file and suspend scenario. The following describes file and suspend which I believe is the loophole that was closed:

Under current rules, the older spouse can claim benefits at age 66, the current full retirement age, and immediately suspend them. That allows the younger spouse (as long as she or he is above age 62) to claim spousal benefits and defer his or her own claim. When the older spouse reaches 70, he or she will be able to start claiming benefits that will have grown to the maximum amount, and the younger spouse can collect either his or her own benefit or a spousal benefit, whichever is larger.

 

[Bestwifeever]

Yes, but what she described is not the file and suspend scenario. The following describes file and suspend which I believe is the loophole that was closed:

No, pretty sure both file-and-suspend and restricting benefits options are gone for people KM's age and younger: https://www.fidelity.com/viewpoints/retirement/social-security-rules

 

[eytonxav]

No, pretty sure both file-and-suspend and restricting benefits options are gone for people KM's age and younger: https://www.fidelity.com/viewpoints/retirement/social-security-rules

Ouch, I erroneously thought this elimination only applied to the scenario of claiming a spousal from a spouse who had filed and suspended their SS. Looks like my DW will also end up having to take half mine or her own since she will turn 62 in July.

If you were planning to delay your own benefit and claim only spousal benefits instead—you may do so from your full retirement age until age 70 only if you are at least 62 years old in 2015. If you turn 62 in 2016 or later, this strategy will no longer be available for you.

 

[Music Lover]

Another good point is quality of life - money at 63 often can be enjoyed a lot more than money at 70 and beyond.

That's why I'm taking early CPP (Canada) at 60 rather than wait until 65. If I outlive the break even point, then I'll be happy to have been "wrong". I retired early at 53 for a reason...so I could enjoy life now instead of when I'm 75.

 

[haha]

This subject has come up every so often.

When I ran FIRECalc with my savings and SS, I found that what I can spend varies less than 1%, whether I take SS at 62, FRA, or 70. This is for a 30-year run. YMMV.

Glad it comes around. It's a handy emetic.

 

[samclem]

Please don't sign up for survivor benefit plan. A term policy is much cheaper. Not to mention statistically you will out live him. SSB is not cost effective IMHO.

I strongly disagree. Whether you take the military Survivor's Benefit Plan is a complicated decision. Much depends on how important the pension money would be to the survivor, relative age and health of both of you, etc. I >did< run the numbers, and in our situation no term life insurance policy could come close to matching the benefits offered through the SBP. In any comparison, don't forget to include the "wild cards" of unknown future inflation rate (covered by SBP) and the rate of return you'd earn on any payout from a term life insurance policy. Not even close in our case, once we included realistic assumptions for all the unknowns/unknowables.
At the >very< least, know that the first small part of the SBP benefit (about $300/mo to the survivor) is highly subsidized by the government, costs less than $20/mo, and nearly every military retiree (spouse) should take that.
Don't let a sharpie insurance salesman, annuity salesman (same thing), or barracks accountant talk you out of the SBP. It's not a "slam dunk" either way, but in some (most?) situations it is clearly the best course of action. I'm happy we signed up for it.
See lots more here and in other places on this forum. Also, if you are a "numbers person" want to use some calculators that will show you the amount of subsidies you'd get through the SBP, I highly recommend the DoD's "Office of the Actuary" site (here) and especialy the two spreadsheet downloads (SBP subsidies) and (SBP: Comparison to Life Insurance costs). This is a big decision, be careful.

 

[pb4uski]

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?

Works perfectly if you die early.... but is suboptimal (less to your kids) if you live long. Pick your poison.