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Taking Early Social Security
Old 03-02-2014, 12:54 PM   #1
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Taking Early Social Security

I enjoy this website and have a question maybe someone can help me with. Many articles and opinions suggest taking SS as late as possible to increase the payout. My question is if someone has what they perceive to be enough to fund their retirement lifestyle via retirement accounts, rental properties, pension and cash savings, why wouldn't you take SS as early as possible and use that pool of money to help fund retirement rather than drawing down your personal assets? It just seems to me it would be better to not use personal assets and let them continue to grow if you can offset the income you may need by taking SS at 62. Hope this makes sense. Thanks in advance for any opinions.
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Old 03-02-2014, 01:01 PM   #2
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"When should I take SS, and why?" is a very frequently asked question here. It is addressed in the following FAQ, which might be fun to read while you are awaiting responses.

(FAQ Archive) When to take SS
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Old 03-02-2014, 01:06 PM   #3
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Hi fuzz.. my 2 cents... If SS is going to represent a large percentage of your retirement income, then it maybe best to hold off until you can take the full benefit. If not and you think your retirement income will comfortably take you to an age that most of you relations have lived to, then go for it. We live for today and for tomorrow.
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Old 03-02-2014, 01:21 PM   #4
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My plan is to have enough in personal investments to fund my retirement lifestyle. Since I will have enough money, I will take SS as late as possible. If I die early, I had enough money so the fact that I collect little or no SS doesn't matter much to me. My heirs get a little less, but I still live life as well as I wanted.

On the other hand if I live longer than expected, then by taking SS late I maximize that payout. It's a kind of longevity insurance with a COLA built in. In the event of a long long life, that's when there is the most time and therefor most chance of unexpected complications to my plan. I have no equivalent investment, so if I do happen to live a long time, I will be glad I waited.

To me it's not simply about maximizing the payout I receive. It's about maximizing the payout in those cases where it might matter to me, and being willing to take less in those cases where it doesn't matter.
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Old 03-02-2014, 01:24 PM   #5
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To me it's not simply about maximizing the payout I receive. It's about maximizing the payout in those cases where it might matter to me, and being willing to take less in those cases where it doesn't matter.
+1
My thoughts exactly. I think the best thing the OP can do to get more meaningful feedback is to give us some history on family longevity and their best guess about the age they expect to live until. There are many other things to consider as well...which is why entire books have been written about maximizing social security benefits. But that's the main first question I ask when this subject comes up.
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Old 03-02-2014, 01:52 PM   #6
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it would be better to not use personal assets and let them continue to grow
Grow by how much? Enough to handle the high expenses of your late life, or way more than enough?

Remember, some people actually want to have far more than "enough" when they die. Either to provide a substantial bequest to heirs, or to give to worthy causes. They are not bothered by the "gotta die broke" syndrome, but simply want to avoid worrying about finances.
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Old 03-02-2014, 02:29 PM   #7
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This question is the hardest.

The answer is like a rat maze with no exit. Not sure to turn to a CPA or a palm reader for help.

some factors
taxes now and then. Taking early could knock 0% tax on dividends into 15%
amount you can "safely" get above inflation for early money
how long you will live
wife/husbands age compared to yours
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Old 03-02-2014, 03:06 PM   #8
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Originally Posted by 1fuzzball View Post
I enjoy this website and have a question maybe someone can help me with. Many articles and opinions suggest taking SS as late as possible to increase the payout. My question is if someone has what they perceive to be enough to fund their retirement lifestyle via retirement accounts, rental properties, pension and cash savings, why wouldn't you take SS as early as possible and use that pool of money to help fund retirement rather than drawing down your personal assets? It just seems to me it would be better to not use personal assets and let them continue to grow if you can offset the income you may need by taking SS at 62. Hope this makes sense. Thanks in advance for any opinions.
Are you single or married? If single, then I'm not sure it matters much, particularly if you are male since my understanding it that the payouts from 62 to 70 or anywhere in between are designed to be actuarially neutral (in other words, the expected present value of payments are the same).
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Old 03-02-2014, 03:13 PM   #9
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Unless you absolutely need the money early (to eat, have a place to live, etc), it probably makes sense to wait to take it until age 70. Especially if you have a spouse who depends on your SS benefit. It's the cheapest longevity insurance you can get.
If you live a long time, you'll come out money ahead and be glad you waited to start. If you die early--you're dead, so no chance to regret.
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Old 03-02-2014, 03:32 PM   #10
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Because we are going to self insure for long term health we have decided to take my wife's ss early so as to take pressure off our investments down the road in case one of us have to go in a nursing home. Also because I have a public employee pension if my wife predeceases me I will not get any of her benefit. I guess though everybody's situation is different.
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Old 03-02-2014, 05:27 PM   #11
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I am delaying taking my SS until age 70 because I have plenty current retirement income to live on prior to age 70 and would probably just put the extra cash in my Ally savings account with an APY of 0.87%.

By delaying the SS payoff I can accrue DRC at an 8% rate for 4 years. There is no way that I could receive an 8% APY on any current savings.

As I have stated a number of times before, one of the beauties of SS is that it is so damn flexible. You need it now~take it. Don't need it? Delay it.

Makes everyone happy.
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Old 03-02-2014, 05:36 PM   #12
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because I have a public employee pension if my wife predeceases me I will not get any of her benefit.
Yes. GPO really changes things, and not for the better! We're doing the same thing only my wife has the public pension and won't get any spousal SS based on my earnings.
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Old 03-02-2014, 05:37 PM   #13
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Because we are going to self insure for long term health we have decided to take my wife's ss early so as to take pressure off our investments down the road in case one of us have to go in a nursing home.
I would have thought this would be a prime scenario for delaying SS. LTC is most likely to be needed after age 70. If one spouse needs LTC and it puts a big dent in the portfolio, the higher monthly benefit provided by a delayed SS could make a significant difference in the standard of living of the healthy spouse. A surviving spouse with a diminished portfolio will likely be forced into the kind of low-volatility investments that have a hard time keeping up with inflation, so the inflation adjustments of the (larger) monthly SS check would be especially welcome. But, everyone has to assess their own situation and make their choices.
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Old 03-02-2014, 05:42 PM   #14
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A surviving spouse with a diminished portfolio will likely be forced into the kind of low-volatility investments that have a hard time keeping up with inflation, so the inflation adjustments of the (larger) monthly SS check would be especially welcome.
.

Good point. Well stated.
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Old 03-02-2014, 06:06 PM   #15
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Originally Posted by 1fuzzball View Post
I enjoy this website and have a question maybe someone can help me with. Many articles and opinions suggest taking SS as late as possible to increase the payout. My question is if someone has what they perceive to be enough to fund their retirement lifestyle via retirement accounts, rental properties, pension and cash savings, why wouldn't you take SS as early as possible and use that pool of money to help fund retirement rather than drawing down your personal assets? It just seems to me it would be better to not use personal assets and let them continue to grow if you can offset the income you may need by taking SS at 62. Hope this makes sense. Thanks in advance for any opinions.
I agree with you. There are a lot of diff. opinions but when I reach 62
my ssn, rentals and small pension will cover our living expenses with 10k left over. Will use the 401k pretty much for Travel.
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Old 03-02-2014, 06:34 PM   #16
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I would have thought this would be a prime scenario for delaying SS. LTC is most likely to be needed after age 70. If one spouse needs LTC and it puts a big dent in the portfolio, the higher monthly benefit provided by a delayed SS could make a significant difference in the standard of living of the healthy spouse. A surviving spouse with a diminished portfolio will likely be forced into the kind of low-volatility investments that have a hard time keeping up with inflation, so the inflation adjustments of the (larger) monthly SS check would be especially welcome. But, everyone has to assess their own situation and make their choices.
The problem with delaying SS when trying to protect a spouse who will not receive either her own SS or a spousal benefit based on yours is that if you predecease her as you reach 70, she never gets a penny from SS. If you start SS at 62, she gets a FIRE portfolio that is 8XSS + earnings larger than if you delayed.

It's a tough deal but those are the rules. If the DW had just stayed home, she'd get the spousal SS and it would be worth delaying.

Edit - I think you missed the fact that the non-SS spouse does not receive any spousal SS, period. If the SS spouse goes into LTC and dies after dimishing part of the FIRE portfolio, the surviving spouse gets no SS. There is no death benefit due to GPO. It requires a little different view when planning.
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Old 03-02-2014, 07:17 PM   #17
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The problem with delaying SS when trying to protect a spouse who will not receive either her own SS or a spousal benefit based on yours is that if you predecease her as you reach 70, she never gets a penny from SS. If you start SS at 62, she gets a FIRE portfolio that is 8XSS + earnings larger than if you delayed.

It's a tough deal but those are the rules. If the DW had just stayed home, she'd get the spousal SS and it would be worth delaying.

Edit - I think you missed the fact that the non-SS spouse does not receive any spousal SS, period. If the SS spouse goes into LTC and dies after dimishing part of the FIRE portfolio, the surviving spouse gets no SS. There is no death benefit due to GPO. It requires a little different view when planning.
Thanks for the clarity, Youbet.
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Old 03-02-2014, 07:29 PM   #18
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Since we are on the topic of social security, I have a question that's a bit off from the original post but I'm hoping those of you who understand the system better than me can answer, or point me in the right direction.

My partner and I are now eligible to get married in California. We both have put the maximum amount possible into the social security system for most of our careers, and our anticipated benefits are within a few dollars of each others. My partner is about 6 years older than I am. FRA for both of us is age 67. No kids.

Is there any conceivable benefit to either of us as it relates to social security from getting married? Can I claim a portion of his benefits at an earlier age than FRA while delaying my own benefits until age 70?
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Old 03-02-2014, 08:31 PM   #19
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Old 03-02-2014, 09:17 PM   #20
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Since we are on the topic of social security, I have a question that's a bit off from the original post but I'm hoping those of you who understand the system better than me can answer, or point me in the right direction.

My partner and I are now eligible to get married in California. We both have put the maximum amount possible into the social security system for most of our careers, and our anticipated benefits are within a few dollars of each others. My partner is about 6 years older than I am. FRA for both of us is age 67. No kids.

Is there any conceivable benefit to either of us as it relates to social security from getting married? Can I claim a portion of his benefits at an earlier age than FRA while delaying my own benefits until age 70?
You can have the younger partner claim spousal benefits between FRA and 70.
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