Taking Social Security at 62 - Point to Ponder

[RunningBum]

Wow. You must think you're immortal and will be physically active for forever. For sure, shifting payments into the future will give higher benefit, but you miss the point. Even if you'll live as long as you so optimistically think, quality of life will inevitably go down hill.

I'm not saying waste all your money in the early years with nothing left over later (in planning for a longer life). It's all a balance. Just don't think greedy and try to be stingy upfront to collect more when too old to enjoy. Life is basically short, and this sort of planning is all about balance.

Don't assume that any of us are being stingy from 62-70, or won't need just as much money in later years to stay comfortable and hire help around the house should we be in ill health in our later years.

 

[packrat44]

Wow. You must think you're immortal and will be physically active for forever. For sure, shifting payments into the future will give higher benefit, but you miss the point. Even if you'll live as long as you so optimistically think, quality of life will inevitably go down hill.

I'm not saying waste all your money in the early years with nothing left over later (in planning for a longer life). It's all a balance. Just don't think greedy and try to be stingy upfront to collect more when too old to enjoy. Life is basically short, and this sort of planning is all about balance.

This is amazing. So if a person/couple plan to delay receiving their SS benefits until later because they want to ensure there is a higher cash flow in their old age and they do not want to be a financial burden on their children they are now considered "greedy' and "stingy". I thought it would be the other way around.

If my father had not planned financially to cover older age, by brothers and sisters would have to be caring for them. (He will be 99 this summer, mother is 96.)

 

[padlin00]

I misread your original post. I thought your were intending your DW to switch to a 50% spousal once you hit 70. My intent was to have her start a 50% spousal based on your benefits once you hit FRA.

If I have read it correctly now, you intend to take the 50% spousal on your DW's benefits. If that is the case, I think there is a problem. I believe when requesting a spousal, SS looks at which is higher. If the 50% spousal is higher than your benefits you would get the 50% spousal. Since your own benefits are higher than the 50% spousal you would receive them not the spousal. Maybe I read this incorrectly again. Sorry if I did. However, it is best to know the rules before we step into the game.

I've been told that as long as I don't put in for my benefits I can put in for spousal on my wifes at my FRA. As I won't have put in yet that they are higher is not a concern. Once I hit 70 and file, my wife would change to spousal on my benefits. You bring up a couple issues I'll have to double check on, better to find out now rather then later.

Here's the applicable paragraph from the SocialSecurityChoices report;
"First, the wife files for and begins to receive retirement benefits at age 66, year 2022. Next, provided the husband has reached full retirement age, the husband files for a spousal benefit on the wife’s record at age 67, year 2023. The husband should be careful to apply for the spousal benefit only, and not for his own retirement benefits at this time. Then, the husband files for and begins to receive retirement benefits at age 70, year 2026. Last, at age 70, year 2026, the wife begins to receive a supplemental spousal benefit on the husband’s record in addition to the retirement benefit she is already collecting."

 

[Richard8655]

People seem offended when someone here thinks early (62) is better that later. This is my opinion and works for me. I'm not calling anyone stingy, just saying not to delude and deprive yourself that you'll live to a ripe old age to use and/or enjoy your earned benefits.

In my case, early SS means I can enjoy life sooner based on what I earned in my career. I'd be interested in seeing the statistics or percentages of people who waited to 66 or even to 70, and never live long enough to recoup their life-long contributions, let alone enjoy those benefits.

As my amigo said, YMMV.

 

[beowulf]

As has been said by just about everyone, it depends. In my case, I took SS in Jan 2013 at 64 1/2. I stopped working in mid 2012. My wife turned 66 in April and filed for spousal SS. She will wait until 70 to collect her full SS. As a retired fed with CSRS, I cannot ever receive a spousal benefit. Her benefit at 70 will be more than double mine. In the meantime she gets half of mine for 4 years and gets a bump up on her full benefit each of those 4 years.

Yes, I could have also waited until 66 or even 70, but male longevity on my side of the family is poor. As far as I know, none of my male family relatives made it past 75. Maybe I'll get a bit further with modern medicine. But in her family, mid 90s is typical for females.

So this way we have a few more bucks to enjoy while we can do so together. My SS is low anyway as I only about 16 years of SS contributions, mostly at low salaries.

Again, YMMV.

 

[WWDog]

OK I took a link off of a post somewhere on this site to T Rowe Price Benefit planner
Social Security Benefits Evaluator - T. Rowe Price
using the SS calculator to determine what my and my wife's benefit would be at FRA. This is a very nice tool as it is based on what goal you are looking for with your SS benefit. I'm assuming that it takes into account all the rules and gives you a strategy i.e. what you and your spouse need to do when to get the maximum benefit toward that goal. You have two choices of life expectancies which probably doesn't fit most circumstances but it gives you a good plan to start with for a variety of goals.

 

[RunningBum]

People seem offended when someone here thinks early (62) is better that later. This is my opinion and works for me. I'm not calling anyone stingy, just saying not to delude and deprive yourself that you'll live to a ripe old age to use and/or enjoy your earned benefits.

In my case, early SS means I can enjoy life sooner based on what I earned in my career. I'd be interested in seeing the statistics or percentages of people who waited to 66 or even to 70, and never live long enough to recoup their life-long contributions, let alone enjoy those benefits.

As my amigo said, YMMV.

True, you didn't call anyone stingy, but you needlessly admonished others not to be stingy. Stick to worrying about yourself.

And again, why do you think any of us are depriving ourselves? Are you simply unable to grasp that we can spend down more of our accounts early, knowing we have a bigger SS check coming later?

As for statistics, what do you suppose the % is of people who are dead and care about not recouping their life-long contributions?

 

[packrat44]

People seem offended when someone here thinks early (62) is better that later. This is my opinion and works for me. I'm not calling anyone stingy, just saying not to delude and deprive yourself that you'll live to a ripe old age to use and/or enjoy your earned benefits.

In my case, early SS means I can enjoy life sooner based on what I earned in my career. I'd be interested in seeing the statistics or percentages of people who waited to 66 or even to 70, and never live long enough to recoup their life-long contributions, let alone enjoy those benefits.

As my amigo said, YMMV.

I do not believe people were offended because of your statement receiving SS at 62 works better for you. It was you attitude that others were stingy or greedy because delaying receipt of SS worked better for them.

You apparently assume that if someone delays receipt of SS they are automatically depriving themselves financially in the early stages of retirement. That would be a false assumption in many cases. There is nothing that I want that I can not pay cash for at this moment. Bought another vacation house a couple of years ago and paid cash. Bought a new car for DW - paid cash. While SS benefits are nice, they are not a major source of our NW.

My desire for delaying SS is to provide a higher level of assurance that we will be financially independent and not a burden on others. Their is also the spousal insurance factor. Another reason we all delaying SS is so we can maximize our tIRA to ROTH conversions. I value FI much more than desiring to spend every $ I have earned.

There are a multitude of reasons why taking SS at 62 is better for some. There are also a multitude of reasons why delaying SS is a better choice for others.

 

[Bestwifeever]

I can't imagine why anyone would second guess someone else's decision about this, even if it were based on a coin toss. Helpful to hear others' reasoning for their decisions, but I can hardly make my own mind up about this, let alone urge someone else to go a certain way. My decision would probably have emotional factors, so scientific of me!

 

[youbet]

I can't imagine why anyone would second guess someone else's decision about this, even if it were based on a coin toss. Helpful to hear others' reasoning for their decisions, but I can hardly make my own mind up about this, let alone urge someone else to go a certain way. My decision would probably have emotional factors, so scientific of me!

+1

Yes.

And, in fact, even if statistics and historical data related to one's personal circumstances suggest taking SS at one point or another, it may still turn out that that point is non-optimal based on how things actually work out. There are so many unknowns. Longevity. Investment returns from 62 to 70. Future changes to SS rules. Etc. Other than optimizing the situation for married couples, I see little to justify a microscopic investigation into the situation.....

 

[clifp]

People seem offended when someone here thinks early (62) is better that later. This is my opinion and works for me. I'm not calling anyone stingy, just saying not to delude and deprive yourself that you'll live to a ripe old age to use and/or enjoy your earned benefits.

In my case, early SS means I can enjoy life sooner based on what I earned in my career. I'd be interested in seeing the statistics or percentages of people who waited to 66 or even to 70, and never live long enough to recoup their life-long contributions, let alone enjoy those benefits.

As my amigo said, YMMV.

The benefits are designed to be actuarially neutral so the number of people who come out ahead is equal to those who come out behind.

The reason waiting is a good deal because it is impossible to purchase a COLA annuity for the same price as delaying social security. Delaying SS is by far the cheapest longevity insurance around

I think what you maybe missing is a lot of expense as we get older are not stuff we want to have but stuff we have to have.

For example most assisted care place charges $300-$500 a month to administer drugs once or twice a day. That is in addition to cost of the drugs in the first place.

My 87 year old mom isn't happy about spending that kinda of money, but if we don't have her pay for that the drug don't get taken every day. Nor is mom happy about spending $75/month for Depends. The $20 hour we spend for somebody to get her to her Dr. appointments and help with paperwork is pretty cheap compared to most places.

Anyway I really haven't seen a much of chance in her spending, just what she is spending it on.

But hey maybe you'll get lucky, be healthy one day, and day of a heart attack in a bed with 20 year old playmate the next day.

 

[youbet]

The reason waiting is a good deal because it is impossible to purchase a COLA annuity for the same price as delaying social security. Delaying SS is by far the cheapest longevity insurance around

If you get good returns on the 8 years (62 - 70) of SS income and if you don't live to an extreme age, the benefit of the higher delayed SS payments over lower payments plus spending down the early SS plus earnings, or buying an annuity with that sum, is likely to be small, if anything. (That's a big "if" on the earnings of course.)

But, there is a subjective benefit of delaying and that is the benefit of having a higher cola'd annuity coming in you don't have to manage as a geezer. That could be quite important with age.

I had to start SS at 62 to protect my DW because she is impacted by WEP. No other viable choice. Fortunately, earnings on those dollars have been fabulous since the market has been climbing since the recession. Hopefully, I won't blow it going on from here. I'll be looking at buying an immediate annuity for DW with that stash (est.$250k?) later which hopefully will fill the gap between my early SS and what I would have gotten if I waited until 70.

Having a spouse you want to protect financially who is impacted by WEP makes SS an interesting game. I likely would have waited until 70 otherwise. Hopefully my current strategy will give me the equilvalent of delaying. It'll depend on how earnings go between now and 70 and how attractive annuities are then.

 

[F4mandolin]

I can't see waiting much past 62 myself. My wife is only eligible for spousal 50% but is almost 3 years younger. But as people have pointed out again and again.....I will likely go first and having at least a little bit larger SS from my side will help her out more. Waiting until 63 or 64 will bump her 50% up a little bit as well. I still have another 6 years to worry about it though. Hopefully my SS supplement will be starting in two months....

 

[beowulf]

I had to start SS at 62 to protect my DW because she is impacted by WEP. No other viable choice.
Having a spouse you want to protect financially who is impacted by WEP makes SS an interesting game. I likely would have waited until 70 otherwise. QUOTE]

I don't quite understand how your DW being affected by WEP would force you to start SS at 62 (I assume that you are not affected by WEP). The Windfall Elimination Provision reduces any earned SS she receives on her own earnings by at least $385 or more (depending on when she turned 62). It has nothing to do with your SS benefit. As a retired CSRS fed, my SS benefit has been reduced by about 35%. The longer your DW waits to claim, the larger the penalty (you didn't think the gov would give you a free pass for longevity ?).

Are you referring to the Government Pension Offset, or GPO? The basic rule is that GPO will reduce the amount of your Social Security spouse's, widow's or widower's benefits by two-thirds of the amount of your government pension. This means that, if her pension from her non SS employment is anywhere near your SS benefit, she will receive nothing. There are exceptions and other rules, but when you claim SS is irrelevent to this rule. In fact. your best bet is to wait as long as possible (70?) as she will not get any of your benefit - probably ever.

Am I missing something that you left out? See my earlier post for what I did in a similar situation.

 

[Katsmeow]

I can't see waiting much past 62 myself. My wife is only eligible for spousal 50% but is almost 3 years younger.

Why isn't she eligible on her own record?

 

[youbet]

I had to start SS at 62 to protect my DW because she is impacted by WEP. No other viable choice.
Having a spouse you want to protect financially who is impacted by WEP makes SS an interesting game. I likely would have waited until 70 otherwise. QUOTE]

I don't quite understand how your DW being affected by WEP would force you to start SS at 62 (I assume that you are not affected by WEP). The Windfall Elimination Provision reduces any earned SS she receives on her own earnings by at least $385 or more (depending on when she turned 62). It has nothing to do with your SS benefit. As a retired CSRS fed, my SS benefit has been reduced by about 35%. The longer your DW waits to claim, the larger the penalty (you didn't think the gov would give you a free pass for longevity ?).

Are you referring to the Government Pension Offset, or GPO? The basic rule is that GPO will reduce the amount of your Social Security spouse's, widow's or widower's benefits by two-thirds of the amount of your government pension. This means that, if her pension from her non SS employment is anywhere near your SS benefit, she will receive nothing. There are exceptions and other rules, but when you claim SS is irrelevent to this rule. In fact. your best bet is to wait as long as possible (70?) as she will not get any of your benefit - probably ever.

Am I missing something that you left out? See my earlier post for what I did in a similar situation.

No, you're not missing anything. I just made a simple typing too fast error. I was thinking GPO, but typed WEP. DW is impacted by GPO, will never receive any SS based on my earnings and will get approximately zero based on her earnings (few SS earnings reduced further by WEP).

Bottom line........ I needed to start my SS at 62 to protect her in the event I predecease her. She won't collect any SS based on my earnings, but she will have the nest egg funded by whatever I collect and invest between 62 and death.

An example of what I needed to avoid:

I'm waiting until 70 to collect SS. I die at 68. Neither I or DW would have collected a penny from SS and never would. Since I started at 62 and so far have received excellent returns on the invested SS dollars due to the market recovery, my death at 68 would probably yield her an extra $200k or so ($21k x 7yrs + earnings) in our portfolio. Because of GPO, that's the only way to provide her with some longevity protection.

Thanks for spotting my typo. Yep, I meant GPO (and know better!) but typed WEP.

 

[omni550]

No, you're not missing anything. I just made a simple typing too fast error. I was thinking GPO, but typed WEP. DW is impacted by GPO, will never receive any SS based on my earnings and will get approximately zero based on her earnings (few SS earnings reduced further by WEP).

Bottom line........ I needed to start my SS at 62 to protect her in the event I predecease her. She won't collect any SS based on my earnings, but she will have the nest egg funded by whatever I collect and invest between 62 and death.

An example of what I needed to avoid:

I'm waiting until 70 to collect SS. I die at 68. Neither I or DW would have collected a penny from SS and never would. Since I started at 62 and so far have received excellent returns on the invested SS dollars due to the market recovery, my death at 68 would probably yield her an extra $200k or so in our portfolio. Because of GPO, that's the only way to provide her with some longevity protection.

Thanks for spotting my typo. Yep, I meant GPO (and know better!) but typed WEP.

youbet,

Wouldn't your spouse be eligible to collect SS even if you had an untimely death and had not yet started collecting SS?
Retirement Planner: Benefits For You As A Spouse

omni

 

[youbet]

youbet,

Wouldn't your spouse be eligible to collect SS even if you had an untimely death and had not yet started collecting SS?
Retirement Planner: Benefits For You As A Spouse

omni

No, she won't collect a penny based on my SS earnings due to GPO. In our case, the only way to use SS as financial protection for her is to start SS early and invest the money.

 

[beowulf]

youbet-

OK, now I understand why you took SS at 62. If you die without taking it, you and your wife would lose any chance to enjoy the money, even if there is less of it than if you live longer and waited. It is a craps shoot and, if I had stopped working at 62, I might have done the same thing. Since I worked until 64, I waiting until January of the following year and then took a 9% decrease from what I would have gotten at 66.

 

[daylatedollarshort]

It is kind of like investing your money at an 8% growth rate per annum. If you are just going to let it sit in a Savings Account, CD or Money Market earning the current .75 or 1 percent you are better off letting it sit growing at 8%.

One reason to take it at 62 would be if you want to leave an inheritance. If you die before you collect, your heirs or favorite charities will never see any of the money. It is an annuity, not a CD or savings account.

Another reason to take it early is to not deplete your nest egg. If you need nursing home care of have some other big expense at age 69, and you have not collected SS, your nest egg may have dwindled down and you may not have the cash reserves you need for emergency expenses.

A third reason would be if you want to spend the money on travel or vigorous hobbies, you are more likely to be in shape to do more of that before age 70 than in your later years. If you look at the Consumer Expenditure Surveys, spending drops down significantly after age 75. Taking it earlier aligns your income more with your likely outgo.

There are many factors to consider, and no one right answer for every household. But these are some of the reasons we might take ours early rather than later.

 

[youbet]

youbet-

OK, now I understand why you took SS at 62. If you die without taking it, you and your wife would lose any chance to enjoy the money, even if there is less of it than if you live longer and waited. It is a craps shoot and, if I had stopped working at 62, I might have done the same thing. Since I worked until 64, I waiting until January of the following year and then took a 9% decrease from what I would have gotten at 66.

Not exactly.

I took SS at 62 to provide financial protection for DW.

 

[pb4uski]

One reason to take it at 62 would be if you want to leave an inheritance. ....

For me and DW, it is much more important NOT to be a financial burden on our kids should one of us live to a ripe old age rather than leave them an inheritance. Waiting on SS will accomplish that objective for us.

 

[daylatedollarshort]

For me and DW, it is much more important NOT to be a financial burden on our kids should one of us live to a ripe old age rather than leave them an inheritance. Waiting on SS will accomplish that objective for us.

If your priority is longevity insurance, then delaying SS is the wiser course for your household.

 

[rayvt]

Are you simply unable to grasp that we can spend down more of our accounts early, knowing we have a bigger SS check coming later?

Spend down the accounts that belong to you and are in your own name, and depend on receiving SS money that you have no ownership of, and which can change considerably at the whim of Congress?
Especially when it is virtually certain that SS is going to have to change, because it is on shaky financial footing.

I think that the least dangerous course is to take the "free" money first, and spend down your own money later.

 

[Independent]

1) One reason to take it at 62 would be if you want to leave an inheritance. If you die before you collect, your heirs or favorite charities will never see any of the money. It is an annuity, not a CD or savings account.

2) Another reason to take it early is to not deplete your nest egg. If you need nursing home care of have some other big expense at age 69, and you have not collected SS, your nest egg may have dwindled down and you may not have the cash reserves you need for emergency expenses.

3) A third reason would be if you want to spend the money on travel or vigorous hobbies, you are more likely to be in shape to do more of that before age 70 than in your later years. If you look at the Consumer Expenditure Surveys, spending drops down significantly after age 75. Taking it earlier aligns your income more with your likely outgo.

There are many factors to consider, and no one right answer for every household. But these are some of the reasons we might take ours early rather than later.

I agree that the 8% quote in the OP badly misstates SS.

But, these three reasons for starting at age 62 aren't persuasive to me.

1) Depends on date-of-death. If I die before age X, my heirs will get a bigger inheritance if I start SS early.
If I die after age X, my heirs will get a bigger inheritance if I defer SS.

2) Also depends on date-of-death. If I have a big expense at 69 and die at 73, I'm less likely to run out of money if I started SS early.
If I have a big expense at 89 and die at 93, I'm less likely to run out of money if I deferred SS.

3) Depends on my SWR conservatism. If I act on an SWR rate of 4% or less, I can spend more money in the early years of retirement by taking SS early.
If I act on an SWR rate of 6% or more, I can spend more money in the early years of retirement by deferring SS.
(This is true even if I plan on decreasing spending.)