Taking Social Security at age 62

[marko]

What life expectancy is assumed?

Many of us are not looking at delayed SS as a straight financial gain/loss break-even thing. It is looked at as longevity insurance - it may pay off in the case that we outlive our average LE. It provides some protection if our portfolio dwindles in our old age.

And like most insurance, you don't expect it to provide a gain - you expect to pay on average to cover a risk. But if that risk happens, you get some benefit. And SS is unique in that it appears to be 'cheap' insurance, and can have have spousal benefits, if they apply.

-ERD50

I agree, but if I can spend 30% more per year through the rest of my lifetime, (set calculator to age 92), it sure makes a big difference!

 

[43WorkYears]

As I am early 61 and retired after a 40+ career with two mega corps and married, I read so many opinions on this to figure out what is best to do.

My opinion at this point is to take SS no later than FRA, if not a little earlier.

I see that many thread calculate living well into the late 80's, many well into the 90's. Many of us want to, of course, but won't make it. If I make it and take SS before FRA, then I will be an old man on a limited income. What will I be able to do at that age anyway if I'm still around.

We should all think about that in my opinion.


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[Chuckanut]

Some regard it as longevity insurance, while others take the approach of attempting to withdraw as much from it as possible over their lifetimes. The 2 approaches have (obviously) very different objectives.

+1

What Tom said.

 

[ERD50]

I agree, but if I can spend 30% more per year through the rest of my lifetime, (set calculator to age 92), it sure makes a big difference!

OK, that still seems like a big delta to me, but w/o knowing your specific inputs there's not much for me to say.

Be aware though, that a reporter like FIRECalc is dealing with the worst case scenarios. So that big delta is likely for the case where you retire just as the market drops, so taking SS early helps protect drawing down your portfolio. This would be a larger effect if your SS covers a large % of your spending, and your portfolio is relatively small.

But, you can sort of have have it both ways. You could postpone SS, and if the market does well, just keep postponing for as long as you like (even 70). If the market drops, you can choose to start SS, to avoid further draw down of a damaged portfolio. Several forum members did this in the last downturn. FIRECalc can't really model those choices.

Not trying to change your mind, just throwing out options to consider.

-ERD50

 

[RunningBum]

As I am early 61 and retired after a 40+ career with two mega corps and married, I read so many opinions on this to figure out what is best to do.

My opinion at this point is to take SS no later than FRA, if not a little earlier.

I see that many thread calculate living well into the late 80's, many well into the 90's. Many of us want to, of course, but won't make it. If I make it and take SS before FRA, then I will be an old man on a limited income. What will I be able to do at that age anyway if I'm still around.

We should all think about that in my opinion.

If you read through more of the "when to take SS" threads you will see that most of those of us who are considering waiting have thought about all that. If you do land on the long side of the actuarial tables, you may find that having a little extra money may help you live more comfortably. Even though you may not be traveling or very active, you may spend more on in-home assistance, for example, or want to live in a nicer senior living center.

 

[43WorkYears]

In being 61, retired, two non cola pension still to apply for, two 401K accounts, a few homes, condos, all paid for, in all the opinions I read from this site and others, there appears to be no right or wrong answer. The big X factor being how long one lives, which none of us know.


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[marko]

OK, that still seems like a big delta to me, but w/o knowing your specific inputs there's not much for me to say.

Be aware though, that a reporter like FIRECalc is dealing with the worst case scenarios. So that big delta is likely for the case where you retire just as the market drops, so taking SS early helps protect drawing down your portfolio. This would be a larger effect if your SS covers a large % of your spending, and your portfolio is relatively small.

But, you can sort of have have it both ways. You could postpone SS, and if the market does well, just keep postponing for as long as you like (even 70). If the market drops, you can choose to start SS, to avoid further draw down of a damaged portfolio. Several forum members did this in the last downturn. FIRECalc can't really model those choices.

Not trying to change your mind, just throwing out options to consider.

-ERD50

Thanks! My main question was if the analysis was correct but then another poster commented that they had similar outcomes. It just seemed counter intuitive that taking SS at 62 gave me that much of an increase vs 70.

I could easily accept a little bit more/less but 30% more?! I need to work this a bit more (and corroborate against some other calculators). Somewhat moot as I'm already taking SS, but an interesting academic study if anything.

 

[razztazz]

Originally Posted by razztazz View Post
Ok mr smarty pants.

Hey I'm an Auslander here. I am not in on all that collegiality that most of the peeps here have. I don't try to follow the players. Nords was a Sub commander. That's the only "personality" I've noticed here.

 

[Ally]

I think we are going to take SS when we turn 64. My husband has a pension that would continue for me, if he passed away before I did. If we take the SS in addition to the pension, we won't have to touch our savings until 70. We were going to wait and use our savings first, but longevity issues came into consideration. My husband's relatives all died in their 60's and 70's, and he has some of the same health issues, although not too bad at this time. I have kidney disease and although I feel good, the doctor tells me it is a degenerative disease and it wouldn't have to get much worse for it to interfere with my activities. So while we are active and feel good, we've decided to take the SS.


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[PERSonalTime]

People patiently waiting until 70 to better handle the "worst case" of living long are greedy? ooookay.... Not my definition of "greedy", and certainly not when compared to the rationale some have for taking it early ("I'm going to get mine now in case it's not there later."). Most people have good reasons for choosing the way they do, so I don't think it's productive to put negative labels on their choices.

unno's last case, paying off his rental mortgage with SS money, looks like comparing apples to nothing. I suspect there is a breakeven point if he takes SS at 70 and quickly pays off the mortgage and is then receiving a higher amount. Maybe not if the mortgage interest rate is high enough. Taking SS early often comes out better if you have cash flow issues between 62 and 70. Paying off a high interest loan is like getting a high return on investments, both of which push the breakeven point to the right, and paying off that loan is risk-free compared to seeking a higher return on investments.

Calm down RunningBum.

The use of the term greedy was not meant to refer to you or anyone else. We just meant that DW wasn't going to wait around for years to get a given amount of SS that will take her over a decade to break even on. We're aware of the fact that every individual will, and should, do what's in their own best interest when it comes to deciding on when to take SS. That's as it should be. DW just wants to get her money ASAP so she can have more resources with which to have a fulfilling retirement.


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[mathjak107]

taking care of your spouse should be the primary goal of when to take ss.

if the loss of one ss check and if you have a younger spouse who may have to file before their fra the penalty to the surving spouse can be as much as a 48% hair cut from what your full benefit would have been.

survivor benefits get double cut. once if you filed early and again if the spouse files early.

 

[43WorkYears]

In most cases what you say is true. In my cases, my spouse will have enough to take care if herself, So I will not take that into consideration for when to take SS.


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[marko]

Can someone help me with this?

I've been half-following this thread, but for kicks I opened up i_orp and ran some numbers.

I entered all my data including my current SS plans (age 62, first check arrived last month).

Then I kept everything the same except I changed my SS to my FRA (age 70) and my FRA amount.

The result is far from what I expected!! According to orp, if I take SS at FRA, I must spend about 30% LESS than if I take SS at 62.

Can this be right? A glitch? If true, my guess is that because I'd be waiting 8 more years, I'd be depleting my portfolio faster. Comments?

Folks, it looks like there was a problem with i-ORP yesterday. I re-ran my numbers this morning. (Just re-ran the saved numbers...didn't change anything)

The results this morning are entirely different and more in line with what I'd expect. Rather than a 30% decrease, I got a 5% increase which is what I would've expected.

So, if anything, the message is to not run a single report and consider yourself done!!

But, like the man with two watches I'm now not sure which one is right!

 

[38Chevy454]

I appreciate all of the discussion here. As many have stated, from a pure financial perspective it really comes down to your life expectancy and age at death. Actuarial tables have the SS basically an equal result. However, being an actuarial table, it means approx half live longer and half live shorter.

What is not a pure financial decision is the emotional side of the equation. For many, having that lower SS income at 62 and preserving savings is preferred vs drawing down savings more and then having higher SS income later.

Certainly there are also tax implications, RMD's, investment rate of returns, and other variables in the total equation. At least for SS you do know the rate of return or discounted rate to be considered.

I tend to think of it simplified as would you rather have a nickel each month starting at 62 vs a dime each month starting at 70? I personally tend to be a nickel now type person.

 

[Rustward]

The always/never thing highlights one of the hazards of participating in forums like these. Many people comment on only their own situations. Applying always or never to one's own situation changes the meaning.

So when the context is general, I don't see how someone can say something is always one way or never one way.

There are probably an unlimited number of different combinations of factors -- I guess we are talking about SS here, but it goes beyond that. Every situation should be treated as though it is unique.

 

[Ronnieboy]

How many years out would be the break even point compared to full retirement age? my wife has some health issues and I am trying to get her to sign up at 62 also.

I recently read an article on Seeking Alpha that if you were to file at 62 it would be age 83ish till the break even.

This was based on the author's own numbers so YMMV.

Here is the link Why I Will Start Social Security At Age 62 | Seeking Alpha


We're not close yet, but if I understand the rules as stated, my wife who is 3 years older than me can take benefits at 62 and I can get half of hers (I'll be 59). Then we can decide when to take mine, as it will be a higher benefit for the both of us.

 

[Which Roger]

In most cases what you say is true. In my cases, my spouse will have enough to take care if herself, So I will not take that into consideration for when to take SS.

+1 DW and I will have roughly equal benefits, so this in not a big issue for us.

There are too many variables to give a one-size-fits-all answer. In my case, I want SS to fill the role of longevity insurance, so the later I file the better. But someone whose goal is to maximize the benefit may want to file earlier.

 

[43WorkYears]

I agree.


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[PERSonalTime]

I appreciate all of the discussion here. As many have stated, from a pure financial perspective it really comes down to your life expectancy and age at death. Actuarial tables have the SS basically an equal result. However, being an actuarial table, it means approx half live longer and half live shorter.

What is not a pure financial decision is the emotional side of the equation. For many, having that lower SS income at 62 and preserving savings is preferred vs drawing down savings more and then having higher SS income later.

Certainly there are also tax implications, RMD's, investment rate of returns, and other variables in the total equation. At least for SS you do know the rate of return or discounted rate to be considered.

I tend to think of it simplified as would you rather have a nickel each month starting at 62 vs a dime each month starting at 70? I personally tend to be a nickel now type person.

Thanks for simplifying what, for some, can be an unnecessarily complex issue. It all boils down to each individual's particular preference and given situation.


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[bizlady]

Want to verify the rules-- If DH takes SS at 62, can I still get 50% of his benefit at MY FRA, and then take mine at age 70? Mine is higher than his so it makes most sense for us to postpone mine.

 

[ProspectiveBum]

We're not close yet, but if I understand the rules as stated, my wife who is 3 years older than me can take benefits at 62 and I can get half of hers (I'll be 59). Then we can decide when to take mine, as it will be a higher benefit for the both of us.

Wouldn't you have to wait until your FRA to get half of DW's benefit? You could take it as early as 62, but you get less than half of her reduced benefit. Is that correct?

 

[Ronnieboy]

Wouldn't you have to wait until your FRA to get half of DW's benefit? You could take it as early as 62, but you get less than half of her reduced benefit. Is that correct?

I have no idea, I was just throwing out what I thought was possible. We are too far away to look into it closer, but if that is the case - DW can take hers at 62 I'd have to wait till I'm 62 to get 1/2 of reduced benefits by which time she would be 65 but still below her FRA of 67 (and mine).

We really haven't planned for SS we are shooting for it to be our 'extra' shot in the arm, but who knows? We'll have to research it more in about 10 years