Taking Social Security at age 62

[target2019]

I see that a lot of ss decisions are based on leaving a higher spousal benefit. That I understand, but if that is not a factor as your spouse will do well on their (her) own, how much does that change anyone's thinking regarding 62 vs 66 or whatever.

It changes my thinking quite a bit. I would consider claiming at 62, as I would probably need the money.

I would look at a detailed analysis of tax impact from 62. I have mostly tax-deferred investments, and converting to Roth and taxes would be the priority. It would also impact how much I could work.

 

[Bestwifeever]

Got my first check last week @ 62!

As you say,
....
2) it is taxed differently...and free of state tax so I figure about a $2500/yr pocketed even with the 87% Fed....

Congrats on your first check! I don't understand this? Are you saying you would have to pay this amount in tax if it were ordinary income so you are considering it as a "bonus" since you get to keep it? Bear with me, still on my first cup of coffee

Is anyone considering taking SS at their full retirement age vs 70? DH turns 66 in a few months and is pondering this.

 

[mf15]

Took it at 62.
1. My breakeven is 77 don't think I will live that long.
2. Calculated that it would take about 7 years just to get back what I put in, and that is not counting inflated dollars.
3. Immediate cash flow,no digging into IRA.
4 Wife should be fine with my pension and SS if I am gone first.
5. The gov't can't wait to stop your check, the first thing the funeral director did when we met with him about an hour after my mother died, was to call a special SS phone number to tell them she had passed. I was kind of miffed off.
Old Mike

 

[misanman]

DW took SS at 62.
I am now taking the spousal benefit based on her earnings.
I will switch to my benefit at 70

 

[marko]

Congrats on your first check! I don't understand this? Are you saying you would have to pay this amount in tax if it were ordinary income so you are considering it as a "bonus" since you get to keep it? Bear with me, still on my first cup of coffee

Is anyone considering taking SS at their full retirement age vs 70? DH turns 66 in a few months and is pondering this.

What I mean is that if I had to take the same amount of my SS benefit out of my IRA, I'd have to pay Mass State tax of 5.25% plus the full Fed tax instead of 87% of that amount.

As SS is (one of the few things) not taxed in MA, I'm already saving about $1300 a year, another $800 on the Fed differential, plus the amount that I got to leave in the IRA could/should make (but wouldn't make if I had withdrawn it).

It's a 'bonus' in the sense that, at least from the tax savings (about $2,000), it is that much more that I have to spend, and I have perhaps another $2,000 of additional tax-free gain in the money I didn't have to withdraw.

 

[ProspectiveBum]

I'm 42, and DW is 46. Our career earnings are nearly identical, so we'll collect roughly equal amounts. SS is quite a ways off for us, and will probably be different than the program that's in place today. I do my planning based on the current benefits, and will adjust as needed.

As things stand today, I think we'd wait for DW to collect at 70, since her family is all very long-lived. If we don't need SS to survive, I'll probably take the spousal benefit at 66, and then my full benefit at 70. If the market is tanking hard, I'd take it at 62 to provide some cushion while the portfolio recovers. Our combined benefits if we both take it at 70 would cover all "necessary" spending, so our portfolio would only need to support discretionary spending, and possible LTC.

I've got spreadsheets that model our benefits based on which year we stop working. It's fun to daydream about, but probably somewhat pointless since I don't think today's plan is the same as it will be in 20+ years.

 

[W2R]

Is anyone considering taking SS at their full retirement age vs 70? DH turns 66 in a few months and is pondering this.

I was seriously considering taking it at age 66 for a while because I was getting awfully tired of waiting! But then (thanks to the forum!) I discovered that I could take divorced spousal SS at 66 and my own SS would continue to grow until age 70, when I would switch over to it in order to get larger benefits. My divorced spousal amount is half the size of his full amount at FRA, and comes to about the same as my own would have been at age 66.

Mostly I didn't take it at age 62 due to indecision and the fact that it would have been pretty small at age 62 (due to some employment that didn't participate in SS), but in my case I think everything worked out for the best.

It is SUCH A KICK to see that direct deposit showing up each month and knowing it will happen again the next month, and the next, and the next.... While paying into it I was absolutely rock solid certain that SS would crater soon and I would never see any of it, so I didn't really count on it for my retirement. It's indescribably amazing to have the money flowing in my direction now.

 

[Walt34]

Is anyone considering taking SS at their full retirement age vs 70? DH turns 66 in a few months and is pondering this.

Yes I am, or perhaps a year later at 67. 66 is FRA for me. The reason is that the pension for DW drops by 30% assuming I pass on first and waiting will lessen that effect. The pension dropped by the amount I would have been eligible for at 62 the intent being to keep a level income. By waiting I can lessen the effect of the pension drop significantly for DW.

When SS begins that's all gravy and we will have more money than we know what to do with but I'm sure we'll figure something out.

 

[Car-Guy]

While paying into it I was absolutely rock solid certain that SS would crater soon and I would never see any of it, so I didn't really count on it for my retirement.

Me too! So, when I hit 62 I took it.

Also, I was dreading having to deal with the SS administration to sign up. I just knew it was going to be a real PIA. But I was really surprised that it took me less than 15 mins on their website and I was 100% done. No phone calls, no US mail, no office visits, and no follow-ups. Direct Deposits started exactly on time and never had a problem.

 

[Archman]

In my situation, if I take Social Security at age 63, and therefore drawing less from my retirement savings, my break even point is at age 97+,assuming the markets cooperate.

Taking less from your investments mitigates the sequence of portfolio bad returns that might occur early in retirement.

Sequence-of-returns risk involves the actual order in which investment returns occur. Typically, negative returns earlier in retirement have a more severe impact on your portfolio than negative returns later in retirement. That’s because your portfolio’s value is reduced by both negative market performance and any withdrawals you take to fund your day-to-day expenses. This means that a smaller amount is left behind to experience any potential future growth.

 

[Bestwifeever]

Yes I am, or perhaps a year later at 67....

When SS begins that's all gravy and we will have more money than we know what to do with but I'm sure we'll figure something out.

DH is most interested that the nest egg would be able to keep growing without our current periodic withdrawals for property taxes etc. I did tell him we need to start seriously having fun (serious fun, who doesn't want that ) when he takes SS.

 

[PERSonalTime]

Planning in taking it at age 62..Take the benefit while I am still "Living" rather than at age 70 where I might be just "Existing"...



Family history has it that men (like me) are either dead or bed ridden at age 70 while the women in the family are still strong and alert at over age 90.

I'd say that's a darn good reason to take it early. Lol. Thanks for your response! Everyone is really adding meaningful insight to the discussion.


Sent from my iPad using Early Retirement Forum

 

[mathjak107]

I took it at 62. The last thing I want is more ordinary income when I'm forced to take RMD's.

my rule is never let the tax tail wag the dog.

to really see what is better you need to crunch so many scenerios ,some of which go against conventional rules of thumb.

on the surface the higher payments and rmd's may not be a good thing but:

for some it may be the better choice tax wise.

why?

because while conventional wisdom says spend tax deferred money last that may be soooooo wrong tax wise.

a couple who delays ss to 70 as an example gets a gift if they use it wisely from uncle sam.

if they do spend that deferred money first they can pull up to 22k a year tax free from their retitement money or 42k a year with as little tax as 4.8%.

any equities kept in a taxable account can see zero capital gains taxes on income generated, roths can provide tax free income and over funded life insursance borrowed out can provide tax free income that never gets repaid.

in short you can draw 100k a year for 8 years while delaying and pay very little tax.

plus you spend down quite a bit of your rmd money while getting the higher ss payment eventually.

it all depends on the preperation and planning you do in advance and your knowledge and personal situation.

to many folks look at only one factor and jump on it without ever knowing there were better alternatives..

 

[frank]

can someone please direct me to the spousal benefit site? my wife is applying for ss right now but If I have been understanding correctly, she could be taking the spousal benefit and letting her ss grow until 66. thanks

 

[mathjak107]

at 62 she can only get her own but if you filed already she can get a bump up if 1/2 yours is higher. you did not say how old but i assume pre fra.

 

[Which Roger]

DW and I plan on waiting until age 70 for two reasons: The bigger, COLA'd benefit will serve as both longevity insurance and a hedge against inflation. That lessens the need to mitigate these risks using things like (deferred) annuities and TIPs.

 

[athena53]

I was seriously considering taking it at age 66 for a while because I was getting awfully tired of waiting! But then (thanks to the forum!) I discovered that I could take divorced spousal SS at 66 and my own SS would continue to grow until age 70, when I would switch over to it in order to get larger benefits. <snip>

It is SUCH A KICK to see that direct deposit showing up each month and knowing it will happen again the next month, and the next, and the next....

Yeah, I've been thinking all along that spousal benefits don't matter in my case, but the idea of getting half of DH's when I hit 66 (I'm 61 now) and letting mine accumulate is a good middle ground. Half of DH's is less than what I'd get at 66 on my own record, but the financial benefits of waiting till 70 to collect on my own might be worth it.

I know what you mean about regular payments. I get a small ($932/month) pension from work at a former GE sub, which starts at age 60 whether you want it to or not. I LOVE seeing that money come in every month even though there's no COLA adjustment and it will probably be enough for the monthly grocery bill when I'm 80.

 

[Katsmeow]

DW and I plan on waiting until age 70 for two reasons: The bigger, COLA'd benefit will serve as both longevity insurance and a hedge against inflation. That lessens the need to mitigate these risks using things like (deferred) annuities and TIPs.

Surely one of you will take spousal at FRA?

 

[Which Roger]

Surely one of you will take spousal at FRA?

Yes, then switch to own benefit at 70.

 

[43WorkYears]

Recently retired from after 42+ years with two corp, just turned 61. Two pensions and two 401K's. My fra is 66. I plan on taking ss at 65, this way I can apply for SS and Medicare at the same time.


Sent from my iPhone using Early Retirement Forum

 

[NYEXPAT]

DH started SS at 62. For us it worked out to be the best solution because we have a pre-teen and a teenager... They can collect, as well, if he's collecting. (Something I learned about here.) This puts us well ahead of the game, financially.

In my case, I will be taking it at 62 (15 months) for the sole reason of the family benefit. We even timed our second child's coming birth to max it out.
The family benefit(not including my benefit) will add $500,000.00 to our nest egg and all will be paid out before 2035.

I plan to suspend my benefit at age 66 and restart again at age 70 in order to maximize my YW survivor benefit.

It's unusual to have minor children at SS age, I guess... One slight advantage to marrying and having kids at an "advanced" age.

It is actually becoming popular among retired Expats with young wives and several of my friends were extremely grateful when I pointed this out to them!

 

[Cat-tirement]

What I mean is that if I had to take the same amount of my SS benefit out of my IRA, I'd have to pay Mass State tax of 5.25% plus the full Fed tax instead of 87% of that amount.

As SS is (one of the few things) not taxed in MA, I'm already saving about $1300 a year, another $800 on the Fed differential, plus the amount that I got to leave in the IRA could/should make (but wouldn't make if I had withdrawn it).

For a good while now I had been assuming that waiting until 70 would be best. Recently, situations like the above have made me question that a bit.

In our case, we will be living with a state income tax of up to 9%, though that doesn't apply to SS. So I have been wondering if starting SS earlier, and not paying tax on it, would be better than taking out IRA money and paying tax on that. Of course that early SS scenario means larger RMDs, though the federal tax on the reduced SS would be somewhat less than the max SS scenario.

 

[PERSonalTime]

Took it at 62.
1. My breakeven is 77 don't think I will live that long.
2. Calculated that it would take about 7 years just to get back what I put in, and that is not counting inflated dollars.
3. Immediate cash flow,no digging into IRA.
4 Wife should be fine with my pension and SS if I am gone first.
5. The gov't can't wait to stop your check, the first thing the funeral director did when we met with him about an hour after my mother died, was to call a special SS phone number to tell them she had passed. I was kind of miffed off.
Old Mike

mf15,

Totally agree with you on #'s 3-5!


Sent from my iPad using Early Retirement Forum

 

[mathjak107]

one factor i never include is what if i die ?

dying is dead ,game over. the question i always ask is what if i live or my spouse lives.

to many folks have this what if i die mentality and it ends up being the wrong question to ask yourself when making a social security decision and a poor decision at that. taking ss later is the one decision ever that you can never live to regret..

after all statistics mean nothing in life. they only mean something to insurers.

we only have two outcomes , either things work out as planned or they don't.

 

[youbet]

one factor i never include is what if i die ?

dying is dead ,game over. the question i always ask is what if i live or my spouse lives.

to many folks have this what if i die mentality and it ends up being the wrong question to ask yourself when making a social security decision and a poor decision at that. taking ss later is the one decision ever that you can never live to regret..

after all statistics mean nothing in life. they only mean something to insurers.

we only have two outcomes , either things work out as planned or they don't.

Not always true!

Some of us take SS at 62 to protect a spouse impacted by GPO financially if we die first.