Taking Social Security at age 62

[mathjak107]

still true, it isn't about you dying as much as it is about what if your spouse lives? the planning in that case is based on taking care of the surviving spouse in the best way you can.

i am not saying there are not reasons to take it early but i am saying just taking it early because you might die and give up a buck is a poor reason. there needs to be reasons based on what if you live to be considered if you are going to make a well thought out choice.

 

[golfersailor]

I retired in 2009 after taking a early buy out. We did not have a lot of money in are 401K's but decided it was enough to give it a try. Then I decided to take SS at 62 because with my pension and SS we could pay all of our bills and still have a few dollars left over. Best decision I have ever made. Of course the market has been on a bull since I retired. Now I know why the experts say market performance makes a big difference in the first 5-8 years of retirement. Will I have less cash coming in when I am 80? Yes, but my buffer is now very large. Just lucky the market gave us a big retirement present.

 

[mathjak107]

yep. timing is everything. a good bull run does wonders for the early ss money.

but something to keep in mind is most small investors suck at it and get but a fraction of the returns. but the real issue in many cases is the surviving spouse knows even less and they not only can't invest it they won't invest it.

the higher ss payment may really be to keep things simple and guaranteed for the financially less savvy spouse.

that is something i am trying to take in to consideration in my own plan. i am most likely going to utilize a deferred annuity,ss at fra and keep simple investments and the newsletter i have been following for 25 plus years just to keep it simple and somewhat guaranteed for her.

when my wife first became a widow from her first husband she threw everything in T-BILLS AND CD'S.

many women do not like risk at all as opposed to men.

 

[davetoretire]

Hi,
Penny for your thoughts.

Have retired from my high paying job and now work part time making less then the SS limit. Wife works full time with benefits(you could say
I am a kept man) and we both have access to 401ks. My thought is to collect SS at 62 and max out her 401k and continue to live on my part time work and the remaining of hers. Would this be enough of a tax saving ?

both are 62 and the difference between taking ss at 62 and 66 are $6,0000 and have $700K in Ira and 401k.

thanks

 

[lynxville]

You can do all the calculations you want and look at your genes etc. But know one knows when your going to die. I know lots of people that never collected SS and they kept working to get the higher amount. I also know many people that died before 65. Think it over.

 

[athena53]

when my wife first became a widow from her first husband she threw everything in T-BILLS AND CD'S.

many women do not like risk at all as opposed to men.

I know what you mean. I'm female and love investing, but my mother (equally intelligent but not into it) just wants to know there's enough money left that she won't run out. Fortunately, Dad is still managing their money, but we've agreed that I'll be in charge if he can no longer do it. (Considering that I have one brother who's a CFO and another who's a tax partner with a major firm, I'm honored.)

I'm most likely to going to file at 62. I might at FRA. Odds are I'll live to a ripe old age, which is why I'm waiting. If I'm wrong, well, then, I certainly won't outlive my savings.

 

[marko]

You can do all the calculations you want and look at your genes etc. But know one knows when your going to die. I know lots of people that never collected SS and they kept working to get the higher amount. I also know many people that died before 65. Think it over.

A good friend of mine was holding out for 65..."More money!!".
Pancreatic cancer had different idea and and with six months notice, took him at 64.

Take the money and run.

 

[unno2002]

If I'm 62 and don't need the SS money until later that's years of SS money I can put into investments.

$1,628 - Age 62 monthly payment
$2, 279 – Full retirement age (age 66yr 2 mo) monthly payment.

50 months between earliest retirement & full payment age.

$81, 400 (if the cash is just stuffed into a mattress)

$651 monthly difference in the payments.

If at full retirement age I just pulled $651 out the mattress each month, the cash would last 125 months (10 years 5 months). So if I take SS at the earliest date, just stack the cash without interest or investment, and start spending it later, I'm 76 and 7 months before I "break even".

If I die anywhere between age 62 & 76yr 7mo, there's a pile of cash there for the heirs that otherwise would not exist.

If the early cash is invested at 4% interest, the break even point becomes age 81 or so.

If I use the early cash to pay off the mortgage on a small rental property I have some pocket cash from the SS at age 62, and by age 66+ I have "free and clear" rental income that exceeds the full SS payment difference.

Yes, I know there are those who dislike rentals. I prefer that risk to the risk of SS disappearing.

 

[PERSonalTime]

If I'm 62 and don't need the SS money until later that's years of SS money I can put into investments.

$1,628 - Age 62 monthly payment
$2, 279 – Full retirement age (age 66yr 2 mo) monthly payment.

50 months between earliest retirement & full payment age.

$81, 400 (if the cash is just stuffed into a mattress)

$651 monthly difference in the payments.

If at full retirement age I just pulled $651 out the mattress each month, the cash would last 125 months (10 years 5 months). So if I take SS at the earliest date, just stack the cash without interest or investment, and start spending it later, I'm 76 and 7 months before I "break even".

If I die anywhere between age 62 & 76yr 7mo, there's a pile of cash there for the heirs that otherwise would not exist.

If the early cash is invested at 4% interest, the break even point becomes age 81 or so.

If I use the early cash to pay off the mortgage on a small rental property I have some pocket cash from the SS at age 62, and by age 66+ I have "free and clear" rental income that exceeds the full SS payment difference.

Yes, I know there are those who dislike rentals. I prefer that risk to the risk of SS disappearing.

Well thought out and explained. I agree 100%. DW prefers to not be greedy and will take her SS at 62.


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[youbet]

still true.

Actually no...

Using the numbers and not emotions says in our case and with our objectives take SS early.

 

[Lancelot]

I posted on Bogleheads that I was waiting until age 70 to claim SS. I also stated that my Father wasn't comfortable waiting and claimed at 62.

Some a-hole insulted my Dad for taking SS early and I told him where he could stick his advice. The Bogleheads Mod gave me a warning...

The SS Police are a closed minded bunch as in 'My Way or the Highway'

The actuaries have saved us from ourselves in that, unless we beat the mortality odds, we roughly receive the same total benefit.

 

[prototype]

There was a thread with a poll (and associated posts/comments) on this topic about 9 months ago. 62 was at 38%, followed closely by FRA and 70+.

Hope I got the link right, first post I've made with a link in it.

http://www.early-retirement.org/forums/f29/poll-when-will-did-you-draw-from-ssa-69230.html

 

[RunningBum]

Well thought out and explained. I agree 100%. DW prefers to not be greedy and will take her SS at 62.

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.

 

[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?

 

[ERD50]

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?

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

 

[43WorkYears]

I'm confused by your thread. I assume your FRA is 66. How is that 8 more years after 62. It may be my misunderstanding.


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[razztazz]

Can someone help me with this?

I get similar results. Taking SS at 62 always wins as far as spending amounts and preservation of personal assets

 

[W2R]

I get similar results. Taking SS at 62 always wins as far as spending amounts and preservation of personal assets

(emphaiss mine) When I was a kid I was told that, "You should never say "always" or "never" in writing, because somebody will come up with an exception.

Taking SS at 62 NEVER wins as far as spending amounts and preservation of personal assets (with the assumptions I prefer to use). So there.

When to take SS is a subject that has been argued back and forth in numerous threads since the beginning of the ER Forum. Check the FAQs for more information; it's even been made a "stickie" there. http://www.early-retirement.org/forums/f47/faq-archive-when-to-take-ss-69366.html

If it ALWAYS worked out one way or another, there wouldn't be anything for people to have discussed in all those threads.

 

[Major Tom]

If it ALWAYS worked out one way or another, there wouldn't be anything for people to have discussed in all those threads.

Hear, hear.

Another factor that we are reminded about from time to time, but which many posters don't always seem to be too aware of is that there are 2 broad and distinctly different approaches to the taking of SS. 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.

It is very possible for 2 people with different outlooks to both be right. It's one of the things that makes the world of E-R.org go round

 

[razztazz]

(emphaiss mine) When I was a kid I was told that, "You should never say "always" or "never" in writing, because somebody will come up with an exception.

Ok mr smarty pants. Not "always" as in Always for all time and in every context. I meant every time ***I*** personally use FireCalc et al and do the "When should I take SS" What-if scenarios, the output always tells me I can spend more and end up with more personal assets (which probably don't matter since I'm dead at that point) if I take it at age 62 than if I wait till later.

I cannot argue with the numbers. Maybe the calculator is 'ucked-up and it's giving me bad data but that's a different thread.

 

[Options]

Thank you for your very frank post on reasons you favor taking SS at 62. While I agree with many of your concerns, here are my reasons for delaying as long as possible.

1) I have enough savings to get me to at least 70, but my calculations show that if I live unexpectedly long and markets are unexpectedly unfavorable, then I may eventually run out of money unless I get a higher payout from SS.

2) I have longevity in my family, so while I do not know how long I may live, I must plan at least for the possibility I last into the high 90's (or more if medical advances keep extending lifespans). In that case I also want to be sure I have enough to pay for quality care and not end up in some less desirable institution.

3) The COLA aspect of SS and the taxing aspects of SS can be tampered with by a Government that wishes to do so to save money, but so can aspects of my various retirement accounts. I want to be diversified between SS, IRA/401k, Roth/Trad, taxable/sheltered, investments/home equity and so on, so whatever happens I can still muddle through and not have the majority of my eggs in any one basket that political action could reduce in value enough to hurt me. I am also hopeful that a large senior lobby can at least somewhat contain any of these political take aways.

4) I need the years between age 62 and 70 to do as much Roth conversion as possible and with lower income in these years hope to get maximum benefits from my various tax advantaged savings programs.

5) I have no spouse or dependents and no opportunity to file/suspend or manage higher payout with spousal benefits games. I have adult children as heirs, but unless something catastrophic happens they stand to inherit enough to put them in good shape for their own retirements no matter when I expire. They will get enough in any case so I see no need to take risk to maximize their gain if I die unexpectedly early. I see no need to try to maximize their gain in any scenario. I already do not buy life insurance as it is superfluous.

6) I do not think of SS as a way to maximize my take from the government. I view it as a way to insure myself against the risk of living unexpectedly long. That is the ONLY scenario in which SS is significant in my planning. I have enough assets to live as I am accustomed and still leave assets to heirs for any other scenario. In those cases, I will have lived a lifestyle I wanted and will not care about my remaining portfolio as I will be expired. I already have enough assets to live the lifestyle I want and have the experiences I desire, without SS. Taking SS early or late will not result in my reducing or expanding my lifestyle. The only scenario in which I am at risk of running out of assets is if I live to a ripe old age, and using SS to generate maximum payout for life, plus the assets I will still have, covers that risk.

7) If I have to accept a bet on whether I live long or short, the only side of that bet I care about is the side where I live long.

This. Every word.

 

[W2R]

Ok mr smarty pants.

That's Ms smarty pants, BTW. Or you can call me Dr. smarty pants if you prefer.

Not "always" as in Always for all time and in every context.

Right, exactly. And for each person who gets your particular results with a retirement calculator using his own set of assumptions, another person will get the opposite with a different set of assumptions. That's all I'm talking about.

 

[Major Tom]

Ok mr smarty pants.

 

[razztazz]

That's Ms smarty pants, BTW. Or you can call me Dr. smarty pants if you prefer.

I thought of that but but W2R sounded like a part number or something and I inferred "probably a guy". ( Altho thinking about it now, razztazz is sort of a unisex name too)

Right, exactly. And for each person who gets your particular results with a retirement calculator using his own set of assumptions, another person will get the opposite with a different set of assumptions. That's all I'm talking about.

I am going to file this under that Pet Peeve thread. People responding, sincerely and earnestly but in an irrelevant way to something that was never said.

Buena Suerta

 

[marko]

I'm confused by your thread. I assume your FRA is 66. How is that 8 more years after 62. It may be my misunderstanding.


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Yeah...mind cramp. I meant age 70...FRA is 66