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Old 02-28-2013, 06:36 PM   #101
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Originally Posted by haha View Post
This is one of those areas where there are too many unkowns to make a blanket call. If SS were to continue as it now is, it would almost always be better for a healthy, non-poor individual to take it later under low return conditions like our current situation. There is no way tha tmoney can be safely invested and return more than putting off the start of SS payments. This is quite easy to demonstrate, and has been explained over and over in these pages. But I have come to think that there is a < 25% chance that payments to affluent people will not be cut in some way or another, most likely greater taxation and some form of means testing. In that case, it might always be best to take it as soon as possible, and put it safely in a pocket.

So we are back at deciding by whim.

Ha
I agree with this situation as we do not know the future. Taking it now for some of us doesnt make sense. It all depends on what resources you have. If you are going to have enough to cover your expenses for now you might want to take it later. Another factor is your health. If you health is not as good than taking it makes sense. As for me I plan on banking it as well as some other funds as I draw down my savings and take my pensions. I know that anything can happen and all of this will change for me but I will have enough to live on quite comfortably.
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Old 02-28-2013, 10:37 PM   #102
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I'm waiting till 70 to take SS. My dad (the baby of his family) just turned 88. His sister is 95 and his other sister died a day after her 101 birthday. Longevity could be in my future.
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Old 03-01-2013, 07:12 AM   #103
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Originally Posted by freebird5825 View Post
I have no spousal considerations to think about.
This comment was about survivor benefits but I've been thinking about how regular spousal benefits should (?) affect the decision.

We're 10 years apart, so if I understand correctly when the younger of us reaches 62 there is going to be literally half as much incentive to take SS early (in one's own right) because of the ability to start taking spousal benefits at that time without side-effects. (I believe that by that time we'll both have the same credits into the system.) True?
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Old 03-01-2013, 07:39 AM   #104
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We are going to see if we need it when we hit 62. If we do, we take it. If we don't, we will wait. We were fortunate - or lucky - in that we planned and saved for retirement without expectation that SS would be around, so we think we can be flexible with it. It all depends on what happens in the next 7 years.
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Old 03-01-2013, 08:09 AM   #105
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Even though we currently do not need SS to make our monthly budget, we plan to take my SS at 62. Our reasoning, DW never paid into SS. Due to her school pension, and hence the SS offset program, she will be not be receiving any survivor benefits from my SS. We plan to take the SS, and invest it. In this way she will have some benefit should I kick the bucket. (I would need to exceed 86 years to break even, if I were to wait until 70.)

Like people have said, each situation is different. You have to decide for yourself what is right.
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Old 03-01-2013, 08:28 AM   #106
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I was all set to start it at age 62 since I am single. Taking it early reduces the withdrawal of assets in my estate, one of my goals is to leave something for my daughter. However the PPACA may change my strategy. It may be advantagous to NOT increase my taxable income until I am old enough for Medicare so as to maximize the tax credit available through the PPACA up through age 64. Obamacare appears to have added another layer of complexity into the decision for me.
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Old 03-01-2013, 11:23 AM   #107
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I think trying to understand the differences of when to take SS benifits is keeping my mind young.


on a serious note; I am guessing that inbetween 62...66 and 66..70 the benifits are prorated?

Bob
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Old 03-01-2013, 12:41 PM   #108
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I think trying to understand the differences of when to take SS benifits is keeping my mind young.


on a serious note; I am guessing that inbetween 62...66 and 66..70 the benifits are prorated?

Bob
Getting close to applying for Social Security myself and came across this on the SSA https://secure.ssa.gov/iCLM/rib website - thought the real question here was - how lucky do you feel

Applying For Retirement, Spouses's Or Medicare Benefits For Myself

Under "Applying for Retirement Benefits"

If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between.

This page gives you the reduction amounts for 62

Retirement Planner: Benefits By Year Of Birth

This throws in a little more (confusion) information

Retirement Planner: Other Things To Consider

When you think about retirement, be sure to plan for the long term. A man who turned 65 in 2011 can expect to live about another 18.7 years. A woman who turned 65 the same year can expect to live about another 20.8 years. And those are just averages. About one out of every four 65-year-olds today will live past age 90. One out of 10 will live past age 95.

Appears that good (or bad) genes, and good (or bad) luck will pretty much determine your exit, and whether or not you will have beaten the system.
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Old 03-01-2013, 01:16 PM   #109
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I just turned 62 on february 14. Earlier on this thread that was in january i said my wife and i were going to use the 62/66/70 plan.

she took ss at 62 4 years ago and i was going to wait until 70.

so what did i do tuesday. I signed up to take ss now. In all honesty i do not need to but i did anyway.

Why? I'm not sure. it kept nagging at me.

I did find on the web a few financial people that recommend both taking at 62.

my wife and i actually fell into the catagory-not because of our high net worth which is not that high based on this board but because we have got ourselves down to a low maintenance life.

is this right. there is no doubt that putting of ss means higher payments later on but i like my decision.

it works for us.

i also have one more reason. although i became a part times employee march 1st-i did not want to be tempted to work to much. the ss max is 15,000 a year. i make this working 5 hours a week. i did not want to be tempted to work more
I am leaning toward doing what you've done. The one argument for taking it later is so that you are safer if you happen to live longer doesn't really hold water as far as I'm concerned.

IF you don't take SS at age 62 because you have enough to live on comfortably all the way to age 70, then taking it early could HELP you have enough money (and have ALL that money be within your control) if you happen to live long.

Suppose you (not YOU, but anyone) are going to get $19,000 a year in SS that goes up 2% each year with inflation. Now, suppose that since you don't need that money that you park it in a mutual fund that earns 6% (it could be more than that depending on how you have it invested -- in fact, since in this scenario you don't really need it at age 62, why not go decently aggressive and hope to get 8% or more?). Here's what happens to that money in 8 years at just 6% annual return:

...turns into $213,177.67. Since you're now 70, if you assume you might live to 90, you could take 5% of that minimum each year. That's an additional $10,658.88 per year. Since it is invested and likely earning some sort of return, you could likely take more.
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Old 03-01-2013, 02:55 PM   #110
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This comment was about survivor benefits but I've been thinking about how regular spousal benefits should (?) affect the decision.

We're 10 years apart, so if I understand correctly when the younger of us reaches 62 there is going to be literally half as much incentive to take SS early (in one's own right) because of the ability to start taking spousal benefits at that time without side-effects. (I believe that by that time we'll both have the same credits into the system.) True?
With 10 years difference I'm not sure the spousal benefits approach would work for you. My DW is 5 years younger and I think we have about 2 years of spousal benefits as opposed to normal SS benefits.

But having the oldest start at 70 and the youngest at 62 might make good sense since a surviving spouse gets the higher of either spouse's benefit. That means the larger benefit lasts until the last spouse passes, while the smaller benefit goes away with the first spouse to pass. Taking SS at 70 for the younger spouse (of equal earners) is like taking it at 80 if you were single. Not worth the wait unless you're really expecting to live forever.
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Old 03-01-2013, 03:02 PM   #111
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Originally Posted by Brdofpray View Post
Even though we currently do not need SS to make our monthly budget, we plan to take my SS at 62. Our reasoning, DW never paid into SS. Due to her school pension, and hence the SS offset program, she will be not be receiving any survivor benefits from my SS. We plan to take the SS, and invest it. In this way she will have some benefit should I kick the bucket. (I would need to exceed 86 years to break even, if I were to wait until 70.)

.
+1

We're following the same strategy for the same reason: GPO.

In order to ensure some protection for DW from SS, I started mine 3 yrs ago at 62.
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Old 03-01-2013, 09:55 PM   #112
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I am leaning toward doing what you've done. The one argument for taking it later is so that you are safer if you happen to live longer doesn't really hold water as far as I'm concerned.

IF you don't take SS at age 62 because you have enough to live on comfortably all the way to age 70, then taking it early could HELP you have enough money (and have ALL that money be within your control) if you happen to live long.

Suppose you (not YOU, but anyone) are going to get $19,000 a year in SS that goes up 2% each year with inflation. Now, suppose that since you don't need that money that you park it in a mutual fund that earns 6% (it could be more than that depending on how you have it invested -- in fact, since in this scenario you don't really need it at age 62, why not go decently aggressive and hope to get 8% or more?). Here's what happens to that money in 8 years at just 6% annual return:

...turns into $213,177.67. Since you're now 70, if you assume you might live to 90, you could take 5% of that minimum each year. That's an additional $10,658.88 per year. Since it is invested and likely earning some sort of return, you could likely take more.
This is an incompetent analysis.

First of all, you compare amounts adjusted for inflation with amounts that are not adjusted for inflation. In this analysis I'll state all amounts in 2013 dollars.

If your SS benefit at age 62 is $19,000 per year, then your SS benefit at age 70 will be 132% of that amount or $25,080, not including the annual COLA adjustment. That amount is guaranteed and is not based on investing luck. (I assume political risk is negligible if not zero. You apparently agree since you do not list it as a motivation for your take-early decision. I also adopt your assumption that spousal benefits are not relevant.)

If at age 62 you instead decide to take your SS benefits and invest them, you will deposit $19,000 per year always in 2013 dollars because of the COLA. You assume you will receive a 6% return in nominal dollars. Since you also assume a 2% inflation rate, this means that your real rate of return is 4%. So, at age 70 your investment of your SS benefits will accumulate to $175,000 stated in 2013 dollars, not the amount you state. (I am assuming, probably incorrectly, that you will pay $0 federal and state income taxes on the SS benefit and that all of it will be deposited to your after-tax investment account.)

Now, you (crucially) assume that you will die at age 90 and can therefore safely spend 5% of the portfolio per year. That will be $8,750 per year in 2013 dollars, which combined with your SS benefit will be $27,750 per year of income, in 2013 dollars. This compares to the SS benefit with DRC at age 90 of $25,080. Your expected real income would be 10.6% higher than the real SS benefit with DRC.

But this comparison is deceptive in many ways. For one thing, the higher SS benefit is pretty much certain while the returns from investment are no more than a guess and could be much worse. Or better, of course. But the big failure in your analysis is that by guessing that you will die at age 90 and by not setting up a backup plan if you live to 100 or more, you are assuming away the problem that you (and we) are trying to solve. Namely, how to fund the rest of our lives when we don't know how long we will live. Of course, if we did know how long we will live the problem would be much easier to solve. But we don't.

So, now what happens if at ages 91, 92, 93 and beyond when you are unexpectedly still breathing. Your investment portfolio will dry up while the SS benefit will continue to grow, not just from the COLA, but likely from planned increases in the PIA beyond the current benefit level. These increases are not certain however. So, we'll leave them out of the analysis.

Also, what happens if inflation is higher than the 2% that you assume? The SSA will adjust the COLA, but your investments might not do well, just as the stock market did poorly during the high inflation period of the 70's. 2% is a reasonable guess at this time, but your analysis does not reflect the substantial uncertainty that exists, nor does it provide a solution in the way that SS does.

If you have thought clearly about the risk of unexpected old age you would have realized that under your portfolio plan you would need to increase savings to provide for that possibility reducing your disposable income to an amount probably below the SS with DRC benefit level. Instead, like all of the other posters who reach the same conclusion you assume away the problem and decide to spend the funds that you would need to save to cope with it. As I say, not competent.

How likely is it that you will live on into your 90's? Hard to say. I know a number of people who are alive or have lived into the upper 90's and beyond 100. On the other hand, I have never known anyone whose house has burned down. But everyone I knew who owned a house had fire insurance on it.

People should buy insurance when they face a risk that they cannot afford to bear themselves. A house burning down falls into that category for most people. So does outliving your money. If you accept a risk that you could pay the SSA to assume for you, to some degree, but then just spend the insurance premium assuming that you will get "lucky", then you are just living beyond your means. It might work out, if you're lucky in one or more ways, but the analysis you post in support of that decision is just not competent because it doesn't reflect the actual level of uncertainty that exists.
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Old 03-01-2013, 10:26 PM   #113
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I think it is this simple - if you can afford to defer taking SS to 70, then do it! The largest concern in retirement is running out of money. If you live longer than you anticipate, a higher SS payment will be there, for the rest of your life. If you don't live to 70, you don't get any SS, but you should have a large portion of your nest egg left, no problems running out of money. If you live to say 99, you will have a much larger lifetime annuity (SS) to help you survive if your nest egg is exhausted earlier. Isn't this what all our retirement planning is about, avoiding becoming impoverished later in life?
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Old 03-01-2013, 10:39 PM   #114
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i posted this before but-taxes. taking ss early will enable me not to pay income taxes for at least 8 years. another variable about overall moneymaking
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Old 03-03-2013, 11:02 AM   #115
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Does the benifits of waiting 8 years from 62 to 70 change if we have high or low inflation during those years?

Just wondering if like back in '82 you could get cd @ 16%.....if so would that change the decision to take it at 70.

Bob
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Old 03-03-2013, 11:29 AM   #116
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Does the benifits of waiting 8 years from 62 to 70 change if we have high or low inflation during those years?

Just wondering if like back in '82 you could get cd @ 16%.....if so would that change the decision to take it at 70.

Bob
I wouldn't think inflation would have a giant impact. There's always the little details, but SS is all inflation adjusted, before or after you take it.
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Old 03-03-2013, 11:36 AM   #117
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I have a small public pension but also have 22 years of earnings that will qualify me for SS. My SS will be decreased by WEP, though, and my survivor benefits on DH's SS will be decreased by GPO.

DH is 2 years older than I.

Current plans are for me to file and suspend at 66 and 2 months (NRA) and let DH collect some spousal benefit for a couple of years on my record.

DH will apply for SS at age 70, and 2 years later, I will start mine at age 70.

Along with providing some longevity insurance, that approach will also provide more time for us to move funds around to decrease RMDs.
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Old 03-03-2013, 11:50 AM   #118
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I just took mine at 62 even though i did not need to.

I also concede i would have a higher benefit if i waited until 70 an lived long enough.

who knows?

its a personal issue.

but as i just conceded on paper waiting is better
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Old 03-03-2013, 12:19 PM   #119
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...
If your SS benefit at age 62 is $19,000 per year, then your SS benefit at age 70 will be 132% of that amount or $25,080, not including the annual COLA adjustment. That amount is guaranteed and is not based on investing luck.
...
I think your numbers are off. The SS site estimates that my SS benefit at age 70 would be 175% of my age 62 benefit. It estimates that my SS benefit at my full retirement age (66) would be about 132.5% of my age 62 benefit.
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Old 03-03-2013, 12:35 PM   #120
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I made a spreadsheet and made one of the columns (all inflation adjusted) net worth divided by annual living expenses.

In this case taking SS for both of us at 62 smoothed this multiple out the most over the years. Otherwise dipping into the nest egg while deferring SS made this multiple go low in the years prior to SS and larger as we got older.

I am not sure we will need more money as we get older, so I am thinking for us SS at 62 might be the way to smooth our income the most. However, this model could all change depending on tax rates, inflation, market returns and part time income. We will wait to make a final decision until we are closer to SS age.
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