Taking Social Security early vs. not

[Katsmeow]

Are you and your wife the same age or is one of you older than the other?

You mention your wife working. How does her SS compare to yours?

It is highly likely that you and your wife won't both die at the same time. Therefore, one of you will have to live in a situation where there is one SS income coming in rather than 2. Therefore there is a case to be made for one of you to claim early and one of the two of you to claim late.

In a situation where you are the same age or the higher income person is older then it might make sense for the person who will have higher SS income to defer taking SS longer so that in the event of either of you dying the survivor will have more income than if you both took SS early.

For my husband and I our likely SS income at similar age is very similar (mine is slightly higher). DH took SS at 62. I am 7 years younger and will probably not take SS until full retirement age (or later) although it is not a decision we have to make for several years and I could change my mind depending on circumstances.

Quote:

Originally Posted by AWeinel BUT, I am wagering that CURRENT RECIPIENTS will be grandfathered in (POLITICALLY it is way easier to DENY benefits to someone who is not getting them than to take them away from someone already drawing them). Given THAT, in our case, the plan is TAKE THEM THE FIRST DAY WE CAN.

I can understand thinking that on first thought. But when I really think about it I just don't think it likely that a law would be written saying that, for example, the person who is 62 and receiving benefits gets to keep receiving them while the person who is 69 and hasn't started taking benefits yet will receive none at all. I just don't think that any change in eligibility will be based upon whether you have started receiving benefits yet given that you have a choice as to when to start receiving benefits. I think it is far, far, far more likely that anything like that would be age related and have nothing to do with whether you have started receiving benefits or not.

[Lazarus]

I will take benefits as soon as I can. Bird in the hand kind of guy. I retired as early as I could also.

[Original Wally]

Quote:

Originally Posted by Lazarus I will take benefits as soon as I can. Bird in the hand kind of guy. I retired as early as I could also.

Yup. If nothing else... MAD money.

Get it whild you can.

[ejman]

Being in the unfortunate situation of depending entirely on my investments for income since I ER'd 10 years ago I find it absolutely wonderful to have SS deposit a not insignificant amount into my checking account. This same amount of money is NOT coming out of my investments. Now maybe, IF THE WORLD HANGS TOGETHER, 8 years from now I could get a larger amount from an Organization that seems to have a great deal of trouble paying it bills. The answer to me in my particular world was pretty clear. Other's answers no doubt will be the opposite.

[Original Wally]

Quote:

Originally Posted by Katsmeow I can understand thinking that on first thought. But when I really think about it I just don't think it likely that a law would be written saying that, for example, the person who is 62 and receiving benefits gets to keep receiving them while the person who is 69 and hasn't started taking benefits yet will receive none at all. I just don't think that any change in eligibility will be based upon whether you have started receiving benefits yet given that you have a choice as to when to start receiving benefits. I think it is far, far, far more likely that anything like that would be age related and have nothing to do with whether you have started receiving benefits or not.

Good point, Meow. BUT I still say take it when you can. THEN God intervened and I ended up on SS disabilty. FINANCIALLY it is great. Added to the defined benefits DW and I draw, plus a modest withdrawal from the portfolio and we are on a cash basis right at $100k a year. And STILL have a portfolio of nearly $525k and house of $350k w/ ZERO mortgage (COULD downsize into a mobile home if needed and pocket, what, $275 - $300k of that mortgage equity.) DW **WILL** draw her SS @ 62.

[Major Tom]

Quote:

Originally Posted by palomalou Last night I ran Firecalc a few times, one variable being when to start SS. It made less than 1% difference whether I took it at 62, 66 and a few months (FRA), or 70. That was a bit surprising. If we do a bit of part-time work, we are at 100% no matter which, so I had to remove the part-time work to find the difference. Now I'm really undecided--how to decide! Probably the 62 for reasons several have articulated.

I did the same - with the same results.

For the record I'm not married, and no plans of being married, so these decisions are much easier. Unless anything substantial changes, I'll be taking SS at 62 (which is a way off for me).

I'm getting by on my low income for now and am hoping to increase it a little in a few years. However, the big bump-up in income due to SS wil be very welcome. As AWeinel said - MAD money

[Animorph]

Quote:

Originally Posted by Katsmeow Are you and your wife the same age or is one of you older than the other? You mention your wife working. How does her SS compare to yours? It is highly likely that you and your wife won't both die at the same time. Therefore, one of you will have to live in a situation where there is one SS income coming in rather than 2. Therefore there is a case to be made for one of you to claim early and one of the two of you to claim late.

+1, that's what we'll do. The surviving spouse gets the larger SS check per the SS rules. We're also about equal earners, but I'm five years older. I'll take SS at 70, DW at 62. The last one standing still gets the fatter age 70 SS checks. That's a fairly safe choice.

As far as SS versus investments, if your investments do better than the COLA'd SS then take SS early. Otherwise, or for longevity insurance, take it late. Sure you have to spend down your investments faster early on if you take SS later, but once the larger SS amount kicks in you'll be drawing less from investments than if you had taken SS at 62. It balances out, depending on how long you live.

[BLS53]

Quote:

Originally Posted by haha If by clawback you mean what that usually means, demanding repayment of money lawfully received when rules change-I cannot think of anything in the politics sphere that I would feel more comfortable betting against. Imagine being the politician who made Granny sell her house to pay back her social security. Ha

+1 The SS reform paranoia grows more bizarre by the day.

[bondi688]

Quote:

Originally Posted by BLS53 +1 The SS reform paranoia grows more bizarre by the day.

Before you make judgmental comment, maybe you should carefully read and actually understand what was said!

[BLS53]

Quote:

Originally Posted by bondi688 Before you make judgmental comment, maybe you should carefully read and actually understand what was said!

It's not a judgmental comment. Merely an observation of things I have heard and read from various individuals, running scared that their SS is going away. Without anything of substance to justify such beliefs.

The comment was not directed at you, or anyone in particular.

[Alex in Virginia]

I've taken my SS early. Because I am still working and not needed the SS to cover my expenses, I have simply banked the SS payments and thus added them to my reserves. Even factoring in the income tax hit on those SS payments, I consider myself much better off adding tens of thousands of dollars to my when-I-really-retire reserve than waiting to collect.

Had I waited to collect in order to receive a larger monthly payment, I calculated it would take a minimum of TEN years of the incremental moneies to come up even with the SS I will already have collected by my FRA.

Once I saw THAT, it became a very easy decision for me.

[racy]

I saw this posted by someone someplace and thought it was interesting:

"For me, the key consideration is the cost/benefit analysis of the various scenarios. For example, if I take my SS early, but then I die early, I have a small benefit of receiving at least something, but it is very small since I had more than enough money saved in anticipation of a long retirement that didn't happen. If I plan to take my SS late but I end up dying early, then I have a small loss of not getting as much SS, but since I had enough to live on from my savings and am dead, I don't miss the loss.

If I take my SS early and end up living a long long time, then I have put myself in a position where I could run low of funds and my SS is less than it could have been. Potentially a large cost. If I take my SS late and I end up living a long long time, then I am getting the max benefit that I could in the situation where I might need the max benefit, potentially a large advantage.

What this tells me is that I avoid a large cost and gain a large advantage in the scenarios where I take SS late. In the scenarios where I take SS early I risk incurring the large cost and have potential for a small gain, but the only benefit of that (small) gain is to heirs since I have to die to get it. Consideration of each specific scenario and cost/benefit of each matters because I care more about results when I am living than I do about results where I am dead. The absolute size of the dollars received is outweighed by the utility of those dollars in each of the scenarios".

[obgyn65]

My thoughts exactly.

Quote:

Originally Posted by bondi688 If you need the money, take SS when you are able to.

[bUU]

The fact that there are good arguments for both 62 and 70 leads me to aim for taking SS at age 66.

[HighRoller]

Quote:

Originally Posted by Lazarus I will take benefits as soon as I can. Bird in the hand kind of guy.

+1 However, if I really felt they wouldn't change the rules, I'd wait until FRA.

[Lisa99]

I've run all of the scenarios through firecalc and for us starting at 62 gives us the most spending power over our expected lifetimes.

[eytonxav]

Quote:

Originally Posted by bicker The fact that there are good arguments for both 62 and 70 leads me to aim for taking SS at age 66.

Right now I am leaning this way myself, but with DW being 5 years younger and with her much smaller SS, I may push out taking mine beyond 66, depending on how the port holds up in the next several years. Also, might change depending on what our gummit does to SS.

[KingB]

Quote:

Originally Posted by Alex in Virginia I've taken my SS early. Because I am still working and not needed the SS to cover my expenses, I have simply banked the SS payments and thus added them to my reserves. Even factoring in the income tax hit on those SS payments, I consider myself much better off adding tens of thousands of dollars to my when-I-really-retire reserve than waiting to collect. Had I waited to collect in order to receive a larger monthly payment, I calculated it would take a minimum of TEN years of the incremental moneies to come up even with the SS I will already have collected by my FRA. Once I saw THAT, it became a very easy decision for me.

If your income exceed a $14640/year, you will have to repay $1 for every $2 that you made over the limit.

[fh2000]

I may have missed this particular reason to delay SS in this long thread: I will have to wait to collection SS until I have converted some (or most) of my 401K/IRA to Roth. Therefore, I have not decided to collect at 66 or 70. But, not at 62 for sure.

[coolowl]

I quit working at 61 so it was a choice of whether to take ss and draw down a small amount of investment money, or wait on ss and draw down even more of my investments. I opted for the former - ss at 62 so as not to use up my investments.