Winemaker
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Well, if your doctor told you that you had two years left, he isn't doing a good job as a doctor. And he might have to take SS at 62!
Theory Behind taking Social Security Early?
- Thread starter LXEX55
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Well, if your doctor told you that you had two years left, he isn't doing a good job as a doctor. And he might have to take SS at 62!
jimandthom
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During all these "when to take SS" one of the key statements for delaying is to provide the cushion for the surviving spouse.
Providing a cushion for my spouse, is why I will be taking SS at between 65-66. He cannot collect a spousal on my SS due to his federal pension
Should I go first, he will be without my SS and the amount that we spent from our nest-egg for those 5 years.
As others often state and seem to be suggesting is that they are more concerned about their spouses comfort than their own. I want my spouse to need nothing for him to have a comfortable and cared for remainder of his life.
If he goes first, being concerned about my level of comfort will be the last thing on my mind.
Providing a cushion for my spouse, is why I will be taking SS at between 65-66. He cannot collect a spousal on my SS due to his federal pension
Should I go first, he will be without my SS and the amount that we spent from our nest-egg for those 5 years.
As others often state and seem to be suggesting is that they are more concerned about their spouses comfort than their own. I want my spouse to need nothing for him to have a comfortable and cared for remainder of his life.
If he goes first, being concerned about my level of comfort will be the last thing on my mind.
That's incorrect.
Many folks who will be in that situation can choose to continue to work. I know a fair number of seniors who stay employed in order to delay their social security benefits and to pay for health insurance.
jimbee
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Continuing to work is a valid method of not needing Social Security.
arch57
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In our situation (age 61, DW is 60) besides my fixed pension we are pulling out of our tax-deferred accounts to fund our retirement. So I did a quick Excel sheet today. In our case taking SS @62 allows us to keep the money in our accounts and assuming a conservative 4% gain that grows to $335K at age 90 vs. the extra $218K I would have accumulated by delaying SS until I am 70.
So since our cashflow needs require us to withdraw from IRA and 401K funds to live the lifestyle we desire I'm planning on starting SS at 62 to offset tapping too much out of the tax deferred accounts.
So since our cashflow needs require us to withdraw from IRA and 401K funds to live the lifestyle we desire I'm planning on starting SS at 62 to offset tapping too much out of the tax deferred accounts.
Fedup
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Exactly. My sister is in this category, she chooses to work. But I think her assets can cover her, she’s FI. She just want to be safe. Medicare at 65, SS at FRA.
I'm not sure an assumption of average 4% real gain should be considered especially conservative, especially with the type of asset mix a 70+ YO retiree might find prudent.
Assuming my major concern was having enough spending money until DW and I die, if I were in your boots I might re-run my spreadsheet with some less optimistic assumptions. We could easily see a decade with zero real equity growth (even with dividends). We have had 10+% inflation before. If these or similar conditions prevail after age 70, delaying SS to age 70 provides much better outcomes. That's the route I'd be more comfortable with, rather than one that optimizes results when things are "average" or "good."
ncbill
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"Some" would be more accurate than "many."
The relative for whom I'm now caring was laid off around 60 and did their best to get back to work, but never secured full-time employment again.
Cashed in their modest pension to make it to SS at age 62.
Within a few years of their layoff they were full-time caregiver for their 90-something mother & her brother until both of them passed away.
Yes, surveys show many people expect to be working past age 65, but far fewer actually manage to do so.
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Ironically, I can say the exact same thing but end the bolded part of the sentence with “at 68-69-70 because we want to convert as much from tax deferred accounts in to Roths to deplete the deferred accounts that require RMDs. We know we will require much less from those accounts because of the higher tax advantaged income.”
Another Reader
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684 responses so far. Wow.
I'm very fortunate and grateful to be in a situation where all these arguments are irrelevant to my situation. I was raised to spend only income and preserve assets and that's how I have set things up. Other than taking RMD's from inherited IRA's that I would have to take no matter what happened with Social Security, I am not "spending down" assets. I have rentals, small pensions and those darned RMD's that provide me with sufficient (actually excess) household income. Eventually more RMD's when I turn 70.
I took Social Security at 62. Currently, I'm investing the net proceeds in paying off the last of the rental mortgages early. The income from Social Security is growing my asset base and, as the mortgages are paid off, my income. Much of the RMD money is used for that as well.
It also made sense using my best projections of lifespan. Too many relatives died between 70 and 74 to wait for the bigger marshmallow when I could puff it up faster myself.
So context matters in the decision when to take Social Security. There are a lot of twists and turns in accumulation of assets and income streams described in this thread that affect each individual's decision. There is no right answer for everyone.
I'm very fortunate and grateful to be in a situation where all these arguments are irrelevant to my situation. I was raised to spend only income and preserve assets and that's how I have set things up. Other than taking RMD's from inherited IRA's that I would have to take no matter what happened with Social Security, I am not "spending down" assets. I have rentals, small pensions and those darned RMD's that provide me with sufficient (actually excess) household income. Eventually more RMD's when I turn 70.
I took Social Security at 62. Currently, I'm investing the net proceeds in paying off the last of the rental mortgages early. The income from Social Security is growing my asset base and, as the mortgages are paid off, my income. Much of the RMD money is used for that as well.
It also made sense using my best projections of lifespan. Too many relatives died between 70 and 74 to wait for the bigger marshmallow when I could puff it up faster myself.
So context matters in the decision when to take Social Security. There are a lot of twists and turns in accumulation of assets and income streams described in this thread that affect each individual's decision. There is no right answer for everyone.
CardsFan
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While we normally
once a month, I just realized this thread is now OVER one month old.
Retch The Grate
Full time employment: Posting here.
Nothing wrong with a long ongoing discussion.
foxfirev5
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Spot on. Life happens. All the numbers crunching in the world does not counter life. The last thing DW and I thought about was elder care for my DM. I took SS at 62 and she now lives with us. I just couldn't pull the trigger on the senior apt while we're living in the Taj.
ShokWaveRider
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
While we normally
It's not dead yet, It mouth opens and it's legs are still moving..
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
From Oblivious Investor
Fedup
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I ran that calculator last night, I should take mine at 70, for my husband, he should suspend his and take it again next year. Didn’t take into account of Roth conversion.
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BoodaGazelle
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Final (?) decision
After following this thread closely, what with all of the tradeoffs for minimizing income for ACA subsidies, vs. managing taxes when RMDs kick in, to worrying about changes in the SS laws, to the uncertainty of one's own mortality, I have (after many 180 degree reversals) decided the following.
Both DW (age 61) and I (age 62) will file as soon as we are eligible for Medicare. This splits the difference (not really) between the "62 or 70" question, but still leaves room for us getting ACA subsidies and still taking a little more $ via SS, thus hoping to spend it while we are in our 60's rather than later.
I know this is a completely unacademic strategy, but I do not see how it would make all of the tradeoffs any worse. We will certainly end up paying probably at least 25% on our income in our 70's and beyond, based on our assets, but I am not complaining.
I appreciate all who have put in the real hard work of trying to work out the best strategies, but as far as I can see, there is no one right answer, even for oneself, much less one that has broader applicability.
Cheers!
Bood
After following this thread closely, what with all of the tradeoffs for minimizing income for ACA subsidies, vs. managing taxes when RMDs kick in, to worrying about changes in the SS laws, to the uncertainty of one's own mortality, I have (after many 180 degree reversals) decided the following.
Both DW (age 61) and I (age 62) will file as soon as we are eligible for Medicare. This splits the difference (not really) between the "62 or 70" question, but still leaves room for us getting ACA subsidies and still taking a little more $ via SS, thus hoping to spend it while we are in our 60's rather than later.
I know this is a completely unacademic strategy, but I do not see how it would make all of the tradeoffs any worse. We will certainly end up paying probably at least 25% on our income in our 70's and beyond, based on our assets, but I am not complaining.
I appreciate all who have put in the real hard work of trying to work out the best strategies, but as far as I can see, there is no one right answer, even for oneself, much less one that has broader applicability.
Cheers!
Bood
I like Mike's calculator. It's one of the better ones I've used. One of several that has me collecting at 62 and DW at 70. The only thing I think might have me postponing after 62 is Roth conversions.
Fedup
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I think taking at 65 is much better than taking it at 62.
Independent
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Once again, I'll say that the default mortality in that calculator understates life expectancy for almost anybody who is seriously considering deferring SS.
He uses the 2015 SS Period table, which gives life expectancies at 62 as
20.0 and 22.8.
Other, tables have longer life expectancies. For example, the 2012 Individual Annuitant table has
26.0 and 27.7 for people reaching age 62 in 2018.
The RP-2014 table, which is for valuing pensions for retired employees, has nearly the same numbers as the IA if we select "white collar" retirees.
Crabby Mike
Recycles dryer sheets
It's always possible I missed something here, but your numbers look very wrong to me. You're saying that by delaying claiming SS for one month, your monthly income goes up by $125/1,833, or 6.8%? I think that's closer to what you would get by delaying for a year.
I like the SPIA analogy, though.
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I've been traveling, so just catching up on this thread.
An unrealistic but easy way to understand the above...at 62, imagine you have a portfolio with no risk that's guaranteed to earn 10% above inflation for the next 8 years (thought experiment only, of course). Allowing all of that portfolio to grow rather than spend it while waiting until 70 would certainly generate more spendable cash over the plan duration, even if that duration was 40 years. That's not to say this is a likely scenario, it's only to say that even if one lives a long time, there is a non-zero chance that taking SS early could still provide more spending. This post provides more on this idea of how higher returns can cost SS less and allow the retiree to spend more:
It all goes back to what I said very early in this thread: "Do you feel lucky". But one must realize lucky in longevity pushes one way, lucky in your portfolio return pushes the other way. And you come out the other side and realize all of this is unknowable, so you "pays (claims) your money, you takes your chances".
Is it prudent to ignore the fact that two factors could "go wrong" (extended longevity, lower CGR)? NO! It's not smart to ignore that these things can go in a direction that would confound the results. As discussed, when deciding, one must not look at only the $, but the utility of extra cash versus the "pain" associated with not having extra cash. That is a personal thing. In the industrial engineering curriculum, I learned how to do a decision tree to model this kind of thing. You have "decision nodes" and "probability nodes" and each of all possible outcomes has benefit or a cost. As you work back from the "leaves" of the tree, all the way to the trunk, you can get a solid understanding of what the best decision is. Of course, like any other tool, the trick is to change the weightings until you get the answer you want
The above, and FIRED, is the realm I'm thinking of when participating in this post; the other areas are not applicable to me and also less interesting to me.
Or maybe more over their lifetimes and leave the system in better shape? Isn't it possible they end up with more AND be less of a drain on the system? How? Well, all that would have to happen is that the money they would have pulled while waiting until 70 grows at a "high enough" growth rate. The pie is not a fixed size. So you can get less than your maximum lifetime benefits from SS, yet have more money to spend and/or pass on. And, oh, by the way, pay MORE taxes along the way. Maximizing the whole model, not just lifetime benefits, seems like a smarter approach.
An unrealistic but easy way to understand the above...at 62, imagine you have a portfolio with no risk that's guaranteed to earn 10% above inflation for the next 8 years (thought experiment only, of course). Allowing all of that portfolio to grow rather than spend it while waiting until 70 would certainly generate more spendable cash over the plan duration, even if that duration was 40 years. That's not to say this is a likely scenario, it's only to say that even if one lives a long time, there is a non-zero chance that taking SS early could still provide more spending. This post provides more on this idea of how higher returns can cost SS less and allow the retiree to spend more:
^This is the take-away for me.
It all goes back to what I said very early in this thread: "Do you feel lucky". But one must realize lucky in longevity pushes one way, lucky in your portfolio return pushes the other way. And you come out the other side and realize all of this is unknowable, so you "pays (claims) your money, you takes your chances".
Is it prudent to ignore the fact that two factors could "go wrong" (extended longevity, lower CGR)? NO! It's not smart to ignore that these things can go in a direction that would confound the results. As discussed, when deciding, one must not look at only the $, but the utility of extra cash versus the "pain" associated with not having extra cash. That is a personal thing. In the industrial engineering curriculum, I learned how to do a decision tree to model this kind of thing. You have "decision nodes" and "probability nodes" and each of all possible outcomes has benefit or a cost. As you work back from the "leaves" of the tree, all the way to the trunk, you can get a solid understanding of what the best decision is. Of course, like any other tool, the trick is to change the weightings until you get the answer you want
ShokWaveRider
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I think it is a conspiracy..... all the people that recommend waiting till 70 to take SS just want to make sure there is enough for them to take it and not get a haircut. In theory id 90% of people waited, the other 10% would get more longevity from their SS...…
Food for thought..... JUST KIDDING!!! LOL.
Food for thought..... JUST KIDDING!!! LOL.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
There are 4 mortality table options available in addition to the 2015 SS Period Life Table.... 2017 CSO Nonsmoker Super-preferred, 2017 CSO Nonsmoker Preferred, 2017 CSO Smoker Preferred, 2017 CSO Smoker Residual Standard. Why did you totally ignore these options?
There is also an option to simply enter and assumed age at death.
FWIW, I use the 2017 Nonsmoker Preferred.
GravitySucks
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Can I interest you in purchasing a patented ground strap for the tinfoil helmet? The radio waves travel right through the ungrounded ones. Only $19.95 plus shipping....
