To be or not to be (early SS or not) ...?

[wanaberetiree]

My DW will be 62 soon and I am a year younger.

DW is retired for last 5+ years, I'm still w$rking as it feels good to me.

We are ready to FIRE any time and probably can live on 2-2.5% of assets.

My question is about Social Security.

Do we take it early? Do we not? And more general - how do people find answers to these questions and come to good decisoin?

Thx

 

[travelover]

This has been discussed here many times and a search will turn up those discussions as well as links to SS calculators.

But people love to rehash it so let the fun begin..........

 

[davebarnes]

how do people find answers to these questions and come to good decision?

It all depends upon your situation.
For example, what is your planned death age?
For example, will taking Social Security before age 65 affect your medical insurance cost?

 

[pb4uski]

Start here: https://opensocialsecurity.com/

Check the Advanced Options box just above Your Information.

One way to look at it for a single to keep it simple. Let's say that Joe can take $750/month at 62, $1,000 per month at 66 or $1,320/month at 70 and is looking at the two extremes of 62 and 70.

If he forgoes 8 years at $750/month, or $72,000; beginning at age 70 he will receive a COLA adjusted benefit of and additional $570/month or $6,840/year for life. That is a 9.5% payout rate ($6,840/$72,000) and is a pretty attractive payout rate for a COLA-adjusted life annuity.... if at age 62 Joe would be willing to pay $750/month for 8 years in exchange for $570/month for the rest of his life then he should delay.

 

[Red Badger]

The actuarial tables indicate that you'll get the same either way. DW did FRA. I did 62. Our reasons are unique to us. While we might die in compliance with said tables, we are not obligated to do so (yet).

 

[Navigator]

This is a difficult question because there are so many unknowns: how long will you live, how long will your wife live, what will future market returns be, what will future tax rates be? Fortunately, there is one strategy that covers a lot of bases: the low earner takes social security at 62, while the highest earner waits until 70. This way, you are covered if one of you lives a long life and are also covered if one of you dies young.

 

[NW-Bound]

... Fortunately, there is one strategy that covers a lot of bases: the low earner takes social security at 62, while the highest earner waits until 70. This way, you are covered if one of you lives a long life and are also covered if one of you dies young.

Yes, this we do.

When a spouse dies, the surviving spouse will lose the lower SS benefit of the pair. Therefore, the common wisdom is not to delay both, only the higher SS of a couple.

 

[ER2B]

Another thing to consider is if you are doing Roth conversions. You'll pay more in taxes if one of you collects early. This is why we are both collecting at 70.

 

[mystang52]

This has been discussed here many times and a search will turn up those discussions as well as links to SS calculators.

But people love to rehash it so let the fun begin..........

Yes, but as the situation first crops up for someone it's fine for them to ask "for the first time." To OP: I was originally going to collect at age 62, but deferred because my SS benefit is higher than DW. Short of some traumatic accident it's extremely likely DW will outlive me, so we deferred to make sure DW gets that higher SS widow death benefit. Something to consider.

 

[ShokWaveRider]

One Acronym ACA!

 

[Teacher Terry]

I took mine a year early at 65. Not much money difference because of WEP. We haven’t decided how long we will wait to take DH but he also is affected by WEP.

 

[pacergal]

This is such a personal decision.
It depends on how your retirement finances are situated. We have a three legged stool.
We took ours at 62.
We also have pensions with 100% survivor which cover our basic expenses and a little travel.
We use SS for extra travel, fun, gifting. And our savings is there for LTC, inheritances, or if SHTF.

 

[Dtail]

One Acronym ACA!

Exactly, which is why the earliest I would take SS is at 65.

 

[Sue J]

At age 62 I started watching my benefit amount every month. It grew a few dollars every month and then I saw the cola increase every year. I always planned on starting my benefit at age 65 when Medicare starts.

As someone else mentioned if you are getting ACA subsidies you have to be careful about how your SS benefit will impact that. 100% of your SS is included in your ACA MAGI.

This year we had ACA insurance that was HSA eligible so making a $9000 HSA contribution gave us plenty of room for me to start collecting my SS benefit of $718/mo. I started in April. DH has a state pension and will not get SS (and if he did he is WEPed and GPOed) so we did not have to consider strategies for a married couple.

Considering that my SS was increasing by just a few dollars a month while I was delaying over $700/mo made the decision clear. I just got tired of waiting.

 

[travelover]

Yes, but as the situation first crops up for someone it's fine for them to ask "for the first time."..........

I wasn't admonishing the OP , just advising that there is a ton of discussion on this with no waiting for feedback.

 

[wanaberetiree]

Yes, this we do.

When a spouse dies, the surviving spouse will lose the lower SS benefit of the pair. Therefore, the common wisdom is not to delay both, only the higher SS of a couple.

In our case our SS benefits are somewhat close in value, what is then ?

 

[pb4uski]

What did opensocialsecurity.com advise?

 

[wanaberetiree]

What did opensocialsecurity.com advise?

"Recommended Strategy
The strategy that maximizes the total dollars you can be expected to spend over your lifetimes is as follows:

Your spouse files for his/her retirement benefit to begin 3/2023, at age 62 and 4 months.
You file for your retirement benefit to begin 2/2030, at age 70 and 0 months.
The present value of this proposed solution would be $991,671.

This means that with this strategy you could expect to receive, on average, $991,671 of total Social Security benefits over the course of your lifetime, after adjusting for the fact that a dollar received in the future is worth less than a dollar received today (because the sooner you receive a dollar the sooner you can invest it). See this article for a more thorough explanation of the "present value" concept."

I am trying to digest its rational ....

 

[pb4uski]

That is a fairly common recommendation for a married couple. Now, go to the bottom of the results page where they allow you to input assumptions for alternative claiming strategies and input each of the following alternative claiming strategies and note the present values: each as early as possible, each at 65, each at FRA, lower earner at FRA and higher earner at 70.

In our case, I found that there was only a 3% difference between the optimal scenario per opensocialsecurity.com and the worst, which was as early as possible... for the age 65 and FRA strategies the difference was less than 1%... IOW, it doesn't matter much.

We're delaying for now because we want to do low-tax cost IRA withdrawals and Roth conversions while we can... other people delay to keep their income low for ACA subsidies... so there are other factors to consider.

 

[Squirrel]

When I asked this question, someone replied with a testing-the-limits strategy:

If you're going to die next year, take it immediately.
If you've got vampire genes, postpone till the maximum.

I keep reading that we're living longer. I wonder if the social security tables have adjusted for that.

 

[ShokWaveRider]

OP Could check this for a recommendation, but it does not take into account how much more Health Insurance will cost if they do.

https://opensocialsecurity.com/

 

[RunningBum]

Lots of factors.

Do you want longevity insurance? Delay both of you until 70.

Is your health and life expectancy outlook considerably greater than average? Wait until 70. Considerably less? Take at 62.

Worried about future cuts to SS and think being grandfathered in is an advantage? Take at 62.

Think you can do better than average with your investments? Take it early.

Think the market does better recovering after a crash? Wait for a downturn between ages 62-70 and take it then.

Taking ACA subsidies? Wait until at least 65.

Want to hedge your bets? Take it at your full retirement age.

For most people there won't be much of a difference no matter when you take it.

Personally, I'm looking for longevity insurance, and taking subsidies. I may jump on it after a downturn, a health decline, or react if I get a clearer picture of the future of SS benefits. It's just me, so I don't have the spouse factors. The 62/70 split makes sense to me though I haven't looked too closely and don't know how it changes with fairly equal benefits.

 

[NW-Bound]

In our case our SS benefits are somewhat close in value, what is then ?

You can toss a coin to see who goes first.

 

[pb4uski]

... I keep reading that we're living longer. I wonder if the social security tables have adjusted for that.

I don't think they are for two reasons.... the discounts and premia for taking early or delaying have not been changed in many, many years despite improvements in longevity... and secondly, because we know the crossover age is ~82 and longevity is 2-4 years better than 82 (about 84 for men and 86 for women as I recall).

 

[wanaberetiree]

That is a fairly common recommendation for a married couple. Now, go to the bottom of the results page where they allow you to input assumptions for alternative claiming strategies and input each of the following alternative claiming strategies and note the present values: each as early as possible, each at 65, each at FRA, lower earner at FRA and higher earner at 70.

In our case, I found that there was only a 3% difference between the optimal scenario per opensocialsecurity.com and the worst, which was as early as possible... for the age 65 and FRA strategies the difference was less than 1%... IOW, it doesn't matter much.

We're delaying for now because we want to do low-tax cost IRA withdrawals and Roth conversions while we can... other people delay to keep their income low for ACA subsidies... so there are other factors to consider.

That’s useful thx.

But you could theoretically claim 1/2 spousal SS, could you not?
How do you evaluate for this case?