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When Should You Take Social Security?
Old 08-28-2014, 09:58 PM   #1
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When Should You Take Social Security?

Just wanted to share with the group...


What Is Social Security's Full Retirement Age?
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Old 08-28-2014, 10:15 PM   #2
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I am planning on 70, but I will re-evaluate every year after I turn 62.

My DGF is 12 years younger, so if we get married just prior to collecting, or immediately after, should would be eligible for a much higher spousal benefit.

I had not thought about the break even age being different based on the amount you collect. That is something I have to evaluate. I thought it was the same, no matter how much you collect.
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Old 08-29-2014, 12:25 AM   #3
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Early or Late Retirement

I was planning on waiting until 70 to collect SS. Looking at my spread sheet I will probably start at 69 and four months and begin collecting in December of the year I turn 69. I chose December due to this statement on that URL page listed above: (I will seek clarification before reaching 69)
"If you retire before age 70, some of your delayed retirement credits will not be applied until the January after you start benefits. "

Bottom line, it would take until my early ninety's before making a one percent difference in collected funds. (~12K)
I would rather collect 30k up front at 69 and give up 12k at 90.
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Old 08-31-2014, 06:15 PM   #4
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Please note, the Schwab site still reads that you can take SS early, then repay the amount received to re-set at a high amount. This is no longer the case, do NOT plan on this option.
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Old 08-31-2014, 06:26 PM   #5
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Please note, the Schwab site still reads that you can take SS early, then repay the amount received to re-set at a high amount. This is no longer the case, do NOT plan on this option.
Actually, they do cite the correct rules. You still have a one-year window to do the payback.

Quote:
from Schwab site

If you previously elected to receive early Social Security benefits at a reduced rate, you have the option of paying back to the government what you've already received. You could then restart benefits at a later date to take advantage of a higher payout. This option is limited to one year's worth of benefits.
See Retirement Planner: If You Change Your Mind

Quote:
If you are receiving Social Security Retirement benefits and you change your mind about when they should start, you may be able to withdraw your Social Security claim and re-apply at a future date.

However, if you change your mind 12 months or more after you became entitled to retirement benefits, you cannot withdraw your application.

Note: You are limited to one withdrawal per lifetime.
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Old 09-01-2014, 08:13 AM   #6
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Early or Late Retirement

I was planning on waiting until 70 to collect SS. Looking at my spread sheet I will probably start at 69 and four months and begin collecting in December of the year I turn 69. I chose December due to this statement on that URL page listed above: (I will seek clarification before reaching 69)
"If you retire before age 70, some of your delayed retirement credits will not be applied until the January after you start benefits. "

Bottom line, it would take until my early ninety's before making a one percent difference in collected funds. (~12K)
I would rather collect 30k up front at 69 and give up 12k at 90.
EDIT: I just ran my Numbers in the Social Security Calculator and for taking my SS at age 69 1/2 (In December of the year I turn 69), it would only take about 6 years to 'Break-Even', by Delaying to Age 70. This would be around age 76. I'd like to see your numbers on how you arrived at only ~12K by Age 90.... We're off by a mile somewhere.
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Old 09-01-2014, 09:25 AM   #7
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I live and breathe spreadsheets (retired actuary) so I just created one that showed the discounted cash flow for all 3 scenarios given reasonable annual rates of return (6%) and COLA rates (2%). One thing I don't always see factored in is that if you wait till age 66 or 70 to collect, you need to adjust it for the COLA increases between now and that age- you can't just take the benefit amount they provide for 2014.

For me, collecting at age 62 is clearly a bad deal. The tradeoffs between 66 (my FRA) and age 70 aren't so clear. This has changed my strategy; I may choose 66 instead of age 70.
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Old 09-01-2014, 11:36 AM   #8
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Agree with you on the COLA adjustment. Using your assumptions (6% earned, 2% COLA), I get that 66 beats 62 if I live to 81 1/4 and 70 beats 66 if I live to 86 1/2. Are you getting similar results?

Gram lived to 99, Mom is still going strong at 84 and Dad died at 75 from lung cancer but I don't smoke and his brother is still working in his 80s, so I'm planning to wait.
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Old 09-01-2014, 02:30 PM   #9
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I took SS at FRA of 66. Ran some spreadsheets too, didn't consider COLA (figured it was a wash) or earnings (because I would be spending the money). Taking at 66 was better off than even waiting one year later to age 67 where the crossover was about 13 years later (when I would be 79) or 16 years later at age 85 if I delayed until 70.

I figured that the value of the money (to me) was much greater for that first 13 or 16 year period than afterwards. Delayed gratification is one thing, but delay until you are too old and your money is not as much use to you or you are dead.

I didn't take before FRA because was earning over the limit.
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Old 09-01-2014, 02:47 PM   #10
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Agree with you on the COLA adjustment. Using your assumptions (6% earned, 2% COLA), I get that 66 beats 62 if I live to 81 1/4 and 70 beats 66 if I live to 86 1/2. Are you getting similar results?
I'm getting 66 beating 62 around age 76, but the same age you got for 70 beating 66. I'll be monitoring it as I go; if the market tanks, for example, I may take SS earlier so that the investments can recover.
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Old 09-01-2014, 03:58 PM   #11
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Something these generic articles don't mention is the quirks of benefits.
- spouse collects spousal benefits from FRA until 70... clearly it pays to wait till 70 in that age because the spousal benefit is free money.
- if SS recipient has minor age children, it can pay to take it earlier. (This is our case). I ran the spreadsheet for DH collecting at 62, 66, and 70. For us - the extra 4 years of minor kids benefits skewed the results to starting at age 62 for the hubster.
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Old 09-01-2014, 04:34 PM   #12
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I'm getting 66 beating 62 around age 76, but the same age you got for 70 beating 66. I'll be monitoring it as I go; if the market tanks, for example, I may take SS earlier so that the investments can recover.
+1 the way I look at it, after 62 I have an option and can pull the trigger anytime my investments decline more than I can stand.
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Old 09-01-2014, 04:45 PM   #13
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Something these generic articles don't mention is the quirks of benefits.
- spouse collects spousal benefits from FRA until 70... clearly it pays to wait till 70 in that age because the spousal benefit is free money.
I agree that the calculation would change if my husband could collect a spousal benefit, but he filed in 2003 when he turned 65, and his benefit on his own record is higher than the spousal benefit would be on my record. I'll have to check the rules when I hit FRA to see if there's any way I can first collect spousal and then switch to my own record at 70. I'm not sure what the rules are for that now, but they could change anyway.
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Old 09-01-2014, 06:43 PM   #14
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EDIT: I just ran my Numbers in the Social Security Calculator and for taking my SS at age 69 1/2 (In December of the year I turn 69), it would only take about 6 years to 'Break-Even', by Delaying to Age 70. This would be around age 76. I'd like to see your numbers on how you arrived at only ~12K by Age 90.... We're off by a mile somewhere.
I’ll give it a shot, whichever way is right I plan on waiting until 70ish instead of 62 or 66 to claim as I prefer a higher annuity amount. Looking at the calculations made me go hmmm, why not start collecting a little early.

The SS Delayed Retirement Credits Calculator provided the percentage of PIA. 69.5 1.28 & 70 1.32 were used.
The example uses a PIA of $2200

Excel’s Future Value function: =FV(rate,nper,pmt) 69.5 =FV(0.02,10.5,-33792) 70 =FV(0.02,10,-34848)
Rate used 0 and .02 for cola; nper 69.5 used 10.5 years , 70 used 10 years etc.; pmt 69.5 -33792, 70 used -34848
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File Type: jpg SS_69.jpg (26.4 KB, 221 views)
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Old 09-01-2014, 06:50 PM   #15
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I'll at least wait until 66, but after that it's going to be a year to year thing depending on the market.
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Old 09-01-2014, 07:03 PM   #16
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I'll at least wait until 66, but after that it's going to be a year to year thing depending on the market.
Yep, bull or bear market, Roth conversion to do, I reserve the right to change my mind during the next eight years.
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Old 09-01-2014, 08:14 PM   #17
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I’ll give it a shot, whichever way is right I plan on waiting until 70ish instead of 62 or 66 to claim as I prefer a higher annuity amount. Looking at the calculations made me go hmmm, why not start collecting a little early.

The SS Delayed Retirement Credits Calculator provided the percentage of PIA. 69.5 1.28 & 70 1.32 were used.
The example uses a PIA of $2200

Excel’s Future Value function: =FV(rate,nper,pmt) 69.5 =FV(0.02,10.5,-33792) 70 =FV(0.02,10,-34848)
Rate used 0 and .02 for cola; nper 69.5 used 10.5 years , 70 used 10 years etc.; pmt 69.5 -33792, 70 used -34848
That's a lot of numbers. But, have you ran the Social Security Calculator with your exact figures? I did with mine and I 'break-even' in about 6 years or age 76 by delaying from 69 1/2 to age 70.

So, I think there is something wrong with your formula. Use the Calculator downloaded from the S.S. Website for a more accurate Picture.

That's a bet I'm taking!
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Old 09-01-2014, 10:28 PM   #18
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Originally Posted by springnr View Post
I’ll give it a shot, whichever way is right I plan on waiting until 70ish instead of 62 or 66 to claim as I prefer a higher annuity amount. Looking at the calculations made me go hmmm, why not start collecting a little early.

The SS Delayed Retirement Credits Calculator provided the percentage of PIA. 69.5 1.28 & 70 1.32 were used.
The example uses a PIA of $2200

Excel’s Future Value function: =FV(rate,nper,pmt) 69.5 =FV(0.02,10.5,-33792) 70 =FV(0.02,10,-34848)
Rate used 0 and .02 for cola; nper 69.5 used 10.5 years , 70 used 10 years etc.; pmt 69.5 -33792, 70 used -34848
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Originally Posted by Cut-Throat View Post
That's a lot of numbers. But, have you ran the Social Security Calculator with your exact figures? I did with mine and I 'break-even' in about 6 years or age 76 by delaying from 69 1/2 to age 70.

So, I think there is something wrong with your formula. Use the Calculator downloaded from the S.S. Website for a more accurate Picture.

That's a bet I'm taking!
Don’t think we need a calculator to sort this out. A difference of 6 months in starting social security, #2 pencil math should handle it.
Yearly draw at 70 is 34,848 and at 69.5 is 33,792 for a difference of 1056.
You get a half year head start at 69.5 33,792/2 = 16,896 take away 1056 every year until you get even.
16896/1056= 16 which puts break even out to 85 not 76
Feel free to use your PIA * 1.28 and !.32 to check.

Edit to add: decided to go ahead and plug 85 in Excel:
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Old 09-02-2014, 04:45 AM   #19
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Don’t think we need a calculator to sort this out. A difference of 6 months in starting social security, #2 pencil math should handle it.
Yearly draw at 70 is 34,848 and at 69.5 is 33,792 for a difference of 1056.
You get a half year head start at 69.5 33,792/2 = 16,896 take away 1056 every year until you get even.
16896/1056= 16 which puts break even out to 85 not 76
Feel free to use your PIA * 1.28 and !.32 to check.

Edit to add: decided to go ahead and plug 85 in Excel:
The Social Security Calculator. (The detailed one, with a record of all earnings) gives me a "Delayed increment Factor" of 1.20 for age 69 1/2. Not 1.28. ----
So, this is because as you stated in your first post.- "If you retire before age 70, some of your delayed retirement credits will not be applied until the January after you start benefits. " So, The Calculator was using 1.20 instead of 1.28

But, we are a lot closer now. So, I can certainly buy into age 85 for a break even point. When you said you were getting about 30K up front at 69, It looks like about $23K and that is why we were off by a mile and made me question your math.

So, I'll still delay to age 70 and take the bet that I live to age 85..... My retirement plan goes out to age 100. I won't need the money at 69 1/2 and it would just go into the investment pile anyway. So, it's just a bigger annuity for me. And I'll buy it at age 69 1/2! -- I'll still be looking for good investments.

I'd rather frame the question as would you buy an immediate annuity from Uncle Sam that was Inflation Adjusted, had 100% spouse survival benefits at age 69 1/2 that paid 6.25% --- I'd take a lot more of that than ~$23K !

Social Security Detailed Calculator
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Old 09-02-2014, 06:48 AM   #20
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[(1.28*6)/(1.32-1.28)/12]+70 = 86
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