When to take Social Security - Any new ideas?

[Hal3]

Most advisors say wait as long as you can to start taking Social Security if you can afford it.

It's looking like the system may collapse sooner than expected or perhaps the rules will change.

Is anyone nearing 62?

 

[youbet]

In these SS related discussions, I've been consistent in saying that market conditions and my personal situation would dictate my decision as I approach 62. Well, I'm now within a few months of 62 and it's decision time.

There are pros and cons to collecting early or collecting later. Even if you choose the date that statistically should be most beneficial for you, there is no guarantee that the assumptions you used in making your decision (yrs to live, econ issues, SS rules and regs, etc) will hold true over time.

I'm going to start SS at 62. With the market down and with recovery, IMO, in the distant future, collecting $19k SS goes a long way towards supporting a reasonable ER lifestyle without dipping into the portfolio at an inopportune time.

I've said for the past couple of years we've been discussing this that I'd wait until decision time to decide and I have. Given current conditions, I'm going with starting it at 62. If the markets were roaring upward and a simple harvest of some high flying equity profits as part of rebalancing would cover the next few years, I'd probably delay.

Goal: divs + int + pension + SS = decent RE lifestyle

 

[FinallyRetired]

I recently started receiving it, and I'm 63. My thinking is that if SS, in addition to my pension and savings, is enough for me to retire with, take SS and retire. OTOH, if you can't, or don't want to, retire yet, wait until full retirement age (67 for me) and take a higher amount then. Plus, if you take it at full retirement age, you can keep working and they won't take it back, whereas if you take it early there is a severe cap on how much SS you can receive. But, since this is a retirement board, this should not be a factor.

 

[bubba]

I'm 52, so no point in trying to make a decision right now, but if I were nearly 62 today, I'd take payments @ 62.

 

[Independent]

Most advisors say wait as long as you can to start taking Social Security if you can afford it.

It's looking like the system may collapse sooner than expected or perhaps the rules will change.

Is anyone nearing 62?

I'll be 62 in 4 months. I'm not expecting the "system to collapse" any sooner just because of the current economy (I'm using "system" to mean the SS system, not the overall gov't). Long-term unemployment over 10% would change my opinion. The "trust fund" is estimated to run out when I'm 94.

Looking at the overall gov't, since the "trust fund" is really just a loan to the general fund, and the general fund is in all sorts of trouble, I could see the general fund defaulting on the loan. This would put SS into pure paygo financing sooner.

I expect the first thing they'd do in terms of cutting benefits would be means testing. So I'm not certain how to make myself look "poorer" for means testing (other than the obvious of actually becoming poorer). I could defer taking benefits, therefore spending down savings and having fewer assets and less income from assets in the future. But, that also increases by SS benefit. So would they only look at private assets/income? or would they look at the total including SS?

I don't know that answer, so I can't factor that into the decision.

 

[OAG]

Well DW and I both took it at 62. Then I found the payback rule and did that (paid back benefits). Along about last year I decided to "reapply" for benefits at 67.5 years. I am glad I did rather than waiting until age 70 for another 17% in benefits. I suspect that this year (2009) the COLA will be very close to, or actually, 0%. SS is currently means tested in two ways. The first one is the percent (50% to 85%) taxable above a certain amount of income and the fact that MC Premiums are subtracted from the SS benefits and MC Premiums are a unknown factor going forward. Of course there are other ways the Government could institute, other than raising these two, going forward.

 

[W2R]

In these SS related discussions, I've been consistent in saying that market conditions and my personal situation would dictate my decision as I approach 62. Well, I'm now within a few months of 62 and it's decision time.

I am a year younger than you, and also feel like market conditions and my personal situation should dictate my decision as I approach 62. I do lean towards taking SS at 66, though it is still up in the air. All this talk about cutting back on SS makes me want to take it early.

So basically, I am planning to take it at 66 but am just as likely to impulsively take it at 62, out of fear that I might get nothing at all.

I suspect that the Social Security Administration has enough experts working on life expectancies that it is six of one, half a dozen of the other. However, white females have a longer median lifespan than do members of the population as a whole, and this is not reflected in SS benefits, plus I have familial longevity working in my favor, so I would probably be slightly more likely to do better taking it at 66.

 

[Bikerdude]

Goal: divs + int + pension + SS = decent RE lifestyle

I could not have said it better myself. I will be taking at 62.

Plus, I will pay substantially less income tax, both Fed & State. Your results may differ.

 

[73ss454]

I retired at 57 and will be turning 60 next month. DW is 2 years behind me. My original plan was to take SS at 64 when DW turned 62 as this would give us about 30K in income.
With my current haircut of investments I was thinking of a way to take it now.

 

[OAG]

I retired at 57 and will be turning 60 next month. DW is 2 years behind me. My original plan was to take SS at 64 when DW turned 62 as this would give us about 30K in income.
With my current haircut of investments I was thinking of a way to take it now.

Disability or SSI?

 

[Bikerdude]

I am a year younger than you, and also feel like market conditions and my personal situation should dictate my decision as I approach 62. I do lean towards taking SS at 66, though it is still up in the air. All this talk about cutting back on SS makes me want to take it early.

So basically, I am planning to take it at 66 but am just as likely to impulsively take it at 62, out of fear that I might get nothing at all.

I suspect that the Social Security Administration has enough experts working on life expectancies that it is six of one, half a dozen of the other. However, white females have a longer median lifespan than do members of the population as a whole, and this is not reflected in SS benefits, plus I have familial longevity working in my favor, so I would probably be slightly more likely to do better taking it at 66.

Just an educated guess on my part but I would expect the following to be enacted:

1.) Cap on SS income subject to tax will be lifted.

2.) Means testing will be implemented for very high incomes....to being with.

3.) Age for full benefits will be increased slightly.

4.) Age 62 will be retained as beginning age but with a lower % of full benefit than today.


All they really want to do is kick the can down the road until they are dead and leave the problem to the next generation. Medicare is the BIG problem.

 

[ls99]

Turning 62 in Nov. this yr. Using my usual simplified analysis:

Cash in hand valuable. Promissory note far less valuable.
Start collecting SS @ 62.

 

[youbet]

Just an educated guess on my part but I would expect the following to be enacted:

1.) Cap on SS income subject to tax will be lifted.

2.) Means testing will be implemented for very high incomes....to being with.

3.) Age for full benefits will be increased slightly.

4.) Age 62 will be retained as beginning age but with a lower % of full benefit than today.


All they really want to do is kick the can down the road until they are dead and leave the problem to the next generation. Medicare is the BIG problem.

Agree on all.

 

[W2R]

Just an educated guess on my part but I would expect the following to be enacted:

1.) Cap on SS income subject to tax will be lifted.

2.) Means testing will be implemented for very high incomes....to being with.

3.) Age for full benefits will be increased slightly.

4.) Age 62 will be retained as beginning age but with a lower % of full benefit than today.

Numbers 3 and 4 would affect me, but I suppose I could just wait a little longer if needed. If I took SS at 62 and if #4 and #3 were implemented six months later, I'd be ahead of the game - - one reason to possibly take SS early. I won't be working so my income won't be that high, but if implemented an asset based means test might affect me. To be cautious I have been assuming that my SS will be fully taxable by both feds and state as ordinary income, all along, so any tax breaks will be a nice surprise.

All they really want to do is kick the can down the road until they are dead and leave the problem to the next generation. Medicare is the BIG problem.

That is true, although who knows what changes are in store due to future reforms of the health care system.

 

[ziggy29]

Just an educated guess on my part but I would expect the following to be enacted:

1.) Cap on SS income subject to tax will be lifted.

2.) Means testing will be implemented for very high incomes....to being with.

3.) Age for full benefits will be increased slightly.

4.) Age 62 will be retained as beginning age but with a lower % of full benefit than today.

These would seem to be the four main points to look at. I wondered about whether they'd raise the minimum age from 62, but with the way things are now I don't think they want to discourage people who would be financially able to retire with it. We're entering an economy and a job market which needs as many financially able people to retire as possible, and raising the age from 62 would thwart that.

 

[Rustic23]

While I believe there will be changes to SS. I think those getting it, or about to get it will fair well. It is not called the third rail for nothing. Changing things like how cola is calculated, or percentage taxed are sneaky enough for the politicians to give it a try. Bigger things like telling someone that is 61 and a half the can't get SS at 62, I don't think will float. Telling someone that is 41 is far less of a problem. Likewise delaying full SS for younger folks is doable.

Therefore, for me SS is a player as it is now structured. I plan on delaying SS till 70. If they changed the age you had to start to a higher number, say 75 or even 80, would anyone delay longer than they plan on delaying? Currently SS gives you 8% + inflation (long term say 3.5%) that is an 11.5% return, on a government guaranteed investment. My assumption is anyone delaying is doing so based on good genes in the family.

 

[73ss454]

Disability or SSI?

No disability, I just wish there was a way to take SSI at 60 due to the market crash. I'm feeling a lot lighter these days.

 

[Bikerdude]

These would seem to be the four main points to look at. I wondered about whether they'd raise the minimum age from 62, but with the way things are now I don't think they want to discourage people who would be financially able to retire with it. We're entering an economy and a job market which needs as many financially able people to retire as possible, and raising the age from 62 would thwart that.

Plus you would piss off the trade unions. And they have a point in that physical work is tougher as you get older.

 

[friar1610]

FWIW here's my situation and what I did:

- COLA'd military pension covering darn close to all expenses. (After I retired at 58 and my wife retired a year or so later, we occasionally dipped into nest egg to meet monthly or extraordinary expenses, but way less than what I had programmed.)
- Took SS @ 62. Bank most of it; sometimes spend it for the same reasons as we previously dipped into (rapidly decreasing) nest egg.
- Wife took SS at 62 about 6 months ago. With her modest earnings record, she was better off taking it based on my SS.) Bank all of hers.

Our bottom lines:
- We didn't need the SS to live but also saw no compelling reasons to wait. (Between the partial SBP from military pension, her SS and nest egg, she'll be OK if I predecease her.)
- Although my parents lived until ripe old ages (86 and 92), there's nothing that guarantees I will (or that I won't be hit by a car).
- A bird in the hand...

 

[Hal3]

Wifey has a job she loves and doesn't want to stop working when I'm 62. Really! I may keep earning as well at least on some level. So, I'm thinking I would get killed by the SS penalties for earned income in addition to SS benefits.

I just agree that a bird in the hand is worth two in the bush - so to speak.

Oh well ... it's not an issue for at least five years.

Never to early to start worrying, though!

 

[Koolau]

Have a few more days to 62. Woooo Hoooo! Haven't signed up for SS and am planning to hold off for 66 or maybe even later. DW who is MUCH older (about 3 months, heh, heh) took early SS on her record. We're figuring the bird-in-hand for her and wait on mine to maximize her survivor benefit on my record - we didn't take the optional pension "insurance" which would have given her half my pension upon my death (she will only get 1/4). So we're trying to cover all the bases as best we can. We could even take the "do-over" for her so that she would get the full 1/2 of my SS benefit. Who knows?

One other thing involved in my decision is that I'm trying to "get rid" of my IRA/401(k) money (converting to Roths) before 70 1/2. The less money we have coming in - say as SS benefits - the more I can convert and stay within a lower tax bracket than I will face when RMDs kick in.

Having said all that, I might change my mind tomorrow. Bird in the hand sounds pretty good right now.

 

[mathjak107]

as far as taking social security,ill wait as long as i can.. heres my thought:

for evey year i wait its like getting an extra 8% raise...
forget the old school thinking about what if i die or what age will i break even..thats thinking from our parents generation

current thinking is if you have the resourses(assets) to delay taking it, instead of say withdrawing 4% of your inflation adjusted nest egg each year take say 6% right from day 1... why?

because if you live long enough to collect you have the comfort of knowing your nest egg will be replenished with about 30% more in payments later on refilling the extra dough your pulling out now so you have more money each year while your still healthy and able to enjoy alot of things you may not be able to do later on..

think of it as almost as if your buying an annuity with the money you lay out between 62 and 70 that will give you or your spouse a lifetime of higher payments...

your nest egg will be refilled starting at age 70 with a much larger stream of money and that will go on forever...

to me its not about dying with the biggest pile of money but rather living the best darn life we can while we can.


to me retirement isnt about surviving and getting by... its about enjoying the fruits of a lifetime of work,savings and sacrafice and living better now then before

 

[OAG]

as far as taking social security,ill wait as long as i can.. heres my thought:

for evey year i wait its like getting an extra 8% raise...
forget the old school thinking about what if i die or what age will i break even..thats thinking from our parents generation

current thinking is if you have the resourses(assets) to delay taking it, instead of say withdrawing 4% of your inflation adjusted nest egg each year take say 6% right from day 1... why?

because if you live long enough to collect you have the comfort of knowing your nest egg will be replenished with about 30% more in payments later on refilling the extra dough your pulling out now so you have more money each year while your still healthy and able to enjoy alot of things you may not be able to do later on..

think of it as almost as if your buying an annuity with the money you lay out between 62 and 70 that will give you or your spouse a lifetime of higher payments...

your nest egg will be refilled starting at age 70 with a much larger stream of money and that will go on forever...

to me its not about dying with the biggest pile of money but rather living the best darn life we can while we can.


to me retirement isnt about surviving and getting by... its about enjoying the fruits of a lifetime of work,savings and sacrafice and living better now then before

Those were my thoughts exactly but I Chicken'd out at 67.5 (my FRA was 65.5). Could have held out for another 17% (my increase per year is a tad smaller). Additionally, by waiting, you are, in fact, deferring a good chunk of taxes (it you are in the 85% taxable neighborhood). However, that may actually turn out to be a bad part of the decision (albeit a small one, depending on what happens to tax rates in the near future).

 

[Independent]

Just an educated guess on my part but I would expect the following to be enacted:

1.) Cap on SS income subject to tax will be lifted.

2.) Means testing will be implemented for very high incomes....to being with.

3.) Age for full benefits will be increased slightly.

4.) Age 62 will be retained as beginning age but with a lower % of full benefit than today.


All they really want to do is kick the can down the road until they are dead and leave the problem to the next generation. Medicare is the BIG problem.

Note that (1) is already happening because the dollars in the tax formula aren't indexed.

(3) and (4) don't apply to people who are turning 62 in the near future.

So (2) is the only unknown for those of us around 62. But I don't know how to factor it into a "when to start SS" decision. Does waiting improve or hurt my position regarding some future means testing rule?

 

[MasterBlaster]

Some posters here believe that if you take SS at 62 and keep invested the exta money that you would have withdrawn you'll come out ahead.

However I beleive the risk-normalized tax-normalized optimum stategy for most people is to wait as long as you can to take SS.

It gets involved when you consider spousal benefits and survival benefits.

Here is a great formal analysis that someone posted here a year or two ago... From the analysis you can see that there is no one size fits all stategy for everyone. Your situation may be very different from someone else.