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Old 08-06-2012, 06:54 PM   #41
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Originally Posted by rescueme View Post
Only for the four years between FRA age of 66 and 70 (plus any COLA adjustments).

It's not 8% from age 62 to age 70.

Regardless of that, I'm also waiting until age 70, primarily for the benefit of DW (assuming I pass first).

She will take hers in just over a year at age 66 (FRA), and I will claim 50% of her benefit for four years (we're the same age, within a few months) until my claim at age 70.

We never looked at any "payback" vs. what we/employer contributed. Money is for the living, not the dead; however we also want to maximize any future payout so we will wait.

Of course, you have to have other income sources/investments to be able to wait, and I understand those that must take it at age 62 due to health or not having other income sources.
RescueMe,
I have 10 years minimum before I think about taking SS, so I haven't dug into this in detail. If my older spouse claims SS at her FRA, can I immediately start claiming benefits at 50% of her rate, or do I also have to reach FRA to do this.
Thanks for your reply in advance.
JP
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Old 08-06-2012, 07:28 PM   #42
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Originally Posted by JP.mpls View Post
RescueMe,
If my older spouse claims SS at her FRA, can I immediately start claiming benefits at 50% of her rate, or do I also have to reach FRA to do this.
You would have to be at least age 62, not your FRA in order to get spousal income and would result in a lower rate. This is assuming that there is not a qualified child to consider in the situation.

Here's the official word from SSA, along with a calculator to show what your reduction would be if you would claim before your FRA:

Benefits for Spouses

Hopefully this will answer your question.
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Old 08-06-2012, 07:31 PM   #43
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(I can't believe it wasn't until I read this thread today that I remembered I could have started taking SS yesterday, my 62nd birthday!)
Happy Birthday !
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Old 08-07-2012, 05:17 AM   #44
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As a single man (now 54) whose father died at 75, I plan to take SS at 62 whether I spend it or stash it.
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Old 08-07-2012, 09:21 AM   #45
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When to take SS is a big question. I'm not one to want to do everything I can to maximize my returns, either with investing or when taking Social Security, but I don't want to make foolish mistakes either. I've known plenty of people who have died earlier than anticipated, and it makes me greatly consider taking SS at age 62. The average age in the US for white males (which I am) is 78. While I could hit the genetic lottery and make it to 100, on average we just don't do that, and too many of us tend to think we will when we likely will not. Waiting makes a HUGE difference. In my case, in FUTURE dollars, if my wife and I both take SS at age 62 (in 16 years), that will give us $47,000. If we wait until we are 65, it jumps to $65,000, and if we wait until we are 70, it's $108,000.

The issues are of course:

1) Will I live long enough to take SS at age 70?
2) Will I be healthy enough to enjoy extra money at age 70?
3) Do I risk there being HUGE changes to SS so that my payout is much less than expected?
4) If taking SS at age 62, does the longer period of time getting that money actually help me? I could use that money and keep my investments invested without withdrawing them...that would allow that money to grow. Lots of growth can happen in 8 years.
5) If I take 4% of my investments AND the SS, will I be able to make it 25-30 years?

I'm probably leaning toward taking the money at age 62. I want to get the money for a longer period of time, AND if I take that money and allow my investments to grow, then THAT is what will help me long term. PLUS, if I ever plan to leave money to my children, I can only leave my investment money, NOT any money I might get from SS.

The biggest keys in being able to take SS at age 62 are 1) retire debt free including owning a home, and 2) have another significant source of income from investments or pension.
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Old 08-07-2012, 09:47 AM   #46
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Include in your list...

1) Spousal benefit and it's ramifications

2) Survivors benefit and it's ramifications.

By the way, as I understand things SS is actuarily equivalent for a single person. If you are an average Joe then it doesn't matter when you take your benefit, the lifetime total dollars paid out (for average Joe) are the same.
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Old 08-07-2012, 10:07 AM   #47
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Actually, SS does go down by 25% if you take it at 62 rather than full retirement, which is 66 for me. I look at that as a 6.25% per year increase, plus any COLA, but you would get COLA either way. From 66 to 70, it does go up 8% a year. In this market, it is pretty hard to get a safe 6.25% annual return and harder to get a safe 8% annual return.

If your full benefit is $1,000, you would get $750 by taking it early but $1,320 by waiting to 70. My rough math says that is a 76% increase in the monthly amount for waiting 8 years. That ain't bad.

On the other hand, how long will you live? And could you invest the money wisely during the time you were receiving the lesser amount?

I'm 62 now and the current plan is to pull the trigger on retirement next year. We are blessed to have a very well secured note that will pay us almost enough to maintain our current lifestyle until I'm almost 69. With our other investments, we won't need SS until the payments stop. If we are moderately frugal, we could probably live without touching retirement funds, but we will likely want to draw down about 1% to 1.5% a year until the payments stop.

But will I wait until 70 for SS? I doubt it. As some point, all that "free" money will likely be too tempting and frankly, I suspect both my wife and I will get more enjoyment out of a little extra money when I'm a little younger than we will when I'm older. My guess is that if my health is reasonably good and if a few years of real retirement demonstrate that we will have enough money either way, I'll take it at 67 or 68 or so.

This is a hard choice for most. It is likely a very personal financial decision with no right answer for everyone.
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Old 08-07-2012, 10:09 AM   #48
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Originally Posted by MasterBlaster View Post
Include in your list...

1) Spousal benefit and it's ramifications

2) Survivors benefit and it's ramifications.

By the way, as I understand things SS is actuarily equivalent for a single person. If you are an average Joe then it doesn't matter when you take your benefit, the dollars paid out (for average Joe) are the same.

It's that actuarial equivalent for a single person that I think is the key for couples (assuming the spouse qualifies for spousal benefits).

If I have this right, the tables are based on a single person a single male, or weighted towards single male life expectancy, which is shorter than for women). So the general case where one spouse outlives the other provides for a 'excess' benefit, compared to the tables. Which leverages the delay in SS with the increased payout.

-ERD50
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Old 08-07-2012, 12:06 PM   #49
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So the general case where one spouse outlives the other provides for a 'excess' benefit, compared to the tables. Which leverages the delay in SS with the increased payout.

-ERD50
Is that really only the case where the surviving spouse would be relying on getting the benefit of the deceased spouse? That is, if the two spouses had relatively equal benefits then I'm not sure it really means as much to delay taking benefits for one spouse.
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Old 08-07-2012, 12:25 PM   #50
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The issues are of course:

1) Will I live long enough to take SS at age 70?
2) Will I be healthy enough to enjoy extra money at age 70?
3) Do I risk there being HUGE changes to SS so that my payout is much less than expected?
4) If taking SS at age 62, does the longer period of time getting that money actually help me? I could use that money and keep my investments invested without withdrawing them...that would allow that money to grow. Lots of growth can happen in 8 years.
5) If I take 4% of my investments AND the SS, will I be able to make it 25-30 years?
1. doesn't matter, by taking SS @ 70, you can spend more now knowing you'll have larger SS payments to supplement income later.
2. same as above, you don't wait until 70 to up your income, you just are income leveling, earlier from your pocket, later from US govt.
3. who knows, but I doubt it, if they use means testing, you'll have less at 70 because you have been spending it.
4. can you beat 8%, guaranteed?
TJ
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Old 08-07-2012, 12:27 PM   #51
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Is that really only the case where the surviving spouse would be relying on getting the benefit of the deceased spouse? That is, if the two spouses had relatively equal benefits then I'm not sure it really means as much to delay taking benefits for one spouse.
Yes, good point - I think you are correct. In my case, looks like DW benefit will be a little more than half of mine, so it is a partial factor.

-ERD50
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Old 08-07-2012, 12:43 PM   #52
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I'm still over 15 years from it but right now the main reason I plan to take it at 62 is because I think it is very unlikely that any future SS "reforms" will impact people already collecting it.
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Old 08-07-2012, 01:18 PM   #53
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The 8% thing from 66 to 70 is fine but I think the percentage may be higher that you will die during that period.
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Old 08-07-2012, 01:22 PM   #54
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(I can't believe it wasn't until I read this thread today that I remembered I could have started taking SS yesterday, my 62nd birthday!)
Happy Belated 62nd birthday (are you sure you aren't faking it for the benefits?)
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Old 08-07-2012, 02:09 PM   #55
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I'm still over 15 years from it but right now the main reason I plan to take it at 62 is because I think it is very unlikely that any future SS "reforms" will impact people already collecting it.
I completely disagree.

Consider two taxpayers, John, and Paul, born on the same minute of the same day. They have identical earnings and SS contribution records and identical family situations.

John takes his SS early at 62. Paul is waiting 'till 70.

When they are 65, Congress makes a change in benefit determination.

Do you really think John would be grandfathered and exempt from the change just because he is already collecting benefits?

That is just not consistent with how SS has worked.
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Old 08-07-2012, 02:58 PM   #56
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The 8% thing from 66 to 70 is fine but I think the percentage may be higher that you will die during that period.
Nope, the % of deaths from 66-70 runs about 1.5%, for 75-84 it's about 6%.
Of course if you are not in good health...averages don't matter.
TJ
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Old 08-07-2012, 03:15 PM   #57
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1. doesn't matter, by taking SS @ 70, you can spend more now knowing you'll have larger SS payments to supplement income later.
2. same as above, you don't wait until 70 to up your income, you just are income leveling, earlier from your pocket, later from US govt.
3. who knows, but I doubt it, if they use means testing, you'll have less at 70 because you have been spending it.
4. can you beat 8%, guaranteed?
TJ
Good point about being able to spend more from retirement until getting SS at 70, and I'm sure many would do that (I might even do that when getting very close to 70). Knowing myself though, I would be concerned that the estimated payout at age 70 would be much smaller than estimated, so I likely would not spend as much between retirement and age 70 as your situation might actually allow.

No one can guarantee 8% though I have done better than that on average over the life of my investing (this includes re-invested dividends). In my later years though, I do plan to make my portfolio a bit more conservative, so beating 8% is no given. I do like the idea though of spending money sent to me by the government and allowing my own money that I have more control over grow. I'm definitely not anti-government, but who knows what will need to be done to Social Security to save it.
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Old 08-07-2012, 03:50 PM   #58
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I would expect now that the go on spouses benefit and then file for yours trick is well known for that loophole to be closed. Partly by saying you can apply once for one and only one benefit on whichever record you choose. So that if you apply for a spouses benefit it is permanent and your own benefit goes bye bye.
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Old 08-07-2012, 05:34 PM   #59
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Nope, the % of deaths from 66-70 runs about 1.5%, for 75-84 it's about 6%.
Of course if you are not in good health...averages don't matter.
TJ
OK but many more will die between 62 and 66 also which will raise the total percentage before 70. It's all a crap shoot I guess. One thing is that if you die before 70 and don't collect you won't know it.
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Old 08-07-2012, 05:42 PM   #60
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For me, if I die early, I don't see how I would really care about economic break even. What am I gonna do - sit in my casket and calculate how much money I hypothetically left on the table?
Would we not be doing it laying down? Is there enough head room to sit? Oh, yes, open casket...

But, but, but what would people at my wake think, seeing me sitting there with my HP financial calculator? Call me a scrooge, probably.
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