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Why people take SS at 62
Old 08-05-2012, 11:18 PM   #1
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Why people take SS at 62

I'm taking it because for me it makes sense. While I don't need it I don't have a wife or children to consider. The breakeven point at 78 seems like a risk I can accept. A bird in the hand to my way of thinking.

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Old 08-06-2012, 01:38 AM   #2
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Originally Posted by veremchuka View Post
I'm taking it because for me it makes sense. While I don't need it I don't have a wife or children to consider. The breakeven point at 78 seems like a risk I can accept. A bird in the hand to my way of thinking.

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I took it at 62 for the same reason.
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Old 08-06-2012, 06:02 AM   #3
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I tool it at 62 because I have no other asset in my portolio (i.e. no pension) that provides a guaranteed COLA'd income stream like SS.
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Old 08-06-2012, 06:35 AM   #4
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We will wait 'til 70. In a world of low investment returns SS has an amazing 8% yearly increase if you wait. For an individual or couple with no other annuity or pension income and depending entirely on portfolio, SS lowers the risk of running out of money. That's a fact.

I think people in a similar situation that still take SS at age 62 do so because they do not appreciate the risk of old age poverty. They assign much greater priority to the immediate, visible need and discount the one that is more difficult to express.
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Old 08-06-2012, 06:46 AM   #5
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Clearly, there is a big difference between a single person and a married couple when it comes to the way the longevity insurance of SS plays out.
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Old 08-06-2012, 06:56 AM   #6
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In a world of low investment returns SS has an amazing 8% yearly increase if you wait.
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.
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Old 08-06-2012, 06:57 AM   #7
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Ten years ago I planned to take it at 62, but then stumbled into an easy job that more than makes up for it. And I do have a wife to consider.

So unless things turn south badly at work I'll stay there for a few more years. It's a short and easy commute, the people are decent, and I can have days off when I want them so there's no compelling reason to leave now.

Will I win the gamble? Who knows? That's why they call it a gamble.
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Old 08-06-2012, 07:06 AM   #8
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I turned 62 in late 2008. If you recall, the market had been declining steeply and there was no end in sight. Our portfolio, the sole source of our income, was down more than 30% and was evaporating before my eyes.

I took SS at 62 as the only way I could see to slow the bleeding.
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Old 08-06-2012, 07:30 AM   #9
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I turned 62 in late 2008. If you recall, the market had been declining steeply and there was no end in sight. Our portfolio, the sole source of our income, was down more than 30% and was evaporating before my eyes.

I took SS at 62 as the only way I could see to slow the bleeding.
A few % of additional market loss and we would have made some portfolio changes that would have had a similar result. I still have the worksheet.

I should also qualify my earlier post, because we will receive little from SS. Even waiting to age 70 it will not be an important part of our income because I worked mostly outside the US.
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Old 08-06-2012, 07:36 AM   #10
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I would guess most who take it early do it because that's how it's done by other "kids" in their neighborhood. It does take some level of sophistication to know about the 8% annuity between 66 and 70 and the "take yours at FRA and I'll piggy on 50% of yours and delay mine till 70" plans.

However,it does seem to me that there is somewhat of a middle path there..............

the sophisticated path has a bit of win/win or lose/lose quality to it:
if you die early, you could get no(or little) money and no life. If you live long, then you get more (or lots) of money and more life.

in the take it early path: if you die early, you got your money but not your life. (heirs will be happy you didn't deplete estate) If you live long, you got your life but not your money(or less of it). Of course, in this case, it helps to have other resources.
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Old 08-06-2012, 07:56 AM   #11
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Life isn't just about money it's about quality of life and fun to me. I pulled the plug at 62 and it's the best decision for me. You always have to ask yourself when will my body crap out? We don't live forever and many people die before they retire. I laugh when people tell me when I get real old I am going to reitre and travel the world, ya sure. When your body falls apart traveling (nothing) is not that much fun. I am going for the gusto and want to die broke and worn out.
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Old 08-06-2012, 09:33 AM   #12
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Life isn't just about money it's about quality of life and fun to me. I pulled the plug at 62 and it's the best decision for me. You always have to ask yourself when will my body crap out? We don't live forever and many people die before they retire. I laugh when people tell me when I get real old I am going to reitre and travel the world, ya sure. When your body falls apart traveling (nothing) is not that much fun. I am going for the gusto and want to die broke and worn out.
+1.

The link didin't include as a reason that maybe one won't be around if waiting until 70 to take SS. I look those who qualified in my family. father passed at 66, mother 71, brother at 64. I know my father and mother took SS early so at least had some of the payments. Don't know if brother starting taking SS or was waiting before he passed.
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Old 08-06-2012, 09:55 AM   #13
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Originally Posted by LOL! View Post
Clearly, there is a big difference between a single person and a married couple when it comes to the way the longevity insurance of SS plays out.
Yes, survivor benefits (if they apply) really tip the scales towards taking it at 70. I have not done the 'deep dive' into the numbers yet, I will look closer in ~ 4 years as I approach 62, but my more casual look says it makes sense for me to wait for this relatively cheap 'longevity insurance'.

The OP states that he has no wife/children to consider, so 62 might be the right decision in that case, but it still might not be open/shut.

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We will wait 'til 70. In a world of low investment returns SS has an amazing 8% yearly increase if you wait. For an individual or couple with no other annuity or pension income and depending entirely on portfolio, SS lowers the risk of running out of money. That's a fact. ...
You need to offset that 8% by the amount not received though, right? I haven't done the math on that yet.


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Life isn't just about money it's about quality of life and fun to me. ...
Some years ago, there was a poster who was trying to make the point that you could effectively 'take SS late, and spend it now'. It sounds a little convoluted, but I think he was correct. If your portfolio has a larger COLA in later years, you don't need such a big portfolio now to support those later years. So 'take SS late, spend it now'.

For me, I suspect that waiting will increase my quality of life. Knowing that my later years are better protected, that DW is likely better protected - that helps me to relax today.

I can also understand REWahoo's decision to take it early when that coincided with a 30% portfolio drop. But I question if that reduction in WR would really be that significant. But if one is already stressed out over the market drop, the 'sleep factor' might be well worth it.

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Old 08-06-2012, 10:08 AM   #14
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For me, I suspect that waiting will increase my quality of life. Knowing that my later years are better protected, that DW is likely better protected
Not necessarily disagreeing with your conclusion but bear in mind that that extra SS income may increase taxes and means-testing on the suriving spouse (tax brackets kick in at half the level of joint returns). Also, it will raise AGI which can trigger certain means-tested items (e.g. Medicare parts B and D premiums and who knows what else is to come), especially when coupled with RMD's from regular IRA's
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Old 08-06-2012, 10:12 AM   #15
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(snip)...especially when coupled with RMD's from regular IRA's
Also to be considered is the possibility of RMD's being lower (if any, at all) if one draws down TIRA funds before claiming SS.

A lot of things to consider...
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Old 08-06-2012, 10:17 AM   #16
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For me, I suspect that waiting will increase my quality of life. Knowing that my later years are better protected, that DW is likely better protected - that helps me to relax today.

-ERD50
+1

A relaxed attitude definetly increases the quality of life.
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Old 08-06-2012, 10:19 AM   #17
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I'm 63 and 4months and DW turns 62 in Dec. of this year. Since she only worked a few years her benefit will be very small but larger if I take mine this Dec.. So I'm thinking the best time for me is this Dec but still not sure. Maybe I'll wait till the market causes me some pain and jump in then.

I've also been doing roth conversions to the top of the 15% bracket and that will have to stop if I take SS soon. So this is another consideration.
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Old 08-06-2012, 10:19 AM   #18
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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!)
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Old 08-06-2012, 10:20 AM   #19
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I am 64 and haven't taken SS yet. My original plan was to take it at 70, but now I am on the fence.

Quote:
Originally Posted by REWahoo View Post
I turned 62 in late 2008. If you recall, the market had been declining steeply and there was no end in sight. Our portfolio, the sole source of our income, was down more than 30% and was evaporating before my eyes.

I took SS at 62 as the only way I could see to slow the bleeding.
I think that was very smart, given the market conditions at that time. I'll definitely take SS immediately if we have another 2008-style market crash.

Otherwise, I don't really know. I am not sure that I believe the accepted truism that those receiving SS could never possibly have their benefits lowered later on. If I believed that completely, my decision would be a lot easier, given familial longevity. I'd take it at 70.

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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 08-06-2012, 10:20 AM   #20
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I just applied for SS (at 62) for the following reasons:

1) My portfolio is my only source of income so SS replaces a portion of my portfolio draw

2) The portfolio that is left untouched continues to earn my overall portfolio return. This return has been in the order of 7.5% since my retirement at the end of 2002 thru the great recession and the current environment.

3) My calculations show that any return over 5% on this portion of the portfolio results on higher lifetime balance than claiming SS at 70

4) Since I'm relying more on my portfolio vs a governmental payment my exposure to the political craziness that has overtaken the country is lessened

5) I've determined after exhaustive research that the older one gets the more sickness one endures, the lesser the energy one seems to have and it even appears that the death rate goes up. Thus I've concluded that my enjoyment of a dollar might be a tiny bit higher now than when I'm 95 assuming I make it.

My mother is currently in her 90's with dementia. I can assure you that her enjoyment (or even awareness) of any additional income is rather limited.

So, being fully aware of the higher SS payment options at 70 I decided for the 62 option. Let's check back in 30 years and see how it all turned out...
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