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Yet another, when to take SS thread....
Old 10-02-2015, 03:01 PM   #1
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Yet another, when to take SS thread....

I'm 60 and looking at what to start expecting. Everything is paid off, houses, cars, zero debt.

So, at 62 (we are same age and wife only has worked part time $20k per yr) our SS will be as follows:
62-35,832
63-37,884
64-40,980
65-44,204
66-48,672

Im in good health, but who knows, most of the men in my family are underground in their early 70's. So if I take the low payout at 62 vs 64 it looks like it will take 8.5 years to break even from the difference if I croak at 72.

How do you fine folks make your decision? I am burned out with my job, the FIRE calc says I can chuck it at 62. But a few more years of a fairly high salary I wonder if it is worth the agony..... Decisions, decisions.
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Old 10-02-2015, 03:07 PM   #2
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Quote:
Originally Posted by Floridatennisplayer View Post
I'm 60 and looking at what to start expecting. Everything is paid off, houses, cars, zero debt.

So, at 62 (we are same age and wife only has worked part time $20k per yr) our SS will be as follows:
62-35,832
63-37,884
64-40,980
65-44,204
66-48,672

Im in good health, but who knows, most of the men in my family are underground in their early 70's. So if I take the low payout at 62 vs 64 it looks like it will take 8.5 years to break even from the difference if I croak at 72.

How do you fine folks make your decision? I am burned out with my job, the FIRE calc says I can chuck it at 62. But a few more years of a fairly high salary I wonder if it is worth the agony..... Decisions, decisions.
How long does your wife's family live? Does she need your survivor benefit? My DW WILL need the largest SS survivor benefit possible, so that is the subtext of all my plans. Which means taking it at 70 (not the same thing as retiring at 70). But if you have other funds for your wife after you die in your early 70's, then no problem.
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Old 10-02-2015, 03:13 PM   #3
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The women live forever! MOL is 92, her grandmother died at 100.

Can you explain how this works for survivors? Let's say I kick the bucket at 72 and she lives to 90.

Thanks.
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Old 10-02-2015, 03:20 PM   #4
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She would receive the higher of an individual benefit.

Say, you are getting $30,000 when you hit the dirt and she is receiving $20,000.

She will get $30,000 (your benefit) and nothing else.
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Old 10-02-2015, 03:29 PM   #5
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I'm waiting until FRA (next spring) because the decision will almost certainly affect DW too since she's six years younger than me. When I retired we took the option that the pension dropped by the amount of SS that I would have been eligible for at 62, thus "frontloading" it a bit, and the pension further drops by 30% assuming I exit this world first. The delayed SS to FRA will significantly reduce the reduction in her income then. She won't be rich, but she will be comfortable.
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Old 10-02-2015, 03:35 PM   #6
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Originally Posted by golfnut View Post
She would receive the higher of an individual benefit.

Say, you are getting $30,000 when you hit the dirt and she is receiving $20,000.

She will get $30,000 (your benefit) and nothing else.
Ok, well this changes things a bit. The SS numbers I showed were for both of us combined. Calculating me full and her at 1/2 of mine.
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Old 10-02-2015, 03:38 PM   #7
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Quote:
Originally Posted by Floridatennisplayer View Post
I'm 60 and looking at what to start expecting. Everything is paid off, houses, cars, zero debt.

So, at 62 (we are same age and wife only has worked part time $20k per yr) our SS will be as follows:
62-35,832
63-37,884
64-40,980
65-44,204
66-48,672

Im in good health, but who knows, most of the men in my family are underground in their early 70's. So if I take the low payout at 62 vs 64 it looks like it will take 8.5 years to break even from the difference if I croak at 72.

How do you fine folks make your decision? I am burned out with my job, the FIRE calc says I can chuck it at 62. But a few more years of a fairly high salary I wonder if it is worth the agony..... Decisions, decisions.
Only you can decide if it's "worth it." However, I submit that working longer to increase SS benefits (IF that was a part of your question) would have very limited payback. You probably already have your 35 years in SS and you appear to be near the top payout already. Therefore, I suggest you consider only your other financial issues and not so much SS. Actuarily it's difficult to make a huge mistake with SS unless your DW will need the higher survivor benefit - for a long time. In my case, I'm waiting to 70 due to lower income now promised to dear wife in my pension survivor benefit. As always, YMMV.
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Old 10-02-2015, 04:23 PM   #8
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Ok, well this changes things a bit. The SS numbers I showed were for both of us combined. Calculating me full and her at 1/2 of mine.
Spend a little while poking around the SS site..Lots of details, for example the spousal benefit is capped at 50% of the working spouse benefits at their full retirement age, it is not 50% of the amount at 70 years old.... the more reading you do the more it starts to make sense.
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Old 10-02-2015, 04:30 PM   #9
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Originally Posted by Koolau View Post
working longer to increase SS benefits ... would have very limited payback
This is very true and tends to surprise most people (it certainly surprised me).
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Old 10-02-2015, 04:49 PM   #10
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My answer depends on how much you like your wife.
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Old 10-02-2015, 04:56 PM   #11
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Quote:
Originally Posted by Floridatennisplayer View Post
I'm 60 and looking at what to start expecting. Everything is paid off, houses, cars, zero debt.

So, at 62 (we are same age and wife only has worked part time $20k per yr) our SS will be as follows:
62-35,832
63-37,884
64-40,980
65-44,204
66-48,672

Im in good health, but who knows, most of the men in my family are underground in their early 70's. So if I take the low payout at 62 vs 64 it looks like it will take 8.5 years to break even from the difference if I croak at 72.

How do you fine folks make your decision? I am burned out with my job, the FIRE calc says I can chuck it at 62. But a few more years of a fairly high salary I wonder if it is worth the agony..... Decisions, decisions.
Are the numbers above from the SS site, it's my understanding the increase is based only on the benefit at FRA, in other words, the number doesn't compound you add or subtract 8% for each additional year until you hit 70...doesn't the increase between 65 and 66 seem to be a little bit too big?
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Old 10-02-2015, 05:50 PM   #12
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I got the numbers from the SS website.
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Old 10-02-2015, 06:15 PM   #13
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There's a book out called Get What's Yours: The Secrets to Maxing Out Your Social Security by Laurence Kotlikoff (and others). Check it out of your local library, and read at least the chapters that have to do with spousal and survivor benefits. It explains the options and pitfalls really well.

I agree that working longer in your case won't make any real difference. If I were you I'd wait until FRA (66+), then start your wife taking her benefit. You would then take a spousal benefit that would be half of hers. Then at age 70 you would start taking yours at it's maximum, and she would continue taking hers at full. Then if you die first, she would get yours at the maximum, guaranteeing her the most she could possibly get for the remainder of her life.

An alternative to that would be if half of yours at FRA is higher than 150% of hers. In that case at FRA you could file and suspend, she could claim half of yours, and you could wait until 70 to start yours back up.

Whichever way that works out for you it would get you the most you could get at FRA, while guaranteeing her getting the most possible if you die first. IMO it's the duty of the high earner to watch out for the other spouse should the high earner go first. Unless you have enough other money that SS is an afterthought.
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Old 10-02-2015, 11:59 PM   #14
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Check out this site: SSAnalyze - Bedrock Capital Management

I have similar situation to yours... DW is 9 months older and I worked and she worked part-time. My benefit is significantly greater than hers, so 50% of my benefit exceeds hers.

Our strategy is for her to claim under her own record at her FRA. Nine months later, at my FRA I will file and suspend and she will file for spousal benefits. I will be begin benefits at 70 and if I predecease her she will get my benefit as a survivor.

So if my benefit is 100 at FRA it would be 132 at 70. So (ignoring COLA increases) she'll collect 50 from FRA (66) and then I'll collect 132 at 70 so we'll both be collecting 182. If one of us dies, the 182 then becomes 132 for the survivor (rather than 100 if I started benefits at my FRA). I sleep better at night knowing that if she predeceases me that she'll be getting 32% more that if I starts benefits at my FRA for the rest of her life.

Joint mortality and our current good health suggest that one or the other of us will be alive for a long time.

While we are a couple years away from 62, it is comforting to know that if the investment world goes to hell in a handbasket that we can start SS benefits anytime after we turn 62.
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Old 10-03-2015, 02:12 AM   #15
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Check out this site: SSAnalyze - Bedrock Capital Management

I have similar situation to yours... DW is 9 months older and I worked and she worked part-time. My benefit is significantly greater than hers, so 50% of my benefit exceeds hers.

Our strategy is for her to claim under her own record at her FRA. Nine months later, at my FRA I will file and suspend and she will file for spousal benefits. I will be begin benefits at 70 and if I predecease her she will get my benefit as a survivor.

So if my benefit is 100 at FRA it would be 132 at 70. So (ignoring COLA increases) she'll collect 50 from FRA (66) and then I'll collect 132 at 70 so we'll both be collecting 182. If one of us dies, the 182 then becomes 132 for the survivor (rather than 100 if I started benefits at my FRA). I sleep better at night knowing that if she predeceases me that she'll be getting 32% more that if I starts benefits at my FRA for the rest of her life.

Joint mortality and our current good health suggest that one or the other of us will be alive for a long time.

While we are a couple years away from 62, it is comforting to know that if the investment world goes to hell in a handbasket that we can start SS benefits anytime after we turn 62.
Thanks for posting the link to SSAnalyze. Very helpful for testing various scenarios that include government pensions and the effect of WEP and GPO.
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Old 10-03-2015, 05:29 AM   #16
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if you will not be working from 62 to 70 and living off your own savings then the equation shifts a lot .

if you will be spending down invested assets those assets are done compounding forever .

also , like in our case my wife gets a spousal adder to hers since she is collecting early but until i file she gets no additional kicker of 2500.00 a year . .

then of course we have the checks you didn't collect .

ONE OTHER THING IS UNTIL YOU COLLECT THE HOLD HARMLESS MEDICARE LAW DOES NOT PROTECT YOU .

for 2016 there is a huge jump in medicare of more than 50 bucks a month coming .

if you are collecting you can not be raised more than the cola adjustment . since there is none there will be no increase if collecting .

if not collecting you get the full increase .

based on a balanced fund and all of the above , break even is not until 22-23 years out ,. that is a far cry from just figuring lost checks . that is a very long time just to reach ground zero .

you need to live to 90 or a spouse does to make it worth delaying and getting a big enough difference so taking the risk of not reaching break even is worth it as you are betting against the house when you bet on longevity to that age ,.

there still are reasons for waiting like survivor benefits and reduced dependency on markets down the road , but the point is it is more than looking at 8 years of checks difference .

.
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Old 10-03-2015, 07:55 AM   #17
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.....Our strategy is for her to claim under her own record at her FRA. Nine months later, at my FRA I will file and suspend and she will file for spousal benefits. I will be begin benefits at 70 and if I predecease her she will get my benefit as a survivor.

So if my benefit is 100 at FRA it would be 132 at 70. So (ignoring COLA increases) she'll collect 50 from FRA (66) and then I'll collect 132 at 70 so we'll both be collecting 182. If one of us dies, the 182 then becomes 132 for the survivor (rather than 100 if I started benefits at my FRA). I sleep better at night knowing that if she predeceases me that she'll be getting 32% more that if I starts benefits at my FRA for the rest of her life.....
This joint mortality calculator suggest that one or the other of us (each turning 60 this year) will live until 91 and both of us will live to 80. We are currently both in very good health and are wealthier than average so we "should" outlive the average joint mortality.

Ignoring DW's SS under her own record, which is common to both alternatives, if I take at FRA, we'll collect 150 a year for 14 years (66 to 80) and 100 a year for 11 years (81-91) for a total of 3,200. If I wait until 70 then we'll collect 50 a year for 4 years, 182 a year for 10 years and 132 a year for 11 years for a total of 3,472 so if we hit the averages we'll collect more by deferring.

Or put another way, if I forgo 400 (100 a year from 66 to 70) then we get 32 more a year for the rest of our lives and the 8% payout rate for a 70 year old is very attractive compared to 6.3% payout rate for a joint life annuity for a 70 year old couple .... especially since it is COLAed.

We are lucky that we have saved enough to live on from 62 to 70 so we have a choice.
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Old 10-03-2015, 08:26 AM   #18
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Probably your best bet is for you to file and suspend at your FRA (66 and 2 months?) enabling her to draw her spousal benefit of half your PIA.

Then at 70 you draw your own.

Any other scenario and you permanently reduce her widow's benefit.
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Old 10-03-2015, 08:27 AM   #19
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unfortunately like most statistics they become relatively poor planning tools .

we are only dead or alive and with out knowing which one we will be we still have to plan like we will buck the odds because someone has to .

we never plan anything in our lives based on statistics , we usually plan around the worst case which usually is the case that bucks the odds . .

we insure our homes even though statistically there is little chance it will burn down .

we plan our incomes around worst case even though the odds say we will do better .

we buy life insurance at a young age even though the odds say we will live .
very few things we protect against are based on the fact statistics say it won't happen to us . unlike statistics , humans only have two choices , things work out as planed or they don't .
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Old 10-03-2015, 09:40 AM   #20
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So, at 62 (we are same age and wife only has worked part time $20k per yr) our SS will be as follows:
62-35,832
63-37,884
64-40,980
65-44,204
66-48,672
Question, since your wife has a history of earnings, why not have her retire and claim SS at 62 with you getting the spousal benefit while you delay claiming your own SS until 70 or FRA? At $20K per year, quick estimate, you'd be getting around $12K SS or more at 62 and you're still covered by the Medicare hold harmless provision.
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