You should take SS at 62

[imoldernu]

Understanding life expectancy is important. How it's used, is even more important.
So... what does life expectance mean to you?
What:
Is the the life expectancy for a person born today?
Is it the life expectancy for people of your age?... and if so, does it account for the people your age who have already died?
Is the the average number of years you have left to live?

When I was born, my life expectancy was less than 60 years. As of today, my life expectancy is 86 years. Out of 100 persons who shared my birthday, 59 are still alive today. The leading cause of death was cancer.

If you are a 55 year old male, your current life expectancy is about 25 more years to age 80. Nine out of ten men who had the same birthday are still alive.
When you were born, you were expected to live to age 67.

Taking SS at 62 was a right decision for us. Because of our financial situation, Social Security meant we were able to avoid taxes. At the time, we hadn't considered the longer term implications which, fortunately, worked out perfectly, balancing our income and expenses and staying within the tax code which is designed for middle income couples in retirement. Has worked for the past 17 years. No Federal or state taxes.

Of course, every situation is different, and with no crystal ball for the future,
decisions have to be personal.

 

[bclover]

Here is another thought, especially for us single males. How many of us have a financial plan with 100% success to age 95 even though we only have a 20% chance of living that long from age 65?

I am 58 but with each passing year the more I worry about running out of time (especially healthy quality time) rather than running out of money.

which is what I find so "lacking" in most "retirement" talks. all chats tend to focus on simply making it to 90, 95, 100 without any thought to quality of life.

Even here rarely do you hear discussions (now I'm a newbie so I'm sure someone will point me to the appropriate post) of balanced living.

It seems like the end goal is just surviving to 100 and at 100 there will be a grand prize.

So I too, am becoming less and less concerned with living to 100 nor leaving my sons a gabillion dollars when I die.

I'm moving more to a "how can I lead an fulfilling, exciting, interesting life while I am healthy enough to do so" type of gal. although that maynot mean spending more money.
Now if someone can guarantee that my knees will hang in there until 70, I'll bite but when I'm 62 if my choices are take ss and be fully capable of using it to enhance my life vs waiting to 70 for a guarantee 8% increase. i'm taking door number one.

in the grand scheme of things though I guess i'm lucky that I have a choice.

 

[haha]

well in all fairness it used to be a big deal...100 years ago when infant mortality rates were high

I wasn't clear. I agree with you 100%. When my FIL was like 95 his life expectancy was counted by several years, It was very definitely not a minus figure.

 

[Big_Hitter]

I wasn't clear. I agree with you 100%. When my FIL was like 95 his life expectancy was counted by several years, It was very definitely not a minus figure.

you were clear - I was just trying to make a funny

 

[gauss]

..
I'm moving more to a "how can I lead an fulfilling, exciting, interesting life while I am healthy enough to do so" type of gal. although that may not mean spending more money.
Now if someone can guarantee that my knees will hang in there until 70, I'll bite but when I'm 62 if my choices are take ss and be fully capable of using it to enhance my life vs waiting to 70 for a guarantee 8% increase. i'm taking door number one.

in the grand scheme of things though I guess i'm lucky that I have a choice.

So is your assumption in all of this that you will spend more in your sixties if you take SS early and spend less if you delay?

In the general case the amount of spending in your sixties would be independent of when you draw SS.

-gauss

 

[Chuckanut]

Money is fungible. (I just really like that word.) So, spend more out of one's savings from 62-66 or 70. Or get SS earlier. Or.... Use higher SS at 70 as the most affordable LTC insurance available at the moment.

"You" statements are almost always problematic for a number of reasons. They are guaranteed to signal red alert and get the shields raised. Better to say "Here's one person's reason for taking SS at 62".

My 2 cents. Take what you wish and leave the rest.

 

[travelover]

........
"You" statements are almost always problematic for a number of reasons. They are guaranteed to signal red alert and get the shields raised. Better to say "Here's one person's reason for taking SS at 62". ................

+1. The world does not consist of 7 billion people just like ourselves.

 

[jim584672]

Also, be careful SS @ 62 doesn't put one over one of the ACA cliffs.

 

[hnzw_rui]

It is a straight 8% a year (or portion thereof, not compounded). So if your FRA is 66 then your age 70 benefit would be 132% of your FRA. If your FRA is 67 and you start at age 70 then 124%.

A question, how does COLA factor into this? Say you delay your benefits, will your retirement allowance still be COLA adjusted?

So with MRD at 70, assuming most of it is from ROTH, better to wait or take SS early?

There's no MRD for Roth IRA. If your funds are in a Roth 401k or similar, you can rollover to a Roth IRA to avoid MRDs for greater tax free growth.

 

[Independent]

A question, how does COLA factor into this? Say you delay your benefits, will your retirement allowance still be COLA adjusted?

Suppose your retirement benefit, if you start at 66, is $1,000 per month. Suppose that the CPI increases at exactly 3% for the next year.
Then, a year later you'll be getting $1,030.00 per month.

If you delay and start at age 67, your first benefit will be $1,112.40 (rounded down to $1,112.00, I believe). You get credit for both the 8% for deferring and the 3% for the CPI increase. *

In later years, the person who started at 67 will consistently get 8% more than the person who started at 66.


* There's a tricky deal in the very first year you claim, if it's after your normal retirement age, but I think that's too detailed for this question.

 

[Mulligan]

To quote the venerated wit Mike Tyson "I won't know whether to be ecstatic or ludicrous" if I make it to 78 or 80. (probably ludicrous)



My view is that [-]by the time I'd reach[/-] if I'm lucky enough to reach my break even, my expense profile will be considerably lower or at least shifted to things less valued.



I'd rather have the extra cash now.



1) less $$ I have to withdraw from my portfolio

2) my portfolio would/should grow at least as well as SS (if not better)

3) get in before DC changes the rules. (How sad would it be to hold off for a better result only to be subjected to means testing!)

I agree with you, Marko. Take the money and protect your nest egg. What if they cut it down the road? At least you know you have your money still. But my opinion doesn't mean much.... I will draw at 62 and collect my $110 monthly check instead of delaying until 70 for $170 or whatever pittance it will still be.


Sent from my iPad using Tapatalk

 

[pb4uski]

A question, how does COLA factor into this? Say you delay your benefits, will your retirement allowance still be COLA adjusted?

Yes, COLA is on top of that. So let's say your FRA at 67 is $2,000 and from 67-70 the compounded impact of COLA increases that $2,000 to $2,150. Your age 70 benefit would be $2,666 ($2,150 * 124%).

 

[Ian S]

Also, be careful SS @ 62 doesn't put one over one of the ACA cliffs.

Very true! It's one of the myriad factors that shows when to start SS is very dependent on one's situation.

 

[SumDay]

Aargh, every single time I make up my mind to start at 70, I see one of these posts. So today, I've decided to start at 62. That is, until I see someone start a post about why starting at 70 is so much smarter.

 

[frayne]

FWIW, in my working and saving years I never counted on SS. I just didn't want to add into the equation an unknown. Since I have been retired I took SS at 62 for a couple of reasons. The first was I could back off drawing from my portfolio in the amount of the SS which is a little more than $20K per year. Plus the biggest variable is when are you going to take the dirt nap ? Between myself and employer we put in over $200K and the sooner I could get my money back, the better.

 

[marko]

I agree with you, Marko. Take the money and protect your nest egg. What if they cut it down the road? At least you know you have your money still. But my opinion doesn't mean much.... I will draw at 62 and collect my $110 monthly check instead of delaying until 70 for $170 or whatever pittance it will still be.


Sent from my iPad using Tapatalk

I also forgot to mention that each dollar of SS is taxed more advantageously than the same dollars withdrawn from one's IRA.

 

[Big_Hitter]

Plus the biggest variable is when are you going to take the dirt nap ?

easy to estimate for 100,000 lives, very difficult to estimate for 1 life

 

[Bikerdude]

Correct me if I'm wrong, but my understanding of SS is that you receive the same amount no matter when you start as long as you die within the SS mortality table age. So waiting until 70 is really longevity insurance with a reward for being old.

 

[43WorkYears]

Keep in mind that according bro social security statistics, the percentage of people that apply for ss at 70 is in the single digits. Less than 1 in 10. Very few do.


Sent from my iPhone using Early Retirement Forum

 

[ERD50]

Keep in mind that according bro social security statistics, the percentage of people that apply for ss at 70 is in the single digits. Less than 1 in 10. Very few do. ...

And your point is?

-ERD50

 

[marko]

Keep in mind that according bro social security statistics, the percentage of people that apply for ss at 70 is in the single digits. Less than 1 in 10. Very few do.


Sent from my iPhone using Early Retirement Forum

I suspect that more recently, the Great Recession pushed a lot of people into the 'take it early' group.

It's easy to say "wait until you're FRA or more" if you still have a job, but if you're not working and have little savings, you do what ya gotta do.

 

[Taxman59]

easy to estimate for 100,000 lives, very difficult to estimate for 1 life

Difference between actuaries and the Mob? Actuaries know how many people are going to die in a given year, The Mob knows their names!!

 

[marko]

I did a spreadsheet once that --in my own personal case--showed that once the Fed tax break, no State income tax and loss of investment income from my IRA were all factored in, I was ahead about $4K per year by taking SS at 62 instead of withdrawing from my IRA.

I actually saved $1990 in Fed/State taxes alone.

It effectively pushed my break even age to more like 84.

 

[explanade]

Ok if not Roth then MRDs from 401ks.

 

[Bikerdude]

I did a spreadsheet once that --in my own personal case--showed that once the Fed tax break, no State income tax and loss of investment income from my IRA were all factored in, I was ahead about $4K per year by taking SS at 62 instead of withdrawing from my IRA.

I actually saved $1990 in Fed/State taxes alone.

It effectively pushed my break even age to more like 84.

I found similar savings. Once again, everyone needs to do their own analysis. There is no single right answer.