Social Security at age 62

[daylatedollarshort]

We plan to take at 62 to diversify our retirement income steams and minimize draw downs on the portfolio, the money we have the most control over.

 

[misanman]

Plan to wait until 70. My birthday is in July though, so only need to wait a few more months.

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[Gumby]

Due to the GPO (Government Pension Offset) my young wife will not receive a survivor benefit after I die, and she will not receive benefits of her own, since she has never paid into social security. So my plan is to start benefits at 62 and avoid pulling that much from the nest egg, which will then remain for her when I'm gone.

 

[ziggy29]

One of them said their FA told them ss is struggling and will not be around in the next 10 years or so.

IMO, this FA is a quack. Yes, unless Congress stops kicking the can and actually decides to work together and compromise for a change, at some point 15-20 years from now, the "surplus" (such as it is) is expected to be exhausted and SS will not be able to pay 100% in promised benefits just from the incoming SS tax revenues. (Right around the time I'll start collecting.... how convenient.)

But even the worst case analysis suggests SS will continue to be able to pay out 70-75% of benefits after that time. Too many scaremongers act like SS will belly up entirely and payments will go to zero. My crystal ball is murky as hell but I'm pretty darned sure there is almost *no* political will to let that happen.

That said, folks who are under 55* have reason for concern and additional reason to hedge their bets in terms of retirement income. And if they want to *assume* they will get none in the spirit of very conservative financial planning, so be it. But it's extremely unlikely they get nothing.

* -- I say 55 because that seems to be the "magic number" where most SS reform proposals don't ask anyone above that age to share in any of the pain of SS reform in terms of changes in benefits coming to them.

 

[HadEnuff]

A bird in the hand is worth two in the bush.

I started a few months after 62nd birthday ( I waited because I was still w*rking),

2 factors for me: 1. If I didn't take it, I'd have to dig into my savings further. I have no pensions. Just my nut,
and,

2. someone puts the money on the table,I pick it up. They might not have it later. Or may change the rules.

I had this same conversation with a cousin who has a teacher's pension and so does his DW, so they don't need the cash now, and are waiting. That too makes sense, for them.

I expect to live beyond the break-even, but who knows? If I do, then I've saved more of my savings, if I don't, well...then I win...sort of...I guess...

 

[Senator]

I am waiting until 70 for several reasons.

• I should not need the money, therefore, I can wait.
• Longevity insurance. If I life to be 90, and my investment portfolio goes to crap, it's nice to have SS.
• If I get married at 70, the DGF (wife by then for SS purposes) will have a higher spousal benefit and death benefit.
• Once SS kicks in, it should make up for any inflation losses, if any, in my income stream.
• I can use it as a LTC insurance policy. It will likely pay more than many LTC policies.
• If SS is going to be changed, I can signup faster than a law can be passed.
• If I get bad news from the Dr., I can sign up right away.

SS will ALWAYS have the money. It can be taxed, it can be printed, it can be given in script. The very last of my worries that SS "runs out of money".

I would be more concerned that the minimum wage was $50+ an hour, and everyone was living a $50 lifestyle, and I only was living on a $20 an hour lifestyle with my pension and investments.

 

[cyber888]

This FA is definitely a quack. SS won't run out on 2034, they will just pay 30% less if Congress does nothing from now (2016) to 2034. If Congress raise taxes for social security, it will cover full 100% payments beyond 2034.

 

[Senator]

This FA is definitely a quack. SS won't run out on 2034, they will just pay 30% less if Congress does nothing from now (2016) to 2034. If Congress raise taxes for social security, it will cover full 100% payments beyond 2034.

I can't see SS paying any less. I can maybe see the CPI being adjusted, but not any 'cut'.

In any case, there are a lot more things that are entirely more possible. I would worry more about these...

• Things like high inflation, when you have no COLA adjustments in your income stream.
• The stock market stagnating for 20+ years, like Japan.
• Living in a neighborhood that becomes dangerous.
• The price of a lap dance becoming too prohibitive to invest in.

 

[Danmar]

I don't need the income early and DW and I are in good health so the plan is to wait until 70. We see it as a future inflation adjustment.

Same for us. Currently 66 -if defer to 70 will be 42% higher than at 65. My company pension started at 62 and divs make up the rest of our spending. The national pension plan in Canada is actuarially sound as well and the payments not as generous as in the US. Really not material to our financial situation.

 

[HFWR]

SS won't "run out of money". It will, however, exhaust its SS trust fund around 2033; and, will then only cover approximately 75% to 79% of SS amounts based upon estimated payroll contributions.

Thus the quotes...

 

[HFWR]

As long as you recognize that you don't have to start SS when you stop working... many people live off of savings from when they stop working until they start SS.

We plan to take at 62 to diversify our retirement income steams and minimize draw downs on the portfolio, the money we have the most control over.

This... My four-legged stool: SS, small pension (the short leg...), retiree health insurance, and IRA. My spend down would be larger/faster than I'm comfortable with...

My goal was to get the hell out as soon as possible.

 

[NW-Bound]

What four-legged stool?

My plan has always been to hop on my own stash as a pogo stick (it does bounce like one!). Then, SS is a shorter leg, like a training wheel for kids' bikes, except it is one-sided.

Speaking of bike's training wheels, I still remember my first bike and the time my father removed the training wheels. He removed one side first to see how I did. When he saw that if I could manage to always lean on the correct side then I would not need any training wheel, he removed the remaining one.

 

[athena53]

This FA is definitely a quack.

Ya think maybe the FA might benefit if the client takes SS early and thus keeps more invested with the FA?

;-)

 

[Youngster]

Planning on 62; however, will wait and see whether it is bettter to start taking from 401k or SS at 62. About 3 years to go before I decide.

 

[tmm99]

My crystal ball says SS will not go away and if the payout decreases, it will be only by a very slight amount. There are just too many people whose main source of income is SS. The government won't want to create a bunch of old homeless people who are starving to death.


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[athena53]

I'd modify that prediction to say that there will be only slight decreases for those who have little or no other sources of income. For the rest of us it's a bit of a crapshoot.

 

[Cobra9777]

We are both 55. I've been retired 3 years. Tentative plan is to wait until 70, for both myself and DW. Reasons are similar to Senator's list above. We will reevaluate each year starting at 62, including such things as: our health, portfolio performance, inflation, spending patterns, legacy considerations, likelihood of changes to the program like means testing, etc.

 

[Accidental Retiree]

We printed out DH's SS statement a couple of days ago and saw that 2034 is the new date by which payroll taxes will pay only 79% of scheduled benefits. That's a slight improvement over what we've seen on earlier statements.




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[daylatedollarshort]

I'd modify that prediction to say that there will be only slight decreases for those who have little or no other sources of income. For the rest of us it's a bit of a crapshoot.

For higher than average income or asset retired households, crapshoot is probably the correct term. Wealth inequality gets a lot of press these days.

 

[W2R]

When I was planning my retirement, I assumed that I would get no SS money at all because of the dire predictions in the mass media at that time.

Every month when SS deposits money in my checking account, it's like Christmas! To me, that is an unexpected gift or bonus and it is wonderful to have.

If SS decreases to 79% in 2034, I will already be 86 (assuming I haven't croaked yet) so the decrease will not affect me for too many years.

 

[NW-Bound]

For higher than average income or asset retired households, crapshoot is probably the correct term. Wealth inequality gets a lot of press these days.

Time to spend it, or pretend you did (krugerrands buried in back yard).

 

[Happyras]

I took SS at 62.

My primary reason was concern over the rules being changed at some point particularly against HNW folk. Take the money, run and hope for grandfathering was my motto.

My secondary reason was the realization that the break even was about 78 coupled to minor Fed and full state tax advantages vs taking it from my portfolio; I pocket about $4K a year in saved taxes for eight years.

Agreed! Also, I go along the same lines as the Senator, I can start at age 62 in Jan 2017 and it will depend on the investment returns at that time.

I am past the so called double bent in benefit, at max. I did a model of both my wife and I with benefits at each age and have run a few online estimators including ORP, and Fido's planner. I like my SS spread sheet for simplicity, which is as simple reinvestment of benefits at a given return each year. At simple returns of 5% the break even is age 85ish, where age 66 or 62 are equal in accumulated NW. at 4% its 82 at 3% its 80ish. All simple scenarios starting benefits at age 62 makes only a small impact (5% total NW impact) even living to 95.

Since this all assumes that the rules do not change, the decision is personal comfort in a larger payment for fewer years etc. by waiting. However, I am a strong believer that taxes will be restructured, and benefits reduced for HNW.

The whole system is biased toward a higher benefit % for the lower wage earners. Changing the game will happen.

 

[dixonge]

We'll both take pensions before SS, but probably take SS at 62 each. We don't have much of a nest egg outside those sources, so to be safe we want to throw about half our income into the market. Having that SS money in the market early vs. waiting extends the break-even point possibly to infinity.

 

[nubill]

Our plan is to first do a Roth conversions on all our remaining IRA’s. My tax code knowledge may be incorrect and would invite anyone to comment and correct me. I started this when I turned 60 and have been trying to convert as much as I can without going over the 15% bracket which for married filing jointly is around $75K for TY 2016.

I will be 63 in July and DW will be 59.5 by years end. We will do my conversions first since my window before RMD’s is shorter. We pay 15% to the feds and 7% to the state of SC. If I took SS now I would not be able to convert as much on the Fed Tax side and keep within the 15% bracket. SC does not tax SS income. If we live in a state such as FL, we would not pay state income taxes on the Roth conversions or SS income. If we live in a state such as Utah we would pay a 5% tax on Roth conversions and they also tax SS. We don’t like RMD’s. We would end up with us in a higher tax bracket at age 70.5. With demographics in the US showing an aging population, I would guess that higher tax rates are in the future.

Another reason for the Roth conversion is that our son is currently in the 25% tax bracket. If he inherits an IRA he will have to take RMD’s and pay 25% tax on them. If he inherits a Roth he will still have to take RMD’s but would not have to pay taxes. Before I turn 66 which is my FRA, I will have to buy a copy of Mike Pipers latest book since SS laws may change again. Born in 1953, there may still be a File and Suspend rule where I can claim my spouses SS and delay taking mine until 70.

As I mentioned in my first paragraph, this is my understanding of the tax code. I’m new to posting and my wish is to be helpful and accurate. If there are any experts on this forum please comment.

 

[LARS]

However, I am a strong believer that taxes will be restructured, and benefits reduced for HNW.



The whole system is biased toward a higher benefit % for the lower wage earners. Changing the game will happen.

Perhaps nit picking, but I suspect any changes made for "wealthy" SS recipients will not be for HNW folks per se, but instead for High Income folks. To the extent there will be overt means testing it will most likely be income, and not asset, based. And, even in that regard, I would be very surprised if there isn't a grandfathering aspect to any changes. Regardless, with the current level of cooperation in Congress today I cannot imagine the issue of SS being tackled in earnest any time soon.


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