When to take SS?

[ArkTinkerer]

I am a ways away from SS but planning ahead is what has me on a path to RE...

I found a number of sites that talk about delaying SS so you get a higher payout. MotleyFool has an article that says it may make sense to take it earlier. I find all these are not really as accurate as I would like. Is there a really good tool for making this calculation?

My primary complaints about the other analysis:

1. Doesn't properly account for life expectancy as one ages.
2. Does not account for being able to keep other funds in accounts that earn greater than inflation.
3. Does not account for delays in inflation adjustments when inflation is low.
4. It would be really nice if it accounted for investment risk like FireCalc but I know that is asking a lot.
5. Evaluating each of the possible alternatives for a married couple would be a real boon as well!

Anyone seen or done a better analysis on when to take SS?

 

[W2R]

For those interested, our FAQ provides a list of some previous threads on when to take SS:

http://www.early-retirement.org/forums/f47/faq-archive-when-to-take-ss-69366.html

In my opinion, statistically it is a wash. We have to approach it from the viewpoint of how we may individually differ from others used to compile these statistics.

Personally, I am taking my SS at age 70 so it is still growing year after year. I have a family history of longevity, I am female, and I am pretty healthy now for a 66-year-old. But I don't have to deprive myself now, because I am taking divorced spousal SS right now. If you can wait until age 66, it's a way for either male or female divorced folks to have your cake and eat it too at no cost to one's ex.

My beloved (Frank, not my ex) is planning to take his SS at age 62. For him that makes sense, because he is semi-retired already and because sadly, males generally have a shorter life expectancy than do females.

 

[pb4uski]

When the time comes (we are both only 59 now), we'll probably go to socialsecuritysolutions.com or some similar service to get advice on the best claiming strategy for us.

I was a high income earner and DW was a SAHM. We are both in good health and my maternal bloodline has excellent longevity and my paternal bloodline has very good longevity.

From what I have read and the free tools available on the web, it would seem that our best claiming strategy is for DW to claim her benefits at her FRA, for me to file and suspend at my FRA (about 8 months later) and have DW then claim spousal benefits and then for me to take my SS when I turn 70.

But optimal claiming strategies are very situational based on individual fact and circumstances.

 

[Which Roger]

I found a number of sites that talk about delaying SS so you get a higher payout. MotleyFool has an article that says it may make sense to take it earlier. I find all these are not really as accurate as I would like.

There are two many variables and different circumstances for any site to be making a blanket recommendation.

The bigger payout from waiting until age 70 (which is what DW and I will likely do) maximizes the hedge against inflation and provides additional insurance against longevity. Thus, we won't need to use other measures (e.g., TIPS or purchasing longevity insurance) to mitigate these risks.

 

[youbet]

For those interested, our FAQ provides a list of some previous threads on when to take SS:

http://www.early-retirement.org/forums/f47/faq-archive-when-to-take-ss-69366.html

In my opinion, statistically it is a wash. .

+1

And furthermore (setting married couple claiming strategies aside), you can't know how things will actually work out until the years have gone by because:

1. You don't know how long you'll live

2. You don't know what investment returns you would have gotten on the money received by claiming early.

In my case, I started SS early at the depths of the Great Recession at age 62. I've been investing the monthly dole into VTI ever since. With the fabulous market returns we've had since 2009, I should easily have accumulated a large enough pot of SS dollars to withdraw more than the difference between SS @ 62 and SS @ 70 beginning at my age 70.

But, and that's a big BUT, I had no way of knowing my returns would be so favorable when I started. You pay your money, you take your chances...... No matter which SS option you choose, there is risk that it won't turn out to be the best one for you.

 

[Bestwifeever]

When people take SS is a really personal decision. As W2R says, statistically it's a wash, at least as far as the SSA is concerned. But it is interesting to see what people's strategies are.

DH waited til FRA to file and should see that first payment auto deposited in the next ten days woohoo. I will probably wait til FRA in a couple of years to file and suspend, but will claim half of his benefit at that point and let my (at that point slightly smaller than half of his) benefit continue to grow until I reach 70, when it should be a few thousand $ a year more than half of his.

This strategy may not be actuarially neutral as far as the SSA is concerned--if not, I won't be surprised to see it disappear.

 

[ArkTinkerer]

I went thru most of the threads. I don't think any of the calculators listed cover all the issues or do a statistical look like Firecalc does. I also have to wonder how sophisticated Firecalc is about SS. I'm only using the free version.

Wonder if its time to put those programming skills to work and build a better model...

 

[RetireBy90]

We plan for DW to start at FRA, (delaying to 70 would only add about $300 month) and for me to take spousal at FRA then claim mine at 70. This gives us the greatest benefits for DW if I go before her. She would get my full enhanced SS along with a small pension and paid for house would pay her required expenses. I'm using the delayed SS to buy insurance if you will. Just our individual situation, so I don't need to worry about her having enough to live off if I go first. Not my plan mind you

 

[Ally]

We will both start about age 64.5, because my husband is already retired with a pension and I will retire at that point. By us both drawing our social security at that time, we won't have any need to use our investments to supplement and they can keep growing. I have some health issues that could affect my longevity and my husband's relatives are not long lived. So that's what we decided to do. I think everyone has to decide given their own health and circumstances.

 

[Katsmeow]

It is very individual and I also think you have to think about where you will get money to live on if you choose to wait on SS.

In our case, DH took SS when he retired (a few months shy of 63). It was a very easy decision because we had 2 minor children under the age of 18 and this allowed them to receive benefits.

DH and I have very similar SS benefits from work. I am about a year and a half away from 62 and always said I would decide then.

Basically, what I plan to do is look at how our investments are doing at the time and the general economic conditions. Like many, I expect there will inevitably at some point be an at least 20% decline equity values. I expect it to come out of that then go back up again (might not work out that way, but that is my working assumption). The problem - of course - is that we don't know when that will be. So, I will look at that when I turn 62. If investments are doing well then, I might be inclined to defer taking it. However, if that 20% (or more) decline does hit, then that might be a good time to take SS.

On the other hand, if I make it to 66 without taking it, then I would take spousal at 66 and let mine grow to 70 if that option is still available (I am expecting this option to go away...that is, you could still do it but your benefits might not grow while you deferred your own).

The point is that I'm staying flexible. When I run Firecalc I usually run it with me taking SS at 62 (well the January after I turn 62). I sometimes run it with other options.

Also, I am not a big fan of spending down all your assets just to be able to take SS at 70. If you can spend some of your assets to defer and still have quite a bit left over (quite a bit as you define it) then fine. But if not taking SS at 62 means that when you are 70 you have nothing but SS, then I would take it at 62.

 

[rodi]

I'm Katsmeow twin - except a few months younger. (Although she's probably better looking. LOL)

DH started collecting early because we have minor children who get a benefit. That made his start date a complete no brainer.

I'm remaining flexible. We'll see how the portfolio is doing, and the market is doing, and more importantly, how my health is doing, in 9 years when I turn 62. My benefit is a bit higher than DH's (I picked a better major in college, LOL), but because of our age difference and the kids thing... the file and suspend probably won't work for us... so for us - it's a matter of figuring out how I differ from the statistical average.

My family tends to die young of cancer... But I'm leading a healthier lifestyle than my parents did. Then again, my brother was super fit - and died of cancer at age 48. So it will be a bit of a roll of the dice... no matter what we decide.

 

[Chuckanut]

Here's one person's thoughts on the matter. Note item #1 in his list.

https://secure.marketwatch.com/story/3-dubious-financial-contentions-2015-01-10

Rather, the big risk is living longer than expected and running through your savings. Want insurance against that risk? Go for the fatter Social Security check.

Of course, our situations are often different. And I suspect that ER forum members have more assets and and better invested assets that the population as a whole.

I can't tell anybody what to do, only what I currently plan to do. I will take SS at 70 partly as old age insurance, and partly as a way to pay for LTC since buying a LTC policy in the current LTC environment does not make sense to me.

If the situation changes, I reserve the right to change my mind. And I always reserve the right to be smarter tomorrow than I am today.

 

[pb4uski]

I went thru most of the threads. I don't think any of the calculators listed cover all the issues or do a statistical look like Firecalc does. I also have to wonder how sophisticated Firecalc is about SS. I'm only using the free version.

Wonder if its time to put those programming skills to work and build a better model...

One approach I may consider when the time comes (say, just before the first of us turns 62) is to run scenarios in Firecalc and see which scenario gives the best result. However, that approach might be biased towards delaying SS in that it would have a time horizon of our living to 100 (which is what I typically plan for).

If I'm real ambitious I'll do a expected PV analysis for each alternative (PV of benefits discounted for the time value of money through each year times survival probabilities) but with joint lives that could get a bit tricky, so I'll probably just turn to socialsecuritysolutions.com or some other third party provider.

 

[Beldar]

Basically, what I plan to do is look at how our investments are doing at the time and the general economic conditions. .

That's our approach at this point as well. I could game it to death (no pun intended) but the "wash" date is so far in the future that I'm not sure if one strategy is really better than another. The only certainty is that we can turn it on anything from age 62 onwards if needed.

_B

 

[molly]

There is another issue that nobody seems to talk about. If you have 401Ks and IRA withdrawals at age 70 that combine with SS and/or pension funds that put you up over the
medicare & drug limits --- 80K single/170 married....then you may possibly be giving up your gain.

 

[Lisa99]

I used a service similar to socialsecuritysolutions as a trial (don't remember which one it was).

To maximize available spending I'd have to wait until 70 to file. But since I'm retiring so early (54) we'd be virtually out of assets before I filed.

I'm not comfortable running out of money and being fully on SS so we'll run scenarios at 62 to see if what makes the most sense at that time.

 

[Katsmeow]

One approach I may consider when the time comes (say, just before the first of us turns 62) is to run scenarios in Firecalc and see which scenario gives the best result. However, that approach might be biased towards delaying SS in that it would have a time horizon of our living to 100 (which is what I typically plan for).

I have run Firecalc both ways. Right now, it says we do better if we wait. At one time a few years ago it found it better for me to take it early.

That said....if you just run Firecalc, it will spend down your assets to nothing theoretically to bridge the gap between retirement and age 70 and if doing that results in a couple being able to spend more than someone who took it at 62, you may think that is "better" since you get a better result with Firecalc. (For our expected spending we get 100% either way, but if I wait the amount we can spend each year and still be 100% is a couple of thousand dollars more). However, I personally wouldn't be comfortable if I spent all my assets just so I could get to 70 to take SS.

In our case, it wouldn't mean spending them all, but there is a point below which I don't want to go and if waiting would put us under that point (which I'll figure out at the time) then I won't do it even if I would look at Firecalc and say I could spend a little more later if I did it.

 

[Hermit]

I am drawing on late DW's SS account now. I am also withdrawing enough from tax deferred accounts to equal what I will get when I switch to my account at 70. My income (including pension) is more than I will spend, but having a smooth income level throughout retirement appeals to me. Besides, it forces me to withdraw some money before RMDs which will put me in a higher tax bracket.

 

[Rustic23]

I took it at 68. I was going to wait until 70 so DW's portion would be bigger if something happened to me. However, we ran our numbers and decided 68 was a good age and with our other pensions and savings, is something were to happen to one of us the other would have no financial problems.

Taking it earlier than we had planned has allowed us to cruise, and vacation more, with out worrying about money.

Like others have said it is a personal decision. Scott Burns, in his columns and website gives good rational for married couples to wait. Read all you can and make your decision on your circumstances.

 

[Chuckanut]

To maximize available spending I'd have to wait until 70 to file. But since I'm retiring so early (54) we'd be virtually out of assets before I filed.

I am not a big fan of annuities, but if waiting to take SS until 70 or even 66 will drain one's current financial resources down to or near zero, then using some type of bridge annuity might make sense depending upon the cost.

Just a thought. It may or may not work out.

 

[heeyy_joe]

Here's my plan: If I need the cash flow I'll take it. Otherwise I'll wait.

 

[daylatedollarshort]

I look at the year by year cash flow detail in the Fidelity RIP under different scenarios. I like the idea of net worth smoothing and most likely not spending down our own assets more to age 70 and assuming by then our benefits won't be reduced, chained, taxed or asset tested more than they would be at 62. I find it informative to see asset balances year by year than just the terminal value.

Barring the Zombie attack, I don't think we will run out of money either way, so I'm looking at what would the inheritance be for our kids. The 62 approach smooths that out a bit for our particular circumstances.

 

[sparkee]

I'm 64 and still working and will likely work at least one more year (turning 65 in August so I'd be 66 at the end of that one more year--I'm a professor).

It's possible that I'll work longer (I enjoy most of my job) and if so, will certainly wait.

But even if I retire after one more year the difference for me is that my wife is 10 years younger, so the odds are certainly that she'll survive me by a number of years . . . so I'll ideally wait until 70 since it will make a big difference in what she gets after I'm gone (I have much higher income than she's had).

There's some possibility I could take a half time job where we want to retire after 66 -- if that happens (I'll know by late this spring), I'll probably use ESPlanner, since it can make calculations about various SS scenarios (Fidelity RIP, for example, does some, but not with as big an age difference as we have).

That will inform our decision, but the biggest determination will be what I'd like to do most.

 

[unno2002]

[FONT=&quot]Starting to collect “early” or full:[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]Age 62 payment $1,628
Age 66 & 2 months payment $2,279[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]The difference between the two dates is 50 months.
[/FONT]
[FONT=&quot]The difference between the two monthly payments is $651.[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]My first argument would be… who says I’m going to live to 66? If I do not start SS at 62, and the wife & I die in a car accident on the 4th of July after my 66th birthday, that money went "poof“”. ($1,628 x 50 = $81,400 that could have been received and invested)[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]If I take the early payments and just shove them in a box as cash, then once I reach 66 & 2 months start pulling it out at the rate of $651 per month, the box-o-cash lasts until seven months after I turn 76.[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]($81,400 / $651 = 125 months) If I die at any point before that, the extra cash in the box is a bonus for my heirs.[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]If I take all the early payments and deposit them at just 1%, then start to withdraw $651 every month from that account as of 66 & 2 months, the amount on deposit CONTINUES TO GROW.[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]What I'll probably due is use the SS money to pay off a small rental, that will "free up" the money...
[/FONT]

 

[haha]

There is another issue that nobody seems to talk about. If you have 401Ks and IRA withdrawals at age 70 that combine with SS and/or pension funds that put you up over the
medicare & drug limits --- 80K single/170 married....then you may possibly be giving up your gain.

$85K single. BTW, I am not sure I have never seen anyone change his/her mind about the best approached to this, in all my time on this board. It may be genetic.


To me, if one is financially able to delay, the only reasons to not do so are very certain early demise. or very high interest rates, or a very low PE10 stock market valuation.


What is commonly overlooked in citing "actuarial equivalence" of various paths is that this is not possible unless interest rates are specified, and likely best to assess education and social class of the recipient. Absent special circumstances, likely all of us are better off a priori if we wait given today's conditions.


Ha