Best time for SS withdraw is age 67 not 70?

[fishfactory]

Montecfo, this is different than the 80's. Projections show that by 2030, millennials and their juniors will make up more than half of not just the population, but of all eligible voters. I doubt the politicians will be as concerned with the baby boomer voters at that point.

 

[daylatedollarshort]

Last time we had a SS crises at least a couple of the fixes did impact retirees - delays in cost of living adjustments and higher taxes for higher income beneficiaries:

Here's How We Fixed Social Security Last Time It Was in Trouble, https://www.fool.com/retirement/2017/08/22/heres-how-we-fixed-social-security-last-time-it-wa.aspx

Of course they are never going to call it a benefit cut, but those resulted in reduced benefits just the same.

 

[Montecfo]

+1. I'm 61 and I would really like to wait until 70 to collect (for longevity insurance and more years of Roth conversions) but if this is still getting kicked down the road when I'm off the ACA I may start it then. The people who would being paying increased SS taxes out of their paychecks also vote. I'm not feeling a lot of love for boomers from younger generations. Every year that goes by I'm a little less confident that even 62 year olds will be grandfathered in, especially if they haven't started yet.

You can listen to the people who assure you that your benefits won't get hit, and I agree the odds are favorable, but they won't be chipping in to help if does happen. Everyone has to think and decide for themselves.

I think it boils down to how you wish to spend your time.

"How much pain the evils have cost us that never happened"
-Thomas Jefferson

 

[Montecfo]

Last time we had a SS crises at least a couple of the fixes did impact retirees - delays in cost of living adjustments and higher taxes for higher income beneficiaries:

Here's How We Fixed Social Security Last Time It Was in Trouble, https://www.fool.com/retirement/2017/08/22/heres-how-we-fixed-social-security-last-time-it-wa.aspx

Of course they are never going to call it a benefit cut, but those resulted in reduced benefits just the same.

Yeah I do not consider the tax side as a cut in benefits. But I guess it can be viewed that way.

Everyone gave a bit before. But bennies were not changed for folks near retirement.

I think the cola calculation could change also, along with changes in taxation on the high end, and some deferral of benefits for younger folks.

Full disclosure: my retirement plan assumed zero for SS. But any reasonable analysis suggests this is how it will play out.

 

[reneeh63]

Montecfo, this is different than the 80's. Projections show that by 2030, millennials and their juniors will make up more than half of not just the population, but of all eligible voters. I doubt the politicians will be as concerned with the baby boomer voters at that point.

...millennials don't seem to care much for "greedy" boomers so I wouldn't want to count on THEM to save their elders (meaning me!).

I totally agree that the tide is changing .

 

[fishfactory]

reneeh63, especially since the younger generations have been told and believe there will be no SS for them when they reach retirement age.

 

[CRLLS]

Yeah I do not consider the tax side as a cut in benefits. But I guess it can be viewed that way.

Everyone gave a bit before. But bennies were not changed for folks near retirement.

I think the cola calculation could change also, along with changes in taxation on the high end, and some deferral of benefits for younger folks.

Full disclosure: my retirement plan assumed zero for SS. But any reasonable analysis suggests this is how it will play out.

Well anytime they start taking money from what they already have been giving you, is just slight-of-hand. I consider a cut in benefits. Rgardless of what they call it, the would-be magicians didn't fool me.

Those reduced bennies were for people already on SS.

Longer deferrals for the younger ignores the fact that older workers are finding it more and more difficult to stay employed or find meaningful work up to the current FRA.

More and more people need SS for their retirement. Very few are on the ER train.

The fix is not to further remove the calculations used for those already on SS or for those within 20 years of SS (i.e. age 42). There is little that they can do to adjust their income stream at that point in their lives to make up the difference.

 

[RunningBum]

I think it boils down to how you wish to spend your time.

"How much pain the evils have cost us that never happened"
-Thomas Jefferson

Nah, I don't spend that much time fretting about it. But while you may be certain enough, I don't have confidence to know what will never happen to my SS benefits.

 

[SecondCor521]

Opensocialsecurity.com assumes a dollar at your age 88 is just as usefull/important/whatever, as a dollar at age 63. I disagree.

Does it?

I thought the tool applied a discount rate, which I assumed (yeah, I know) was for the time value of money.

You can see the discount rate by going to the website, checking the box at the very top, and then looking at the sixth option down in the list that appears.

You can even use your own discount rate if you like.

ETA: The tool indicates that it's the fact that a dollar now can be invested and is therefore worth more. I'm not sure if that's different from the utility to the recipient if received more. Or if those two ideas are both being considered in the discount rate or not. (Discount rates, quite frankly, confuse me. I understand and can do the math, but what discount rate to choose is often confusing.)

 

[audreyh1]

Does it?

I thought the tool applied a discount rate, which I assumed (yeah, I know) was for the time value of money.

You can see the discount rate by going to the website, checking the box at the very top, and then looking at the sixth option down in the list that appears.

You can even use your own discount rate if you like.

ETA: The tool indicates that it's the fact that a dollar now can be invested and is therefore worth more. I'm not sure if that's different from the utility to the recipient if received more. Or if those two ideas are both being considered in the discount rate or not. (Discount rates, quite frankly, confuse me. I understand and can do the math, but what discount rate to choose is often confusing.)

What he means is useful, he’s not talking about monetary value, he’s talking about the ability of an 88 year old to do all the things a 63 year old can do.

Others point out however that delaying SS does not prevent you from spending the funds at 63.

 

[SecondCor521]

What he means is useful, he’s not talking about monetary value, he’s talking about the ability of an 88 year old to do all the things a 63 year old can do.

Others point out however that delaying SS does not prevent you from spending the funds at 63.

Right.

I'm in the "others" camp on this aspect of things. Money is fungible - whether spending $ at 63 comes from SS or FIRE stash seems no different to me. As long as one can have the foresight as @pb4uski mentions up thread in post #85.

 

[Dtail]

Right.

I'm in the "others" camp on this aspect of things. Money is fungible - whether spending $ at 63 comes from SS or FIRE stash seems no different to me. As long as one can have the foresight as @pb4uski mentions up thread in post #85.

Agree for many folks on this forum, but not all. I am assuming the majority of folks who take SS at 62 outside of this forum do so coz they need it to spend and don't have sufficient other retirement assets.
As for many forum members, there are many other aspects to consider as to the decision making process and this is why this topic is probably the most debated topic here.

 

[camfused]

Montecfo, this is different than the 80's. Projections show that by 2030, millennials and their juniors will make up more than half of not just the population, but of all eligible voters. I doubt the politicians will be as concerned with the baby boomer voters at that point.

Also, there is a recent trend of voters voting into office people who seem to care more about upending things, not that much about re-election, nor about the concerns of seniors.

 

[levindb]

In our decision making process, we discovered many factors to consider:

1. Most money from the government before passing (aka breakeven)
- just me
- me and spouse
- me, spouse, young children
2. Most money for my spouse after I pass
3. Most amount of funds in my hearse luggage (aka legacy for heirs, charities)
4. Least amount of tax
5. Most amounts from 1, 2, and 3 after tax
6. Least chance of running out of money before I/we pass

I am sure there are more, but once we understood these factors, we then needed to prioritize them based on our personal financial/health situation, and risk personalities.

It is a very complex problem and some people will need professional help. The discussions here help folks understand many of the factors that others have considered...which is very useful when trying to make an informed decision.

 

[pb4uski]

And 5 years of using his stash vice receiving SS payments so he lost all that money. We can play this all day. I respect everyones decision on when they should take SS. Anytime between 62 and 70 is fine. My hope is that everyone analyses their situation and makes an educated decision based on their (and their spouses) circumstances/needs.

WADR, he didn't "lose" that money. He effectively made 60 monthly premium payments to purchase a COLA life annuity with a monthly benefit for the increase in the monthly benefit.

If someone doesn't want to buy that COLA life annuity then that is fine, but please don't twist it into losing money to promote a particular view.

 

[pb4uski]

Forgot to mention that early SS gave us the freedom to spend winters in a warm weather location. Would never trade those years for having to wait till age 70 to draw.

If you have sufficient retirement savings, that is a false premise in that one is just spending retirement savings earlier rather than later to make up for a smaller SS check. OTOH, if you don't have sufficient retirement savings to be comfortable using that money for higher spending during that period from 62 or FRA to 70 then your choice is to start SS early to be able to spend more early or forgo spending winters in the warm weather. We are lucky enough to be able to afford to do both.

 

[pb4uski]

+1



In my opinion, married couples really need to understand all the ramifications of early filing (particularly the primary wage earner) and survivor benefits. Taking SS (often simplistic) advice from SGOTI can be a very costly mistake.



In our case, once one of us passes, there's already a "haircut" going from two SS income streams to one. Plus, the married filing jointly standard deduction goes away. Throwing in the possible (probable) haircut coming to "fix" SS, I don't want to add an additional haircut to DW's future by claiming early.

+1. The chances of one or the other of us living until our early 90s is over 50%, so even if one of us dies after I claim at 70, DDs smaller benefit will go away but the surviving spouse will receive my age 70 benefit for the rest of their life.

That and if I was on SS it would crimp our ability to do low tax cost Roth conversions from 62 or FRA to 70.

 

[pb4uski]

You're probably right overall. But, I do think they will find a way to tax that last 15% for people with higher incomes. That's a good way to cut SS benefits for "the rich" while perhaps not technically cutting the benefits.

While that is possible, I think it is unlikely. The current 85% is broadly equivalent to the taxation of contributory life pension benefits, non-deductible IRAs and retirement annuities, etc. I don't think that Congress would knowingly tax SS more severely than those other contributory retirement vehicles.

 

[pb4uski]

Folks over 50 when the law changes likely would not be affected, no matter what year that happens.

I understand the law. We went through this in the 80s. It is not a new issue. It was fixed then when there was no other option.

+1. The 1980s changes is a good blueprint for the transition of any changes now and any proposed changes will be measured against those 1980s changes.

 

[RunningBum]

While that is possible, I think it is unlikely. The current 85% is broadly equivalent to the taxation of contributory life pension benefits, non-deductible IRAs and retirement annuities, etc. I don't think that Congress would knowingly tax SS more severely than those other contributory retirement vehicles.

I don't follow that. Are those other retirement incomes only taxed at up to 85%? Please explain.

 

[audreyh1]

I don't follow that. Are those other retirement incomes only taxed at up to 85%? Please explain.

Yes, some pension benefits aren’t 100% taxed based on the employee contributions.

 

[pb4uski]

Last time we had a SS crises at least a couple of the fixes did impact retirees - delays in cost of living adjustments and higher taxes for higher income beneficiaries:

Here's How We Fixed Social Security Last Time It Was in Trouble, https://www.fool.com/retirement/2017/08/22/heres-how-we-fixed-social-security-last-time-it-wa.aspx

Of course they are never going to call it a benefit cut, but those resulted in reduced benefits just the same.

The problem is that any time you make changes that result in lower benefits for someone, no matter how reasonably justifiable, someone is going to claim that it is a benefit cut.

So for example, original SS was expected to pay benefits for about 10 years after FRA. Subsequently, longevity improved and those unanticipated additional payments stressed the system financially and the FRA was increased from 65 to 67 to restore the assumed years of benefit payments. So was that simply a sensible adjustment to the program parameters due to improved longevity or a "benefit cut"? You say potato and I say potatoe.

Another example is a few years ago where they closed the loophole that allowed one spouse to claim early based on their spouses word record and allow their delayed benefit to grow. Was that change closing an unintended loophole or a benefit cut? You say potato and I say potatoe. We were directly impacted by that change... 1 year off... but I viewed it as them finally closing a loophole vs cutting benefits.

Taxation is another example. Originally SS benefits were not taxed Then Congress later changed the taxation to be broadly akin to the taxation of contributory pension benefits. A sensible change of an oversight of not taxing SS to begin with or a "benefits cut"? You say potato and I say potatoe.

 

[GenXguy]

62 is more desirable if you are single I think and do not have to worry someone will outlive you.

Wrong again with these "62" comments. I'm single, and 62 would be a horrible decision. It has nothing to do with worrying about someone outliving me. If I took it at 62, would lose any hope of ACA subsidies at that age and pay much more in healthcare premiums and out of pocket costs - assuming the ACA is still around by the time I get that old. So 65 would be the earliest age that would make any sense for me to take it.

 

[pb4uski]

reneeh63, especially since the younger generations have been told and believe there will be no SS for them when they reach retirement age.

And just who has told them that? Certainly not the SSA or the US government. Perhaps some talking heads that don't know what they are talking about. Just like the uninformed comment of some that SS will "go bankrupt" in 2034.

 

[Fermion]

I did just think of another reason someone might want to wait. I believe social security, like some retirement accounts, is protected from civil suits. If you spend down your taxable account instead of taking SS early, it might enable you to reduce or eliminate some insurances you have in place to pay off "slip and fall" type lawsuits.