New Social Security study on claiming it too early

[mountainsoft]

The problem with waiting to take SS is that you still have to pay your bills while you wait. That means you have to work longer, or you need a nest egg large enough to hold you over until you can claim SS.

We got a fairly late start building our savings, so we don't have a large nest egg to hold us over to 67 or 70. I've run the numbers and waiting to take SS would draw our savings down to an uncomfortably low level. So our plan is to take SS at 62.

Yes, we would get more from SS by waiting. We could also increase our savings by waiting longer to retire. At some point you have to decide between enjoying the time you have left and maximizing your money. For us, the time is more important than the money.

 

[razztazz]

The problem with waiting to take SS is that you still have to pay your bills while you wait. That means you have to work longer, or you need a nest egg large enough to hold you over until you can claim SS.

We got a fairly late start building our savings, so we don't have a large nest egg to hold us over to 67 or 70. I've run the numbers and waiting to take SS would draw our savings down to an uncomfortably low level. So our plan is to take SS at 62.

Yes, we would get more from SS by waiting. We could also increase our savings by waiting longer to retire. At some point you have to decide between enjoying the time you have left and maximizing your money. For us, the time is more important than the money.

This! By waiting you're just reshuffling the money for the most part. The difference, in the end, is hardly a difference at all

 

[explanade]

A question about the report. It compares two scenarios, actual income vs simulated, the difference based on the age participants began drawing SS.

There is an 8 year difference between min and max ages. When they conclude someone would have earned higher total income by beginning SS at age 70 compared with age 62, what other income do these people have to support themselves during those 8 years?

Trying to understand if this firm is trying to help clients with planning for retirement or managing their finances after they've retired.

Are they advising their own paying clients to keep working until they're 70 to maximize their retirement income?

Do they for instance advise clients that they're likely to spend less as they age?

 

[gwraigty]

G, scenario 2 is a tough one because if he kept working full time so she would have had a bigger SS considering how young he died he never would have retired which is not optimal either. It seems like selling the house and renting a tiny apartment might be best for her. No clue why she thought a nephew would want to live with her.

Agree. She did consider trying to lower her housing expenses, but has decided to stay put. No clue as to how she's making it work.

As for us, no clue as to what our decision will be when the time comes. No pension in store for us. But we've lived our lives as though SS wouldn't be there. Too early to tell, but I still keep reading along with the SS discussions. More legislative changes without much notice (like the elimination of file and suspend) could change the best laid plans of many.

 

[explanade]

Some people take it at 62 because they need it. I was going to wait until FRA of 66 because I was working part time but when I lost my job I took it at 65 because there wasn’t much difference with waiting a year.

I likely won't need to take it at 62 but it would let me spend more or invest it.

Currently not adding to my assets.

 

[Jeffman52]

43% of men wont make it to age 80.(which is close to the break even point)
80% wont make it to 90.

I wonder if they take all that into account or if they assume that everyone will just stay alive.

 

[ShokWaveRider]

Regardless of Studies or reasons for or against when to take SS by all, and all the posts here defining, asking or challenging the subject, the answer is ALWAYS the same.

Different Strikes for Different Folks, it all depends on your own personal situation. If you are broke or need the cashish, then take early, if not wait to whenever you want.

 

[MarieIG]

The one big thing which may affect when I decide to claim SS is being diagnosed with Type 2 Diabetes 4 years ago. While it is under control (I am at the milder end of its spectrum of problems), I do wonder how much it will reduce my life expectancy.

If it is well controlled, probably not much at all.

DH has it but it is well controlled and the doctor is very pleased with him. Actually told him he was too healthy to retire . . .

 

[starry night]

The years of TWO monthly benefits

DH and I have crunched these numbers every way possible....and we find that that of all the scenarios out there, it is the years in which we are both receiving benefits that cannot be beaten.
No way around it, when one spouse dies, the survivor is cut from two incomes to only the one — thankfully it is the larger of the two, but still a loss of monthly income.
So, every month that we can receive 2 benefits will beat any month later on where the survivor receives only one.
Our choice was to maximize the number of months where we receive double incomes from SSA.

 

[RunningBum]

43% of men wont make it to age 80.(which is close to the break even point)
80% wont make it to 90.

I wonder if they take all that into account or if they assume that everyone will just stay alive.

Is that from birth, or from age 62? Because people who die before age 62 never get to the SS decision. For a man who hits age 62, what % will make it to 80 or 90?

 

[youbet]

Even after a decade it may be too early to declare victory with 3 decades left to go.

Yep. That's what makes the planning (guessing?) about FIRE so interesting. We can make whatever assumptions we wish about the future but only time will tell....... So, in the case of the interesting "When to take SS" question, only the passage of time will show if you got lucky with your choice or not. 62, FRA, 70, any of these might prove to have been best as we look back years from now.

My primary goal was to protect DW (who cannot collect any of my SS now or as a survivor due to GPO) so I started SS at 62 and invested the money monthly. It turns out, through nothing I had anything to do with, those were very favorable years to be periodically investing into the TSM, so it appears I'll be as well off financially (per FireCalc) as if I had waited until 70 to collect SS. Plus I provided for DW's benefit. But only the passage of time, as you correctly point out, will prove if it all pans out. And, of course, this can be said for any SS scenario.

 

[youbet]

I am one of those people who started at 62 and have it 100% for investment.
Because of growth in the market the past 10 years this has worked out very well.
I started reading this forum about that time but only signed up recently.
I have learned so much about so many things here and I thank you all.

+1

This certainly isn't the path for everyone. But for folks with no one to collect survivor benefits and who appreciate the time value of money, compounding, benefits of time in the market, etc., starting early (62) and investing prudently does hold out the hope of beating the "wait to 70" scenario. And, if you die before 70, your heirs receive what you've collected + investment returns up to your passing.

Of course, if you're not a disciplined investor or if having the so-called "longevity insurance" component of SS is key to your plans, you'd need to factor that in. In my case, protecting DW (no SS survivor benefits due to GPO) was my prime consideration. The fact that the decade turned out to be an investment success was just a plus.

 

[GenXguy]

Is that from birth, or from age 62? Because people who die before age 62 never get to the SS decision. For a man who hits age 62, what % will make it to 80 or 90?

Life expectancy tables show a 62 year old man's life expectancy is 82.

 

[MichaelB]

After reading the study, I think the straight up analysis regularly done by forum members in threads on SS Benefits is deeper, more thorough & realisticl, and far more practical.

I also think some of the study conclusions are flawed, but it’s difficukt to know, as they don’t share methodology.

 

[youbet]

Life expectancy tables show a 62 year old man's life expectancy is 82.

Of course, many of us won't make it to 82. And many will make it far beyond 82. The dispersion of the data around the mean is the interesting part of life expectancy tables from the viewpoint of an individual.

For example, for an individual, the probability of living to 80 or 84 might be close to the probability of living to exactly 82. It's a crap-shoot. But for the population in aggregate, the average expectancy does hold true and is very useful for government agencies such as the SS folks or for insurance companies to use in their actuarial calculations.

Anyone who calculates so-called "break-even points" for SS assuming they'll manage to live to the "expected" age and then promptly bow out is whistling in the wind. Average life expectancy applies to the aggregate population and any particular individual has a very significant chance of passing at some other age.

My own goal is to make it to bedtime today and wake up again tomorrow morning.......

 

[zinger1457]

Here's an interesting life expectancy calculator that takes into account your life style and health. Will show your life expectancy and % chance or living to various ages based on your input. This is from a company selling annuities so maybe the numbers are a little optimistic. I did change my data to test the effects of poor health/lifestyle and the numbers did drop drastically.


https://www.blueprintincome.com/tools/life-expectancy-calculator-how-long-will-i-live/

 

[RunningBum]

+1

This certainly isn't the path for everyone. But for folks with no one to collect survivor benefits and who appreciate the time value of money, compounding, benefits of time in the market, etc., starting early (62) and investing prudently does hold out the hope of beating the "wait to 70" scenario. And, if you die before 70, your heirs receive what you've collected + investment returns up to your passing.

Of course, if you're not a disciplined investor or if having the so-called "longevity insurance" component of SS is key to your plans, you'd need to factor that in. In my case, protecting DW (no SS survivor benefits due to GPO) was my prime consideration. The fact that the decade turned out to be an investment success was just a plus.

That's a subtle but very clear bias you're putting out there. You can invest prudently from 62, but if you're not fortunate enough to have a bull market in those early years, you won't beat waiting until 70. Many who wait until 70 are disciplined investors, but aren't willing to risk a bear market and take the more guaranteed return of waiting until 70. And longevity insurance is "so-called"?

How about this slant instead:
----
If you're a dirty rotten market timer who likes to take risks, taking at 62 gives you a dice roll chance at coming out ahead.

Of course, if you'd rather sleep well with a guaranteed return and have the security of longevity insurance, waiting until 70 will likely put you ahead. And once you pass the breakeven point, your heirs will come out ahead as well.
----

That says the same thing as you said. Just a little different bias. Maybe I wasn't quite as subtle.

 

[RunningBum]

The important thing isn't so much whether you make it past the breakeven point, but rather which side of the breakeven point is it more important to win. Is it the short side, when you're almost certain not to have run out of money? Or the long side, when you're still around and may be in danger of outliving your money?

 

[youbet]

That's a subtle but very clear bias you're putting out there. You can invest prudently from 62, but if you're not fortunate enough to have a bull market in those early years, you won't beat waiting until 70. Many who wait until 70 are disciplined investors, but aren't willing to risk a bear market and take the more guaranteed return of waiting until 70. And longevity insurance is "so-called"?

How about this slant instead:
----
If you're a dirty rotten market timer who likes to take risks, taking at 62 gives you a dice roll chance at coming out ahead.

Of course, if you'd rather sleep well with a guaranteed return and have the security of longevity insurance, waiting until 70 will likely put you ahead. And once you pass the breakeven point, your heirs will come out ahead as well.
----

That says the same thing as you said. Just a little different bias. Maybe I wasn't quite as subtle.

Spoken like someone without a dependent (who can't collect any of their SS now or as a survivor) that they're trying to protect, as was my intent and strategy. That is the case, right?

For me:

In my case, protecting DW (no SS survivor benefits due to GPO) was my prime consideration. The fact that the decade turned out to be an investment success was just a plus.

 

[RunningBum]

Spoken like someone without a dependent (who can't collect any of their SS now or as a survivor) that they're trying to protect, as was my intent and strategy. That is the case, right?

For me:

That's all fine except for throwing in the whole bias about prudent investing and not being disciplined investors which has absolutely nothing to do with your situation. Right?

 

[joeea]

Just looking at the statistics thus far, I don't think that is going to be very popular.

There's no doubt in my mind that it wouldn't be popular.

 

[joeea]

Some people take it at 62 because they need it. I was going to wait until FRA of 66 because I was working part time but when I lost my job I took it at 65 because there wasn’t much difference with waiting a year.

And you needed it?
Why were you planning for FRA rather than 70? (Just curious)

 

[joeea]

Too many workers are unemployable by their 60s and just hanging on until they make it to 62.

With the economy the way it is now, it's hard to believe someone in their 60s is really unemployable.

In my locale, anyone in their 60s could walk down the street, turn left or right, and be offered a job on the spot.

 

[youbet]

That's all fine except for throwing in the whole bias about prudent investing and not being disciplined investors which has absolutely nothing to do with your situation. Right?

There was no bias. I was simply saying that my strategy to protect DW financially should not be engaged in if you were not a prudent and disciplined investor. I know folks (some very well) that in the same situation would have failed to receive the monthly SS payments and promptly invest them in a prudent manner (I chose the TSM) for the entire 8 years. If you don't trust yourself to do that, then I couldn't recommend the strategy.

Is it that hard to understand that someone else's life situation is legitimately different that yours?

 

[joeea]

Is it that hard to understand that someone else's life situation is legitimately different that yours?

Whoa. That's a pretty deep question on many levels.

Apparently the answer is clearly - yes. Otherwise the world wouldn't be in the shape it's in these days.