When To Take Social Security? Study takes a statistical approach.

[street]

Taking SS is another risk level event for each of us, just like each personal risk factor is for AA percentages we want to do as we age.

Here is the current average age of life expectancies in the US. So, 50% of us make these age and more and 50% of us fall short of those ages shown.

Both sexes: 76.4 years
Males: 73.5 years
Females: 79.3 years

 

[pb4uski]

^^^ You are looking at the wrong longevity numbers. Those are average longevity from birth. You need to look at average longevity for people who live to be 62.

The longevity of forum members would be better than below because they are more affluent and as a result get better medical care.

The average longevity for men and women in the United States who lived to age 62 is as follows:

Male: 77.78 years
Female: 83.55 years

This means that a 62-year-old man can expect to live an average of 15.78 more years, and a 62-year-old woman can expect to live an average of 21.55 more years.

 

[street]

Agree on the first part that you receive the same total benefits from claiming through 82. What you are missing is that because you'll make more money from 82 onwards means that you can prudently spend more from your savings from when you retire until you turn 82. It works out to be about 9.5% more annually.

Let say you retire at 62 with $1 million and SS of $35,000 a year at 62 or $62,000 at 70 and assume a 4% SWR. If you take at 62 you can spend $75,000 annually ($35,000 SS and 4% of $1,000,000). Alternatively, let's say you put 8 years of SS at 70 of $62,000 annually or $496,000 in a side fund to replace SS from 62 to 70, and apply 4% WR to the remaining $504,000 and withdraw $20,160 annually from savings. That and the $62,000 from the side fund for the first 8 years and from SS after that means that you can safely spend $82,160, an additional 9.5% annually.

WOW!
A lot of buts and ands in that scenario. Your scenario doesn't fit my life style and doesn't fit my numbers.

I think you missed the point for some it isn't about having more money at age early 80's. In my case I don't need to spend down my investments I have more growth than I ever could spend in 3 lives.

Taking SS, here is my point, there are so many other factors to look at than having tunnel vision on more SS at early 80's.

You might not live to age 82. So, what is your thought than and what are your numbers and thoughts with that scenario?

 

[statsman]

It was phased out. It only applies to people born before January 2,1954.

We're quickly closing in on the time where this option won't be available for anyone planning for SS. It will become pointless early next year to even mention this as "optimizing" SS since the option will no longer be on the table.

 

[street]

^^^ You are looking at the wrong longevity numbers. Those are average longevity from birth. You need to look at average longevity for people who live to be 62.

The longevity of forum members would be better than below because they are more affluent and as a result get better medical care.

Mine came from CDC of the US. Who is right is anyone's guess. You can be right I'm not here to persuade you or anyone to take SS at any age. My view and what fits me to have more in my pocket now and later in life works better when I took my SS.

Kinda like the person that has 25% in equities, and another has 100%. Who is right who is wrong? One fits one and one fits another.

 

[Time2]

Scenario: 4 year older spouse is waiting until 70 to collect.
Older spouse dies at 69yr 3 month.
Does the surviving spouse get to collect on the deceased spouses account with the 69yr 3 month benefit amount?



I.e, How is the benefit amount set for a lower earning surviving spouse (that will collect on the deceased's account) if neither have started SS benefits at the time of death?

 

[harley]

Mine came from CDC of the US. Who is right is anyone's guess. You can be right I'm not here to persuade you or anyone to take SS at any age. My view and what fits me to have more in my pocket now and later in life works better when I took my SS.

Kinda like the person that has 25% in equities, and another has 100%. Who is right who is wrong? One fits one and one fits another.

Not really. The fact that you're alive to make this point means the "from birth" numbers don't apply. Nobody should be basing their SS planning with the from birth numbers, as having lived long enough to even consider the options puts you in a different longevity class. All PB4 is saying is that when you do your planning (if you choose to), you should base your potential longevity starting from the age you are the day you do the calculations.

 

[street]

Other factors to consider. Cost of living increases in SS from 62 to 70 in SS. More interest earned without spending your investments in those 8 years. As we age in our 80's and 90's we spend less according to statics. More SS means more income at a later age and that isn't a good thing for some. Some people have different plan for LTC instead of using the larger SS for that expense. Way too many angles to look at other than a bigger check in early 80's.

So many personal things that should considered when to take SS other than more in our 80's.

 

[Montecfo]

The thread has lots of good info. But it is really pointless to try and define an optimizing strategy for all. We need to know expiration dates to do that.

Decisions to draw SS are often made based on conditions on the ground, rather than on optimization theory.

We plan to draw one at FRA. 2nd one: who knows? Need to do a little figuring.

 

[street]

Not really. The fact that you're alive to make this point means the "from birth" numbers don't apply. Nobody should be basing their SS planning with the from birth numbers, as having lived long enough to even consider the options puts you in a different longevity class. All PB4 is saying is that when you do your planning (if you choose to), you should base your potential longevity starting from the age you are the day you do the calculations.

Yes, I agree with that, and I know that. But you are still at odds of a 50% either way if those numbers are your numbers anyway.

 

[candidman]

It appears that when a person gets older, and wound up needing more medical care, they'll wound up making them spend all the extra savings they've accumulated by drawing SS late. Then these medical facilities wound up making a lot of people sale their houses, and other assets. Because of this, a lot of people use to put their assets in somebody else's name, so they could qualify for medicaid. But medicaid implemented the 5 year look-back period.

This is another reason why many people start drawing SS at 62. Why not take it early, if they're gonna come back, and take their house and their savings later anyway, at a time they'll more likely need that medical care. Looks like the system is designed to get theirs back anyway they can.

From the numbers I'm seeing, the money they'll save by drawing at 70, will be swallowed up in only a few years by the medical expensive they'll probably acquire as being a part of the elderly.

But even if a person stay perfectly healthy into their mid 80 or 90's, what is it that they could buy by that time, that they couldn't have enjoyed when they were 62, assuming they don't have an estate. Like I said earlier, the pie might be bigger by then, but you may not have the same taste buds.

 

[Time2]

So, the surviving spouse could wait until 70 and collect the full amount the deceased spouse would have got if they had survived to collect?

 

[PatrickA5]

The thread has lots of good info. But it is really pointless to try and define an optimizing strategy for all. We need to know expiration dates to do that.

Decisions to draw SS are often made based on conditions on the ground, rather than on optimization theory.

We plan to draw one at FRA. 2nd one: who knows? Need to do a little figuring.

+1 No need trying to "defend" or "promote" an opinion on when to take SS. Everybody is different and have different needs/wants.

For the vast majority of people, the net PV of SS payments is going to be within 5% or so regardless of when they take it. The long-lived outliers may be the exception, but they probably won't regret it much even if they didn't make the ultimate decision. Even my dad (who lived to 97) didn't have any regrets taking at 65 instead of 70. The average person on this forum's lifestyle isn't going to be affected regardless of when they take SS.

Having said that, it is kind of fun trying to figure out how to maximize all of our financial decisions. Kind of a hobby for some of us here.

 

[Midpack]

The thread has lots of good info. But it is really pointless to try and define an optimizing strategy for all. We need to know expiration dates to do that.

Decisions to draw SS are often made based on conditions on the ground, rather than on optimization theory.

We plan to draw one at FRA. 2nd one: who knows? Need to do a little figuring.

No one made such a claim.

 

[N02L84ER]

"Scenario: 4 year older spouse is waiting until 70 to collect.
Older spouse dies at 69yr 3 month.
Does the surviving spouse get to collect on the deceased spouses account with the 69yr 3 month benefit amount?
I.e, How is the benefit amount set for a lower earning surviving spouse (that will collect on the deceased's account) if neither have started SS benefits at the time of death?"
If the surviving spouse waits until their full retirement age FRA, then, yes, they can collect the amount the deceased spouse was entitled to at age 69yr 3 mo. Of course, if the surviving spouse is younger than their FRA, they should immediately start their own SS benefit and switch to the surviving spouse benefit upon reaching FRA.

 

[pb4uski]

Mine came from CDC of the US. Who is right is anyone's guess. You can be right I'm not here to persuade you or anyone to take SS at any age. My view and what fits me to have more in my pocket now and later in life works better when I took my SS.

Kinda like the person that has 25% in equities, and another has 100%. Who is right who is wrong? One fits one and one fits another.

In this case there is a right answer. It's nuts to use "longevity from birth" data in assessing SS longevity. Period. What is relevant is average longevity from age 62. Not a judgement call in this case.

 

[Lawrencewendall]

Screenshots I stumbled across that I took in 2021.

 

[Exchme]

Mine came from CDC of the US. Who is right is anyone's guess. ...

pb4uski is right, you are using the numbers wrong. It is called conditional probability.

If you are 62 and looking at the numbers it means you haven't died yet. For a population of 100,000 males at birth, 16,228 pass before age 62, you are not one of those unlucky ones. So given that you are one of the 83,772 still alive, the life expectancy at 62 (50% additional mortality) occurs when half of those have passed. That occurs between age 82 and 83. Each year that you stay alive always adds some to your remaining life expectancy, but each year adds less than one year and less than the year before.

The SS actuaries back in the 80's made the benefits as close to actuarially neutral as they could for a unisex table so that claim age "wouldn't matter". So waiting was a poor bet for men and a good one for women. Since then, life expectancies have extended so now waiting is a reasonably fair bet for single men and a really good bet for single women. For married couples, having the higher earner wait becomes a "last to die" bet so is very much weighted in favor of waiting.

Feel free to make your own decisions about your life, but math is math and I have always found that pb4uski knows his math!

 

[Koolau]

Heh, heh, right or wrong, it's now moot for me as I've already taken it at 70. YMMV

 

[latexman]

There is a The Motley Fool article on Bing news (sorry, could not get a direct url) on the same United Income study that is a little late to the show, but worth the read, IMO. Like most MF articles it is concise and to the point.

One fact that caught my attention was, “just 4% of the 20,000 claims that were extrapolated proved optimal”. That’s terrible! That speaks to how badly most folks plan for retirement. It’s saying most folks don’t plan at all. They live for the moment and are almost always in “survival mode”, and are not really in control of their finances and lives.

That is scary! It makes me glad I found ER!

 

[Time2]

There is a The Motley Fool article on Bing news (sorry, could not get a direct url) on the same United Income study that is a little late to the show, but worth the read, IMO. Like most MF articles it is concise and to the point.

One fact that caught my attention was, “just 4% of the 20,000 claims that were extrapolated proved optimal”. That’s terrible! That speaks to how badly most folks plan for retirement. It’s saying most folks don’t plan at all. They live for the moment and are almost always in “survival mode”, and are not really in control of their finances and lives.

That is scary! It makes me glad I found ER!

Using this search, I found over 10 write ups about the "United Income Study" Forbes, CBS, CNBC, UCLA, Yahoo, USA Today and more. Didn't see the original article :-/


https://www.google.com/search?client=firefox-b-1dq=United+Income+study#ip=1

 

[Surewhitey]

So my driver has been to try to keep DW in a good place, including after I'm just dust in the wind..... dude!

Love the reference...

 

[bobandsherry]

The average longevity for men and women in the United States who lived to age 62 is as follows:

Male: 77.78 years

Female: 83.55 years

This means that a 62-year-old man can expect to live an average of 15.78 more years, and a 62-year-old woman can expect to live an average of 21.55 more years.

You are looking at the wrong longevity numbers. Those are average longevity from birth. You need to look at average longevity for people who live to be 62.

So that really mean half can expect to live shorter and half can expect to live longer? So half never make it to the breakeven point of 82. Just something to consider as one considers when to start SS.

The longevity of forum members would be better than below because they are more affluent and as a result get better medical care.

That's a pretty bold and I'd say perhaps invalid statement. While not a forum member, or maybe he was, but Jimmy Buffet was very affluent with a NW of over a BILLION $$$, yet he passed unfortunately at 76.

Other celebrities who passed and had significant bankroll, thereby most being more affluent than those on this forum include Raquel Welch (82), Paul Reubens (71).

I mention the celebrities as they are well known, but personally had friends in the past couple years who passed at 65 (months after retiring), 75 and 77. They each had more substantial bankroll than me. But money may help, but when it's your time, it's your time and money can't stop death. So "average" just means that, there are still a large number of who will fall well short of that golden age.

 

[qwerty3656]

See attached file on Life expectancy

Edit: So, for example, an average health married couple has a 50% chance of 1 party making to 90 (72% chance for a healthy couple).

 

[candidman]

I don't think most people go by CDC statistics, or any other statistics, when thinking about the average life span. They usually go by how long people close to them are living, for example family and friends, especially the ones who are closest to their age group.

I'm not saying this is the correct way, but it's something you can't ignore.