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Old 01-07-2018, 11:57 AM   #21
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Originally Posted by Perryinva View Post
If you can afford to delay filing and are married, it is by far best annuity money can buy. Younger people seem to think that death is always around the corner at age 70. Once you hit 60, 20-25 more years, if you are healthy, seem right around the corner. If you are always going to be in the 12% bracket and lower, and never pay fed or state tax on your SS, or if it is a small amount, like $1k/mo, then take it at 62. Why not? If you have health issues and realistically think you will not live to age 80 or 90, then take it at 62 and spend it. If you cannot stand the thought of actually using the money you have saved and invested for retirement in order to assure you a higher no sequence risk income, and the amount left to your heirs must be at the max always, then take it at 62.

But when in the 22% and up bracket, especially if you have a pension, and know that you will always pay tax on “only” 85% of your SS, and you have a veryblarge percentage saved in tax deferred, & actually want to USE your investments to enjoy life more plus make sure your less investment saavy surviving spouse has a maximum income in case of your death, (but you expect to live past 85 anyway, ) then it makes more sense to delay filing. I’ve run Firecalc, RIP and others as well as my own calculations and delaying allows me to have roughly a $4-5k/yr net higher income from day one at age 62, compared to taking it at age 62. But in my case, SS would go from a bit more than $25k/yr, to around $42-43k/yr at 69-70. The tax money I save from age 70 and up, from the lower RMDs and the higher income at a lower taxed amount, means we are not at all dependent on my investments for living money. Between both our pensions and SS alone we are above $100k. If my investments drop from 1.3M to 1M in order to delay, with $500k of it Roth and after tax, then having RMDs on only $500k is a cake walk tax wise. And I can invest with more confidence since I can ride out anything without taking a lifestyle hit.

Break even means nothing. I am surprised so many here on this forum even bring that up. Breaking even is betting on yourself to die early. Once you are dead, it matters not. If you live, it matters. I also am surprised so many here say things like “I want to keep my savings, because what it they cut SS, I would be at the short end of the stick”. Seriously? Does anyone really think the chances of losing their SS is greater than lising a major part if their savings in the stock market? How absurd. If you are conservatively invested in CDs and such, so you can’t lose it, then it is easy to show that delaying allows a net higher income immediately because money is fungible, and there is no sequence of risk. It is amusing that so many people say “it is actuarially neutral, so it doesn’t if you take it early”. If it is actuarially neutral, then why not take it later ? It makes no difference, right?

The fact is, SS is actuarially neutral for the entire popluous. Are YOU the same demographic as the average person? Do you have average health, average weight, average education, living conditions etc etc? Or below average so you don't expect to make it to 82? I doubt it on here. I know I am blessed to be born the way I was, and how I have faired over the last 60 years. I am a prime candidate to live to 90, especially considering past generations.

It all depends on many many factors.
This is a very thoughtful answer. It talks about things I have not considered like tax brackets, RMD, taxable SS, net cash flow, based on total income (taxable and non-taxable) . . . There was another answer that discussed Medicare part B. Is there a good calculator/web site that considers all those factors? Or, do you just have to get on something like RIP and make a lot of changes and iterations? I've changed my SS numbers on RIP, but I'm not sure it takes all those other factors into consideration.
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Old 01-07-2018, 12:12 PM   #22
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My break even point is about 79 years using absolute dollars. For me, each one dollar delayed from SS is one dollar I have to withdraw from my IRA. Assuming a modest return, the break even point is extended to the early to mid 80s. If the government makes any changes, the break even point is likely to be pushed out even farther. I'm more than willing to take the risk and take SS at 62.

On the other hand, If I was still working delaying SS would be the easy choice.
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Old 01-07-2018, 12:13 PM   #23
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OP-The deal with Medicare is a hold harmless provision. This area of law isn't my area of expertise. It was explained to me by a SS claims rep. If DW is looking for something to tip her more in the draw/don't draw its a consideration. This is a link that explains it better than the Code of Federal Regulations.
One problem with delayed Social Security: higher Medicare costs | Business | stltoday.com
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Old 01-07-2018, 02:33 PM   #24
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Social Security and Medicare are separate programs.
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Old 01-07-2018, 03:00 PM   #25
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Quote:
Originally Posted by Perryinva View Post
If you can afford to delay filing and are married, it is by far best annuity money can buy. Younger people seem to think that death is always around the corner at age 70. Once you hit 60, 20-25 more years, if you are healthy, seem right around the corner. If you are always going to be in the 12% bracket and lower, and never pay fed or state tax on your SS, or if it is a small amount, like $1k/mo, then take it at 62. Why not? If you have health issues and realistically think you will not live to age 80 or 90, then take it at 62 and spend it. If you cannot stand the thought of actually using the money you have saved and invested for retirement in order to assure you a higher no sequence risk income, and the amount left to your heirs must be at the max always, then take it at 62.

But when in the 22% and up bracket, especially if you have a pension, and know that you will always pay tax on “only” 85% of your SS, and you have a veryblarge percentage saved in tax deferred, & actually want to USE your investments to enjoy life more plus make sure your less investment saavy surviving spouse has a maximum income in case of your death, (but you expect to live past 85 anyway, ) then it makes more sense to delay filing. I’ve run Firecalc, RIP and others as well as my own calculations and delaying allows me to have roughly a $4-5k/yr net higher income from day one at age 62, compared to taking it at age 62. But in my case, SS would go from a bit more than $25k/yr, to around $42-43k/yr at 69-70. The tax money I save from age 70 and up, from the lower RMDs and the higher income at a lower taxed amount, means we are not at all dependent on my investments for living money. Between both our pensions and SS alone we are above $100k. If my investments drop from 1.3M to 1M in order to delay, with $500k of it Roth and after tax, then having RMDs on only $500k is a cake walk tax wise. And I can invest with more confidence since I can ride out anything without taking a lifestyle hit.

Break even means nothing. I am surprised so many here on this forum even bring that up. Breaking even is betting on yourself to die early. Once you are dead, it matters not. If you live, it matters. I also am surprised so many here say things like “I want to keep my savings, because what it they cut SS, I would be at the short end of the stick”. Seriously? Does anyone really think the chances of losing their SS is greater than lising a major part if their savings in the stock market? How absurd. If you are conservatively invested in CDs and such, so you can’t lose it, then it is easy to show that delaying allows a net higher income immediately because money is fungible, and there is no sequence of risk. It is amusing that so many people say “it is actuarially neutral, so it doesn’t if you take it early”. If it is actuarially neutral, then why not take it later ? It makes no difference, right?

The fact is, SS is actuarially neutral for the entire popluous. Are YOU the same demographic as the average person? Do you have average health, average weight, average education, living conditions etc etc? Or below average so you don't expect to make it to 82? I doubt it on here. I know I am blessed to be born the way I was, and how I have faired over the last 60 years. I am a prime candidate to live to 90, especially considering past generations.

It all depends on many many factors.


This may be the best post ever on this topic.
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Old 01-07-2018, 03:23 PM   #26
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Thanks for posting all these insightful comments regarding SS again. I need to remember it is an individual decision.

We are leaning on starting SS at 62, but will evaluate again in 1 1/2 years when DH will be eligible to start SS at 62.
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Old 01-07-2018, 04:53 PM   #27
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I have always greatly appreciated the threads on when to take SS.

I will probably take SS no later than FRA @ 66 (tad over 2 years) but may pull the trigger at 65.

In Michigan SS is not taxed.

The most important reason I will not wait till 70 is that my spouse cannot collect a spousal benefit due to the WEP on Civil Service pensions.

If I die first, he cannot get a survivor benefit. If he dies first, my SS and survivor $$ from Civil Service, will be more than what he gets with just Civil Service and not being able to get a survivor benefit on my SS.

Don't really know if my choice is best, but it seems reasonable.
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Old 01-07-2018, 06:06 PM   #28
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DH whose health is not as good as mine (and does not come from a long lived family like mine) filed at 62. I am planning to wait until age 70 to claim my own SS if my health continues to be good (I am at age 66 now). That seemed the best deal for us. I don't worry about it too much.
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Old 01-07-2018, 07:20 PM   #29
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Thanks for the compliment. Too many spelling mistakes from answering on an iphone! Lots of good solid reasons given here. Much more thought out than many responses on other retirement sites. A few other points are going from married to single, and vice versa. Are there heirs worth the inheritance (take care of you in old age vs hoping you die soon for the $$$). If you unfortunately go from married to single, and have large RMDs, the tax increase is brutal. If all your retirement investments are in Roths, tax is not a consideration. Those two extremes alone can easily change what the “ best” answer is. There is tremendous emotional pressure to “get whats yours” as soon as possible, especially if you’ve paid in the maximum for 35- 40 years. I fully understand that alone as being a valid reason. It is just as valid as the people that simply can’t spend what their portfolio clearly shows as available and have no heirs to leave it to, because they don’t want to. Or working when there is absolutely no financial need. Emotional reasons ARE valid. If the resources are available then it is not just a financial reason to consider. I KNOW me enough that I doubt I could make it delaying until 70 regardless of the math. 69 may be my limit. How can I not claim a monthly benefit of $3333/mo for a year in order to see a $240/mo increase after that year? How can a $2880/yr annuity be worth a $40k cost at age 70?? The emotional pressure would cripple me....LOL.
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Old 01-07-2018, 07:37 PM   #30
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DW is taking her SS at 62. First direct deposit is due to arrive in a few days. She worked for the local school district and has a teacher pension that will start at 65. But, once she starts receiving her teacher pension, SS will be significantly reduced due to WEP. Taking at 62 allows her to receive an unreduced benefit for three years.
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Old 01-07-2018, 09:41 PM   #31
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I took it at 62 because I was not aware that the sophisticated answer is to delay until 70.
The usual uninformed reasons..........break even at 83 or so; if I lost the bet and lived longer, at least I got the longer life. If I "won" the bet and lived shorter, at least I got some bucks back. If I had bet the other way and lost.......I could have been a double loser.....no bucks and no life.

No regrets tho...........one unexpected benefit. Since we have very meager pensions, when the 2008 recession hit, it was of great comfort to have SS coming in every month to cover almost all the costs...........and not having to worry about how long or how deep the recession would be. Priceless! As others have mentioned you often don't really know about longevity. You can be fine and then in one day you can be diagnosed w/ some very serious medical condition. Your decision, make yourself happy .......don't worry about others.
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Old 01-07-2018, 10:24 PM   #32
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For us it was a no-brainer for DH to take at 62. We had/have minor age children, and as dependents of a SSer, they get a small benefit themselves till 18. This made it NOT actuarially neutral for us. (I learned about this benefit on er.org. Thanks!).

I will hopefully wait till 70, spending down some of my IRA money in the meantime. But this is not set in stone... Like other aspects of our retirement plan (WR, etc) I plan to re-evaluate periodically. If we have an extended downturn I might take it earlier. If my health goes south, I might take it earlier. If the hold harmless provision for medicare part B goes away - I might take it at 65.... No need to decide now, when I'm only 56.
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Old 01-07-2018, 10:42 PM   #33
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Originally Posted by jimandthom View Post

The most important reason I will not wait till 70 is that my spouse cannot collect a spousal benefit due to the WEP on Civil Service pensions.


I think you mean GPO, not WEP.
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Old 01-07-2018, 10:53 PM   #34
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85% of our SS would mean no low tax-cost Roth conversions and much higher RMDs later so we're waiting until FRA or 70. Also, since DW was a SAHM we have joint mortality to consider.
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Old 01-08-2018, 12:31 AM   #35
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I used to think as a couple we would both wait until 70 to maximize the return.
However, running a calculator shows that since our lifetime earnings for SS are wide apart, it is better to have the high income earner wait until 70, but have the low earner take it much earlier, and then switch to 1/2 of spousal amount (as it's higher) later on.

We will definitely be buying at least 2 of those software that figure out all the possibilities, once we get to 62.
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Old 01-08-2018, 12:55 AM   #36
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The reason that I am taking social security at the age of 62, It is due to the government pension offset. Because my wife has a government's pension, any survivor benefit she might get would be eliminated to the GPO.
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Old 01-08-2018, 01:37 AM   #37
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We took pensions at 55 and plan to take SS at 62 and together those will cover the bulk of our baseline expenses. Our factors are: no need / concerns for longevity insurance; long pay back period to wait; income stream diversification; Medicare hold harmless provision; prefer to maximize the portfolio, not SS, since the portfolio is money we have more control over; more money for the estate when are kids are younger and less established if we pass away early; and concerns over possible future cuts / asset testing / taxes on SS.

If we do decide for some reason we need longevity insurance, another option for us is to buy a private policy at age 80 or so as the prices are not too expensive at that age.
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Old 01-08-2018, 08:37 AM   #38
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DW is taking her SS at 62. First direct deposit is due to arrive in a few days. She worked for the local school district and has a teacher pension that will start at 65. But, once she starts receiving her teacher pension, SS will be significantly reduced due to WEP. Taking at 62 allows her to receive an unreduced benefit for three years.
You mean "unreduced due to WEP". Certainly claiming at 62 means her benefit is reduced by 25% or so from her full benefit and much more from her benefit at 70.

Hopefully, those 3 years of WEP-free make up for the permanent reduction.
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Old 01-08-2018, 08:50 AM   #39
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[QUOTE=youbet;1992952]I think you mean GPO, not WEP.[/QUOTE

Thanks----- always get them confused.

Whether it was a good or bad idea, in the late 80;s we elected for him to stay with CSRS. At that time and a guess for the future, we would not have been allowed to be married. Where is the crystal ball when you need one?
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Old 01-08-2018, 11:07 AM   #40
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We took pensions at 55 and plan to take SS at 62 and together those will cover the bulk of our baseline expenses. Our factors are: no need / concerns for longevity insurance; long pay back period to wait; income stream diversification; Medicare hold harmless provision; prefer to maximize the portfolio, not SS, since the portfolio is money we have more control over; more money for the estate when are kids are younger and less established if we pass away early; and concerns over possible future cuts / asset testing / taxes on SS.

If we do decide for some reason we need longevity insurance, another option for us is to buy a private policy at age 80 or so as the prices are not too expensive at that age.
That only has effect at age 65, so not a reason to take SS at 62.
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