Collecting Social Security benefits at age 62

[ChrisC]

The same train of thought can also work the other way.

Knowing you have a higher inflation-adjusted lifetime SS benefit coming your way in later years allows some folks to spend more money from their portfolio in their younger years.

This is Cut-Throat's thesis that he espoused in a well-known thread on the Bogelheads forum: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=102609&hilit=social+security.

I might add that having greater SS benefits as we age into medical difficulties could mean better quality of life and medical care for those who need greater financial support in their golden years.

I believe one size rarely works for everyone; there are nuances depending on individual circumstance. Nonetheless, I do think one should have a good reason to take it early -- not merely default to break-even analysis or that early enjoyment is better than later enjoyment. As for me, I took it early at 63.9 (and my wife is taking her SS later at 70 and now taking spousal benefits at 66/FRA with a restricted application under the grandfather provisions of the most recent changes last year. I'm affected by both WEP and GPO.

 

[audreyh1]

Social Security and Medicare are separate programs.

But social security income can affect your Medicare premiums and Medicare premiums are taken out of SS once you start drawing it. You also may be held harmless by Medicare premiums being drawn from SS.

 

[Independent]

Just curious - If I (the higher income earner) decide to delay to 70 and I die before 70, does DW receive my FRA amount?

I didn't find anything really explicit on the SS site. This article from Kiplinger fits my understanding:
https://www.kiplinger.com/article/r...02-social-security-for-surviving-spouses.html

If I plan to defer to 70, but die at 68 without starting benefits, my wife can claim a survivor's benefit equal to what I would have gotten if I had started at 68.

If your spouse dies after full retirement age but waited to sign up for Social Security to earn delayed-retirement credits, your survivor payouts are based on the amount your spouse would have received at the time of death.

 

[pb4uski]

Improved financial awareness is always good news IMO. Why would it be otherwise?
All the bases? My point is that, for many people the choice to begin SS at age 62 is not the result of deliberate informed choice with awareness of the long term consequences. We debate this here and attribute deliberation to their choice, and I think it is not so.

In other words, most people who delay SS to a later age are clear why they do that. Not so for people who choose to begin benefits at age 62.

That was my entire point earlier... just because a large majority of people take SS at 62 let's not be fooled into thinking that lends merit to the notion that it is wise to take it at 62 or even a deliberate choice.... while it may be in some cases in most it is because their financial situation makes it imperative that they start SS at 62.

 

[pb4uski]

The plain fact for us is that we can certainly enjoy the extra money early SS could provide while still young enough to enjoy it. When we get older, our expenses won't be nearly so much. Why save if you aren't going to be able to enjoy the benefits of saving anyways? A bigger bottom line when our life is over? Just because one SS option allows for a larger lifetime worth doesn't mean that it was accessable when it would have done the most benefit.

Money earlier in life has more benefit than money later in life.

The same train of thought can also work the other way.

Knowing you have a higher inflation-adjusted lifetime SS benefit coming your way in later years allows some folks to spend more money from their portfolio in younger years.

Bravo!! This is one very pertinent point of view.

I'm with joeea on this... see post #63 (and #126) in this thread... taking at 62 if you have a choice not to actually reduces what you have available to safely spend... it doesn't increase it.

 

[Floridatennisplayer]

Always a polarizing subject!!!! Seems that those who think it is wise to wait are irritated that people who took it at 62 are leaving money on the table. And those who did take it at 62 think the waiters are foolish because there is always the risk you could croak and not draw many checks.

To me, I think it’s a persons risk tolerance. Those with a low risk tolerance think it best to take it when you can. Those with a higher risk tolerance think they will outlive the the odds and win. Both cases are funny to me. Odds are, it’s a wash. And the government knows it. Actuarial tables don’t lie. Doesn’t really matter when you take it, you end up with about the same benefit.

I polled a bunch of people at the pool in November. The majority seemed to have taken it either early or right at FRA. Main reason....Said they were in good health, have plenty of money, so They took it early and enjoyed the extra money while They were healthy and they enjoyed doing it. Some of these guys are now in their late 70’s and starting to have different health issues pop up. Hip replacements, pace makers, knee replacements etc. said all I do now is just sit around and wait for things to heal and recover. What would I need that extra money now for? To watch tv?

I’ll be taking mine at 65 just to match up timing with Medicare. I’m 63 in March. Plan to work one more year. Draw on my cash at 64 for a year, show no income get a decent healthcare rate and draw SS at 65.

 

[bobandsherry]

To me, I think it’s a persons risk tolerance. Those with a low risk tolerance think it best to take it when you can. Those with a higher risk tolerance think they will outlive the the odds and win. Both cases are funny to me. Odds are, it’s a wash. And the government knows it. Actuarial tables don’t lie. Doesn’t really matter when you take it, you end up with about the same benefit.

Bingo - we have a winner!

 

[skipro33]

I'm with joeea on this... see post #63 (and #126) in this thread... taking at 62 if you have a choice not to actually reduces what you have available to safely spend... it doesn't increase it.

You miss my point;
It's not about how much money I have available to safely spend, it's the quality of life I'll be able to enjoy.
Isn't that the whole point of retiring early? To build up a source of income to safely see you to the end and to enjoy the prime of life at a higher quality with the spoils? When better to enjoy that quality of life than when you are still able? When is enough enough and it's time to enjoy the fruits of your labors?

I've spent most of my adult life LBYM so that one day I wouldn't have to. I want to be 85, sitting in a rocking chair on the front porch, not regretting what I didn't do, but recalling all I was able to do. One day we will wake up and there will be no more time to do the things we want to do. Do them now.

 

[PoorOldCountryBoy]

My DW is contemplating filing for Social Security benefits at age 62.

Has anyone started collecting Social Security early at age 62? If so, do you regret it or do you think it was a good move?

A bird in hand is worth two in the bush. Collect it and reinvest it until 70. The major assumption here is that you have the self discipline to do this.

If you and your wife are spenders, this will likely not work well for you, but if you are spenders, you probably NEED the SS to break even. (No judgement intended here, just being brutally honest).

 

[Perryinva]

You miss my point;
It's not about how much money I have available to safely spend, it's the quality of life I'll be able to enjoy.
Isn't that the whole point of retiring early? To build up a source of income to safely see you to the end and to enjoy the prime of life at a higher quality with the spoils? When better to enjoy that quality of life than when you are still able? .....

I personally don’t care when anyone takes it. Really. My posts are all about the reasons or logic. Like pb4uski, I dislike explanations that do not follow any logic. How does this quoted post make sense? Pb4 points out that the posts that show exactly the scenarios where you have more income from day one at age 62, (post 63, which does not even address the tax benefit) and for the remainder of your time by delayed filing, not by working longer. The assumption being you can actually afford to delay filing. How does more income not improve the quality of life? And then you post that he missed the point. If my estate drops from 1.3M to 1M, at age 70, or 1M to .75M per the example, but I safely have more net income from day one at 62, how is that not a better quality of life. One retires at the exact same age. Delaying does not mean having to work longer, as implied above. It CAN mean more lower taxed income for a net gain, depending on your tax situation. I’m still waiting to see one realistic mathematically illustrated reason, based on net income, MFJ, when in the 25% and above bracket in retirement and living in a state that is SS tax free, but not deferred retirement account free, where filing at 62 provides more income for life with low risk. Maybe Skipro33 missed his point not pb4uski. Hmmm, both have skiing handles...

BTW, it is not lost on me that the dollar amounts that may be gained either way for people that are FIRE are not deal makers or breakers in any way, shape or form. If 4-5k/yr difference means you can or cannot retire, then there are other issues at stake. Wild changes in inflation alone can drastically alter the pro or con. Hence my first sentence. But I do care about the survivor difference which in my case is around $18.k/yr. if I was single, different mindset for sure.

 

[btdt22]

I use to debate/argue this with my best friend of fifty years. He took his SS at 62 while I chose to wait until 70 for increased benefits for my wife (she is six years younger and a housewife). My best friend recently died at age 69 so I guess he won the debate, but then again his wife is scraping by and now receiving less than half of what my wife will in SS and pensions. Still a tough call and no clear answers until both of us die.

 

[Perryinva]

If his wife is struggling, then he lost, but she pays the price. A big point, IMHO.

 

[Winemaker]

Talking about age to take SS at 62, FRA, or 70, is like talking about which pickup is better. GM, Ford, or Dodge.
Or red, white or rose'.
Clearly, 70, GM and red!

 

[Dawg52]

Always a polarizing subject!!!! Seems that those who think it is wise to wait are irritated that people who took it at 62 are leaving money on the table. And those who did take it at 62 think the waiters are foolish because there is always the risk you could croak and not draw many checks.

Might be a little more to it but that's about it.

 

[ShokWaveRider]

Talking about age to take SS at 62, FRA, or 70, is like talking about which pickup is better. GM, Ford, or Dodge.

Ha Ha.... That is easy, it is a well known fact that any Japanese or German Car van or truck is way better than Any US Made one....

 

[Independent]

Actually, it's just the opposite.

On average, folks claiming early leave more money in the system for the rest of us (mostly due to the out of date actuarial tables used these days in the SS calculations).

Odds are, it’s a wash. And the government knows it. Actuarial tables don’t lie. Doesn’t really matter when you take it, you end up with about the same benefit.

You two should talk.

 

[Floridatennisplayer]

Lol I say German cars, Cabernet, 65

 

[REWahoo]

I'll play: Colonel Mustard, library, candlestick

 

[golfersailor]

All I can say is I took my SS early because I retired in 2009 when the market was down down. Now almost 8 years later we are sitting on a net worth that has grown 80%. I did not have a lot of money in my 401k but did have a good pension. I almost died in 2015 from a heart attack so i consider myself very blessed in many ways. Taking SS early or late is a gamble sometimes you win and sometimes you lose. i can safety say I won. Just my 2 cents worth.

 

[pb4uski]

I concede that the differences are not cataclysmic. Below is a table of the differences in our cases... I was a high earner and DW was a SAHM.. as a result, her FRA benefit is about 28% of mine. She is about 9 months older (cougar alert! ).

The percentages are based on the present value of our lifetime retirement benefits from SSAnalyze using expected ages of 91 for me and 93 for DW from the longevity calculator linked to SSAnalyze.

For discount rates, I used the 2% (SSAnalyze's suggested discount rate) and 6% (my expected aggregate investment earnings rate based on our 60/35/5 AA). I added a 65/65 scenario because that is the Medicare age so the hold harmless might be a factor.

DW/me	2%	6%
62/62	87%	94%
65/65	95%	98%
FRA/FRA	100%	100%
FRA/70	107%	101%

While we are on the fence between FRA/70 and FRA/FRA, given the slight difference in PVs I may lean towards FRA/FRA just to keep this easy and simple and to get the benefit of the hold harmless for 4 years.

 

[golfnut]

I concede that the differences are not cataclysmic. Below is a table of the differences in our cases... I was a high earner and DW was a SAHM.. as a result, her FRA benefit is about 28% of mine. She is about 9 months older (cougar alert! ).

The percentages are based on the present value of our lifetime retirement benefits from SSAnalyze using expected ages of 91 for me and 93 for DW from the longevity calculator linked to SSAnalyze.

For discount rates, I used the 2% (SSAnalyze's suggested discount rate) and 6% (my expected aggregate investment earnings rate based on our 60/35/5 AA). I added a 65/65 scenario because that is the Medicare age so the hold harmless might be a factor.

DW/me 2% 6%

62/62 87% 94%

65/65 95% 98%

FRA/FRA 100% 100%

FRA/70 107% 101%

While we are on the fence between FRA/70 and FRA/FRA, given the slight difference in PVs I may lean towards FRA/FRA just to keep this easy and simple and to get the benefit of the hold harmless for 4 years.

I thought, in your case, your wife would get 50% of your fra benefit if both of waited til fra to collect.

 

[pb4uski]

She does and that is what is included in the analysis... I said her FRA is 28% of mine... so what she will collect and is included in the cash flows is her FRA benefit from when she files until I file and then her spousal benefit once I file.

In all cases where we file at the same age that means that she collects based on her FRA for 9 months since she is 9 months older than me (our FRAs are the same)... for the FRA/70 alternative she collects her FRA benefit for [-]4[/-]3 years and 7 months before it steps up to half of my FRA benefit. I think that is part of why the PVs of the FRA/FRA and FRA/70 alternatives are so close.

Edited: to change 4 years and 7 months to 3 years and 7 months.. math is hard!

 

[golfnut]

She does and that is what is included in the analysis... I said her FRA is 28% of mine... so what she will collect and is included in the cash flows is her FRA benefit from when she files until I file and then her spousal benefit once I file.

In all cases where we file at the same age that means that she collects based on her FRA for 9 months since she is 9 months older than me (our FRAs are the same)... for the FRA/70 alternative she collects her FRA benefit for 4 years and 7 months before it steps up to half of my FRA benefit. I think that is part of why the PVs of the FRA/FRA and FRA/70 alternatives are so close.

Thanks for the explanation. I have to admit all the ins and outs of ss causes brain freezes.

 

[Floridatennisplayer]

I concede that the differences are not cataclysmic. Below is a table of the differences in our cases... I was a high earner and DW was a SAHM.. as a result, her FRA benefit is about 28% of mine. She is about 9 months older (cougar alert! ).

The percentages are based on the present value of our lifetime retirement benefits from SSAnalyze using expected ages of 91 for me and 93 for DW from the longevity calculator linked to SSAnalyze.

For discount rates, I used the 2% (SSAnalyze's suggested discount rate) and 6% (my expected aggregate investment earnings rate based on our 60/35/5 AA). I added a 65/65 scenario because that is the Medicare age so the hold harmless might be a factor.

DW/me	2%	6%
62/62	87%	94%
65/65	95%	98%
FRA/FRA	100%	100%
FRA/70	107%	101%

While we are on the fence between FRA/70 and FRA/FRA, given the slight difference in PVs I may lean towards FRA/FRA just to keep this easy and simple and to get the benefit of the hold harmless for 4 years.

And I would expect the gap to even be much less with a more realistic (according to the National average age of death) of let’s say 81-83. Or even 83-85

 

[pb4uski]

Actually, the longevity calculator indicates that DW and I have a 75% chance of living to 86/83 and our estimated life expectancy is 94/91 (which I suspect means a 50% chance of living to those ages).

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