Collecting Social Security benefits at age 62

[FANOFJESUS]

Early SS was an important part of my semi-retirement. No regrets. Would rather have that income now, rather than more later. (I do not have a pension nor millions to retire on, but live comfortably on modest investments, PT work, SS and life in a low cost of living area).

IMO, there is most likely a 50/50 chance of dying before the break even point (in mid-late 70's), so, why not?

I heard the break even point is in the early eighties. I don't know if this is true.

 

[Perryinva]

We took pensions at 55 and plan to take 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.

Where did you get that idea? Both LTC and Life Insurance are much higher or unobtainable at age 80! Otherwise everyone would wait intil they might need it to buy it!

 

[ShokWaveRider]

I am not eligible for FRA till I am 66 but SERIOUSLY considering taking SS at 65. If only for the Hold Harmless provision. My longevity based on family history and current health issues is not really conducive of me living into my 90's.

 

[daylatedollarshort]

Where did you get that idea? Both LTC and Life Insurance are much higher or unobtainable at age 80! Otherwise everyone would wait intil they might need it to buy it!

I was referring to a private annuity:

https://www.immediateannuities.com/

 

[haha]

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.

After you have been here for while, you may discover that this is only one of many head-scratchers that you will encounter.

Ha

 

[golfnut]

Very interesting thread here. Turned 62 last year and still not collecting ss. Got some bad news about my best friend who is 6 months younger than me - found out he has stage 4 lung cancer. He never smoked and worked out all the time and both his parents lived well into their 90s.

Before he was diagnosed, we discussed when we would take ss and he was in the 70 yr old camp. Me-always figured anywhere from 62 to fra. since I was a smoker, did not work out much and my parents lived to early mid 80s.

Guess what I am sayin' here is - life can throw a mean curve ball at you. Pray for my buddy!

 

[Sunset]

I assumed most people here know they can't qualify for Medicare at 62.

You are right folks should know that they cannot qualify for Medicare at age 62.
Just like they should know they cannot qualify for hold harmless at age 62.
Nor at age 63.
Nor at age 64.

 

[Sunset]

Very interesting thread here. Turned 62 last year and still not collecting ss. Got some bad news about my best friend who is 6 months younger than me - found out he has stage 4 lung cancer. He never smoked and worked out all the time and both his parents lived well into their 90s.

Before he was diagnosed, we discussed when we would take ss and he was in the 70 yr old camp. Me-always figured anywhere from 62 to fra. since I was a smoker, did not work out much and my parents lived to early mid 80s.

Guess what I am sayin' here is - life can throw a mean curve ball at you. Pray for my buddy!

Wow, did you two hang out together a lot ?

 

[golfnut]

We have been friends since we were 9 yrs. old. Same grammar school, roomies in college. both were cabbies, conductors and bus drivers for the cta.


He is my son's godfather and I was his best man.

 

[Eagle43]

I took it at 62, since my father passed at 67 and never got 36 checks. I've received 12 years of SS checks. I just looked at my R M D and the IRS projects me for 22.4 more years, IIRC. I hope they're right.

 

[daylatedollarshort]

You are right folks should know that they cannot qualify for Medicare at age 62.
Just like they should know they cannot qualify for hold harmless at age 62.
Nor at age 63.
Nor at age 64.

I didn't post it was the qualifying age. You read that into it. If I write about the various reasons I am leaving Tuesday to get to a concert in a distant city on Saturday, it doesn't mean I could not have waited until Saturday morning, especially if I am talking to friends who all know when the concert is.

 

[Perryinva]

I heard the break even point is in the early eighties. I don't know if this is true.

The break even time period depends on your SS amount, marital status and tax bracket. But it normally is around 81-82. . However, break even is not a financial reason to take it early or delay. That is an emotional response to a gut feel, typically incorrectly “supported” by a non related calculation.

In order for the “break even” date for income to be a valid reason, one would BOTH HAVE to die before that date AND spend the SS at a rate that is comensurate with dying before the break even. If you are spending at a rate that is safe in case you live past break even, then if you can afford to delay, you would have more to spend from day one because your income is guaranteed. It would be no different hypothetically than choosing an SWR of 8%, because you know you have a guaranteed ROI of 12%. With no risk or sequence of risk, then a higher income can always be assumed. So financially, break even is not a reason.

However, not wanting your investments to be reduced while delaying, in case you die before the investments recover and surpass where they would have been, (like daylatedlarshort mentioned) is a prefectly valid reason. He does not want to assume a possible risk, for the gained income. It is weighing an emotional decision against a financial risk and is perfectly understandable.

 

[Chuckanut]

Speaking of breaking even, there is this analysis offered by another contributor:


http://www.early-retirement.org/for...off-maximize-my-ss-com-77660.html#post1604411

OK, I quoted the entire thing so people can see the math. Keep in mind this is for people who don't care about leaving an estate. Obviously, estate size is one of the many factors that go into deciding when to take SS.

[FONT=&quot]Maximize SS how much you get to spend[/FONT]​

[FONT=&quot]Here is a pretty simple calculation for those that wish to spend more money in retirement and do not care about leaving an estate. For those that have a Big enough Portfolio and can afford to wait until 70 to take SS, you'll have more to spend every year of retirement.

Let's Say you retire this year at age 62 with the $1 Million Portfolio and decide to take a 4% SWR. You get Social Security of $19,476 per year at age 62 and delaying to age 70 would get you $34,092 per year. Let's assume no inflation for ease of calculations.

Scenario age 62. Your SWR is $40K per year and Social Security of $19,476 gets you a Spending total of $59,476 for each year of your retirement period.

Scenario age 70. You stash 8 years of $34,092 from your portfolio into a savings account for a total of $272,736. Your portfolio is now down to $727,264. Your 4% SWR is now $29,090 per year and you remove $34,092 from your savings account giving you a total of $63,182 to spend each year for the rest of your 30 year retirement period.

The Delay to age 70 gives you $3,706 more every year starting at age 62 with no more increased risk.

No need for any ... 'break even analysis'.

If your WR is more conservative, such as a majority of the people here and myself, the results are even more compelling. At a 3% WR plus SS at age 62 scenario is a total of $49,476 and the age 70 scenario is $55,910. The delay of SS to age 70 now increases your annual spending by $6,434.[/FONT]

 

[daylatedollarshort]

The break even time period depends on your SS amount, marital status and tax bracket. But it normally is around 81-82. . However, break even is not a financial reason to take it early or delay. That is an emotional response to a gut feel, typically incorrectly “supported” by a non related calculation.

If you do a Google search on SS and break even there are quite a few articles by major publications and financial writers using breakeven as a factor in deciding when to take SS.

 

[caprica]

I am very sorry about your friend's cancer. There are few things I dread more than this type of thing. Thank goodness he has such a good friend in you!

 

[golfnut]

I am very sorry about your friend's cancer. There are few things I dread more than this type of thing. Thank goodness he has such a good friend in you!

Thanks -

 

[Red Badger]

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.

+1 conceptually.

Our pensions and portfolio are rather modest (as is our lifestyle). I was able to retire at 60 with a higher than 4% burn rate. Knowing that SS would get our burn rate well below 4% at 62 was a key component to retirement decision. Plus, DW is older than me and has a few health issues that won't get better with age.

We plan to use the extra flexibility to travel while able to do so. Assuming we survive to our 80's, I'll have a unique pension that will kick in. It will either juice our income or offset the looming SS haircut.

The highlight of many days is our walk the dog walk. We hold hands, have long talks (or say very little) and bask in the moment. Were DW to predecease me, I would not trade these days any amount of money.

Anyhoo, I too did not get sophy "only at 70" memo. Lemme go check the mail box.

 

[pb4uski]

Speaking of breaking even, there is this analysis offered by another contributor:

[FONT=&quot]Maximize SS how much you get to spend[/FONT]​

http://www.early-retirement.org/for...off-maximize-my-ss-com-77660.html#post1604411



*

Spot on.

 

[CRLLS]

If you do a Google search on SS and break even there are quite a few articles by major publications and financial writers using breakeven as a factor in deciding when to take SS.

Just because everyone refers to the break even age as a number to soot for doesn't make it right, or even safe. I think that no-one here would retire if they had only a 50% chance of success using any of the commonly used calculators. Using the breakeven age as a reason for taking it early OR late, is like playing roulette and putting all your money on "black" Maybe you win, Maybe you lose. But what if you are one of the 50% who lose? What then?

I prefer to look at the 90% age where 90% have died and 10% survive past that and then add a couple more years for good measure.

 

[meierlde]

If you look at my original post, I made a made a one sentence list with our reasons for taking at 62, of which hold harmless was one of many reasons, not the only reason.

Hold harmless was an artifact of the low inflation rate so it only becomes an issue if you believe near zero inflation will continue. For 2018 hold harmless did not apply since the approx 2% increase allowed the premiums for those under hold harmless to rise to the same level as others.

 

[daylatedollarshort]

Just because everyone refers to the break even age as a number to soot for doesn't make it right, or even safe. I think that no-one here would retire if they had only a 50% chance of success using any of the commonly used calculators. Using the breakeven age as a reason for taking it early OR late, is like playing roulette and putting all your money on "black" Maybe you win, Maybe you lose. But what if you are one of the 50% who lose? What then?

I prefer to look at the 90% age where 90% have died and 10% survive past that and then add a couple more years for good measure.

By losing I assume you mean running out of money? Not everyone here is worried about running out of money regardless of how long they live or when they take SS. That is why most people agree there is no one size fits all answer. If you need longevity insurance, it is a good reason to delay.

 

[iloveyoga]

To answer the OP. DH started his at 62, about a year ago. No regrets. Nice to see the money every month on the third Wednesday. As mentioned, there are plenty of threads on this, but here is my answer.

 

[bobandsherry]

This is chart from ssa.gov site. Shows the % of distribution by age of award by age of claimant, just some food for thought as to what the majority of people are doing.

 

[DCJennifer]

Ages 65 and below, but not above, would kick in the hold harmless.

I am sorry, but I am new --what is the Hold harmless for Medicare? also what is GPO?

 

[daylatedollarshort]

I am sorry, but I am new --what is the Hold harmless for Medicare? also what is GPO?

I am not impacted by GPO but hold harmless definition is here:

"A medicare hold harmless provision is a legal statement prohibiting an increase to Medicare B premiums for the vast majority of American citizens. The Medicare hold harmless provision ensures that Medicare B premiums can not rise more than the previous year's cost of living increase in Social Security benefits."

Read more: Medicare Hold Harmless Provision https://www.investopedia.com/terms/m/medicare-hold-harmless-provision.asp#ixzz53eJeOp6T

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