Collecting Social Security benefits at age 62

[jazz4cash]

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

GPO is Government Pension Offset. It is a reduction in the benefit for people that receive a government pension for a job that did not require SS taxes to be paid.

 

[jazz4cash]

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.

I never thought of that. I was hoping to wait for FRA at 66 and 4, but the hold harmless ( which I just heard about on here a few days ago) is probably worth a tiny reduction in benefit. I am getting ready to do a deep dive as I approach 62 in a few months. Thanks for the suggestion.

 

[Independent]

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

The definition DLDS posted is correct. I think the relevance for this thread is the "vast majority".

People who are getting SS benefits, and having the Medicare premium deducted from those benefits, can never see a decrease in their net deposit. If an individual's COLA driven benefit increase is $10 per month, and the Med premium increase should be $15/mo, the gov't will discount the Med premium by $5 so this individual's net deposit will not go down.

However, there is a minority of people who haven't started SS benefits, but are on Medicare. They pay Medicare premiums by check. They are not protected in this way - their premiums would go up the whole $15.

As it happens, my wife and I are a perfect example. She was getting SS benefits in 2015 and 2016. The 2016 COLA for SS was 0%, the increase in Medicare premiums was about $15/mo, but she didn't see any decrease in her monthly SS bank deposit. The gov't simply waived the $15.

I was over 65, on Medicare, not getting SS benefits, and paying Med premiums by check quarterly. I paid the entire increase.

Also, people who simply started Medicare in 2016 paid the full 2016 premium.

 

[pb4uski]

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.

While this is interesting, the reason that so may recipients take SS at 62 or before their FRA is because in many cases they have no choice... they have little or no retirement savings to rely on while delaying SS... so I would not read a lot into that distribution.

 

[CRLLS]

IMO, Hold Harmless has less benefit the higher the SS monthly benefit is. Run thru the formulas yourself. Further, when the time ends where Hold Harmless helps, then the beneficiaries of that benefit are saddened when they may have to catch up to the rest of the pack in later years reducing or eliminating any SS monthly increase while they catch up to the rest of the group.

I once thought Hold Harmless was a big thing to consider. When I learned more, it is merely a footnote for our SS planning.

Full disclosure: DW is in the process of filing at FRA and I will be getting spousal at the end of 2018. We will be eligible to benefit if Hold Harmless comes into play. But it was not in any play of our decision process.

 

[bobandsherry]

While this is interesting, the reason that so may recipients take SS at 62 or before their FRA is because in many cases they have no choice... they have little or no retirement savings to rely on while delaying SS... so I would not read a lot into that distribution.

Or maybe they do. What do you base your statement on? Your gut feeling or some source? I didn't infer anything, simply shared information.

 

[youbet]

GPO is Government Pension Offset. It is a reduction in the benefit for people that receive a government pension for a job that did not require SS taxes to be paid.

That’s WEP, not GPO. GPO is a offset to your spousal benefit due to having earned a gov pension while not being covered by SS

 

[pb4uski]

..... What do you base your statement on? Your gut feeling or some source? I didn't infer anything, simply shared information.

I realize that you simply shared information... I didn't suggest anything to the contrary... how come you are so sensitive? I simply provided some insight as to why... and the why is pretty well established... not anything that I made up.... we have seen similar situations many times of people who post here that get laid off or have physical issues with inadequate retirement savings that have no choice but to take SS at 62. Hang around here some more and you'll see some for yourself.

Now that you understand the problem with claiming Social Security at 62, let's talk about why so many people do so. For the most part, it's because they're forced to retire, they don't have enough savings, and they need the money as soon as possible. It's estimated that a good 60% of Americans end up retiring earlier than planned due to factors such as health issues, job loss, or the need to care for a spouse or dependent. Without adequate savings, these same people typically have no choice but to file for benefits as early as possible.

And let's be clear: Most folks have inadequate savings.


The average retirement savings balance among households aged 56 to 61 is $163,577, and though that might sound like a lot, it's not nearly enough to support someone throughout a retirement that could last 25 years or longer. Furthermore, while $163,577 represents the average savings balance among near-retirees, the median savings balance for that age group is a mere $17,000. In other words, the typical American household's retirement savings fall far short of their future income needs.

To be fair, not everyone who claims Social Security at 62 does so out of desperation. There are some people who save really well during their working years and decide to retire early because they're in a strong enough financial position to do so. Meanwhile, those who find themselves in poor health are often better off filing for benefits as early as possible. That's because Social Security is designed to pay recipients the same total lifetime benefit regardless of when they first file, assuming they live to an average life expectancy. For folks who expect to pass away sooner, filing earlier can result in a higher lifetime payout.

https://www.fool.com/retirement/2017/10/22/why-do-so-many-people-claim-social-security-at-62.aspx

 

[Cut-Throat]

I know a lot of people in their 80s..... Every single one of them that took their S.S. at age 62, wished they would have delayed to age 70....

And all of the ones that delayed to age 70, never wished they had taken it at age 62.

I will poll the graveyard next week and let you know the results of the ones that have passed away.

 

[camfused]

I'll jump in on this one. My current plan has me taking SS at 62 (I will FIRE the end of this year, at 59.5). I have tried really hard (many, many attempts) to make my plan come out better for taking it at the FRA, or 70, but every time I run that in my plan, the withdrawal for me at 62 and DW at 70 comes out best, by a significant amount. I suspect I am doing it wrong, and will keep trying. Believe me, if I can figure out how to get more by delaying, I will!

I think the reason it works for me is that SS income earlier allows my 401K amount to build, keeping my MAGI down (to qualify for ACA), and allows me to move earlier funds from my Cash bucket into my dividend-producing taxable savings.

This might be another reason why people take it at 62. So, I say despite what the experts say, plug in the numbers into your plan, and see how it works out for you.

 

[golfnut]

Camfused,

How does taking SS at 62 keep MAGI down ( for ACA purposes) ?

 

[bobandsherry]

I realize that you simply shared information... I didn't suggest anything to the contrary... how come you are so sensitive?

I am hardly "sensitive" to what you said and don't now why you think it was necessary to take this to a personal level. I guess you took exception to me calling out that you broad brush reasons why people take SS early. I merely suggested that perhaps there was a contrary view. Rock on!

 

[ShokWaveRider]

What amuses me in threads like this is all the "granular" reasons people use to qualify their decisions for doing something, in this case SS withdrawal dates. Most are quite trivial, while others are more significant (to them). In the "Grand Scheme of Things", one will end up doing what one "thinks" is right for one's particular situation.

In our case the difference of $100 - $150pm will not change our Standard of living one iota. So the 62 or 65/66 decision is made. No way will I wait Till 70 as I will be lucky if I make it there, let alone 83. Not worrying about this kind of thing may actually help.

I gotta pay taxes anyway. If I wait till RMD time I will pay Taxes too, but probably on more, as I will feel I need to take out more to try and beat the "Death Toll" clock.

So the only decision is; will I take it at 65 (Next Year) or at 66 the following year? I really am not taking the difference in benefits into account at this point. But there again, we have no Debt, No Heirs, No Baggage and No Worries.

 

[pb4uski]

I am hardly "sensitive" to what you said and don't now why you think it was necessary to take this to a personal level. I guess you took exception to me calling out that you broad brush reasons why people take SS early. I merely suggested that perhaps there was a contrary view. Rock on!

The notion that most people take SS at 62 or earlier than FRA because they have no choice is generally accepted to my knowledge and from everything that I have read. What is the contrary view? Any citations?

 

[bobandsherry]

The notion that most people take SS at 62 or earlier than FRA because they have no choice is generally accepted to my knowledge and from everything that I have read. What is the contrary view? Any citations?

Just quickly, here's one article that states reasons you would want to take SS at 62.

https://www.google.com/amp/s/amp.usatoday.com/amp/106701702

And read the third reason from this article.

http://m.nasdaq.com/article/3-reasons-its-smart-to-take-social-security-benefits-at-62-cm876051

So there's a couple for ya.

 

[CRLLS]

The notion that most people take SS at 62 or earlier than FRA because they have no choice is generally accepted to my knowledge and from everything that I have read. What is the contrary view? Any citations?

I have friends who are set financially. They took SS at age 62 due to family history medical reasons. That, and their FA's (yes, plural. one for him and a different one for her) said to take it early. Go figure

 

[pb4uski]

I guess I was looking for reasons why people actually take SS at 62, not why they might... although I note that the nasdaq article does list job loss with inadequate savings which would fall into the no choice category and poor health which makes perfect sense. The last thing they mention is silly and fails to recognize that money is fungible.

The Motley Fool article does list some narrow niche scenarios where it would be better to claim early but doesn't really address the central question of the reasons why people actually do claim early.

The link I provided earlier actually addressed that central question.

 

[pb4uski]

I have friends who are set financially. They took SS at age 62 due to family history medical reasons. That, and their FA's (yes, plural. one for him and a different one for her) said to take it early. Go figure

I concede that poor health is a legit reason for taking early and is likely a significant subset of why people actually do take SS early.

From post #83:

It's estimated that a good 60% of Americans end up retiring earlier than planned due to factors such as health issues, job loss, or the need to care for a spouse or dependent. Without adequate savings, these same people typically have no choice but to file for benefits as early as possible.

 

[bobandsherry]

I guess I was looking for reasons why people actually take SS at 62, not why they might...

Any source that shows reasons why people take SS later?

Personally, I have circle of family and friends who took it early, despite having adequate financial resources. They consider a bird in the hand....

Additionally, I find it interesting that with the number of people who think the government is trying to always screw them they in this case they think it better to chase the carrot dangling at the end of the stick.

There is a subset of population where delaying is better. There is also a subset where delaying is not better. My original post with graph from SSA was just to highlight there is a larger % of people taking SS benefits earlier, no inference it's the right or wrong thing, just raw data collected from a much larger cross section of the population than these forums.

 

[CRLLS]

I concede that poor health is a legit reason for taking early and is likely a significant subset of why people actually do take SS early.

From post #83:

They are not in poor health. neither one has chronic health issues. Only their family history suggests they may not do so well later, in their late 70's. Personally, I don't buy in on that reasoning. But I don't have to. It was their choice.

 

[pb4uski]

.....In our case the difference of $100 - $150pm will not change our Standard of living one iota. So the 62 or 65/66 decision is made. ....

The difference between 62 and FRA is usually 25-30%... so if one's FRA is $2,000 then at 62 would be $1,500 or less.... a $500 per month difference.

 

[ShokWaveRider]

The difference between 62 and FRA is usually 25-30%... so if one's FRA is $2,000 then at 62 would be $1,500 or less.... a $500 per month difference.

Sorry I was not being very clear. In My Case I will take at 65 not 66 (FRA) that is where I get my numbers. I did not take at 62 because of ACA.

 

[pb4uski]

That makes more sense. Thanks for the clarification.

 

[Sue J]

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?

If you get your health insurance through the ACA be sure to consider the impact the additional money will have on your health insurance subsidy. 100% of your Social Security benefit (not just the taxable amount) will be counted in your ACA MAGI so your subsidy MAY be reduced by as much as 16% or so of your total SS benefit. This is the main reason that I am planning to wait until 65/Medicare to start SS. The reduction of health insurance subsidy is in addition to the regular income tax you'll be paying on 50%-85% your SS benefit.

You can check the impact of this on a subsidy calculator like the one from KFF -

https://www.kff.org/interactive/subsidy-calculator/

 

[imoldernu]

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?

No regrets... Since we retired at age 53, in 1989, we were withdrawing from savings at a fairly rapid pace. Taking SS at 62 allowed us to keep some long term bonds which had relatively high interest rates. So far, we have collected about a half million in SS, and between that and the interest in our savings, have been able to live frugally but very comfortably for the past 20 yrs without any decrease in our capital (net worth).

I suppose we could have done better, but we have no appetite for investing.
Definitely no regrets.