Collecting Social Security benefits at age 62

[Chuckanut]

I don't think using FireCalc to predict how much one's estate will be is a good idea. It is designed to test one's portfolio against total failure over a various 30 year periods so one can get an idea if retirement is survivable.

In fact, if you have enough assets to survive from 62-70 and if you don't care about the size of your estate, taking SS at 70 always produces more spendable money.

IMHO, SS could be reduced (it won't go bust!), or we could experience a long bear market with high inflation (think 1974+). That's why it's good to have multiple sources of income in retirement.

Given your situation, I suggest enjoying retirement to the fullest and now worrying about squeezing the last dollar out of SS and investments. I also suggest sharing some of it with others who are needy or down on their luck.

 

[skipro33]

Thanks everyone for the confirmations and clarifications to my assumptions and interpretations of what Firecalc was telling me. I am feeling more relaxed about where I'm heading financially now.

 

[REWahoo]

****EDIT****
I e-mailed Firecalc author and asked him the question if Firecalc acknowledges RMD in it's results.

FWIW, the quickest way to get an answer to a FIRECalc question is to post it here: FIRECalc Support

 

[ReadySetGo]

It really depends on good luck, good health and how much money you have. Take your numbers from ssa.gov. At 62 and $1650 a month you would get $403k by 83 years old. At 67 and $2300 a month you would get $441k by 83 years old. At 70 and $2900 a month you would $452k by 83 years old. So figure your budget and add 20%. Watch out for health insurance and tax, the chaos factors.

That is a good way to look at it-thanks!

 

[daylatedollarshort]

We will start one of our SS checks this year and I'm really looking forward to the extra retirement income stream. My spreadsheets and all the retirement calculators give us 100% to age 100 with a nice legacy amount for the kids, with taking pensions at 55 and SS at 62 so that is our plan.

 

[Perryinva]

No, it depends, as always (to ReadySetGo) . For instance, that’s a silly way to look at it IF you do not need the SS for income for a surviving spouse.

Take your $1650 each month and buy a 5 year CD each month with just the first 3 years SS. Current 5 year CDs are about 2.5% and rising. So ignoring COLA on SS and any rise in rates on the CDs, starting at age 68, just doing that, one would get $22.4k each year, ages 68, 69, & 70 (for a total of about $67,300) . Then take the remaining 5 years (age 65 through 70) of $1650/m compunded monthly in an online savings acount of 1.5%, and at age 70, it is $104647. If you were to take the matured CDs and add them to the savings accounts, that totals $70,800 for just them. So totally risk free, at age 70, one could have $175,500 at age 70. Investing that at a 5% ROR, generates $9k/yr. So, $6k difference per year than delaying (with low risk for this crowd and a $175,500 larger portfolio). If you pull that $6k/yr to equal the delay to 70 income, from the invested fund, it would take about 18 years to deplete. So “break even” now becomes age 88. Of course there is the market risk and an average of 5% is not totally risk free.

So take it another simple step, even, Now, take the $1250/m difference to add to your $1650/m SS and equal the delayed filing of $2900/m, from that $175,500 placed in a simple 1.5% savings. That reduces the total by roughly $12350 the first year, & an added $200 drop each added year. In 13 years, the fund is depleted. So at the same age 83, delaying just STARTS to pull ahead $15k/yr.

You can play these number games all day to justify one way or the other. It’s absolutely not about break even. All one has to do is pick the right age to die to justify. If you are single, and a typical investor on this forum, then file at age 62 is practically a no brainer. It is the longevity insurance if you die at 70, and your spouse is reduced to just the higher of the two SS, possible loss of your pension, and now paying taxes at the single rate that should determine ones position. In many (maybe most) cases, a surviving spouse at age 70, with a tax free or low tax COLA income for life of $35k a year plus the $840k portfolio beats the heck out of a $20k/yr SS and a $1M portfolio. Or for a max SS, $25k/yr vs $45k/yr and $200k difference.

Income and how much you have to have saved at all times determines which way one sways.

 

[ReadySetGo]

No, it depends, as always (to ReadySetGo) . For instance, that’s a silly way to look at it IF you do not need the SS for income for a surviving spouse.

Take your $1650 each month and buy a 5 year CD each month with just the first 3 years SS. Current 5 year CDs are about 2.5% and rising. So ignoring COLA on SS and any rise in rates on the CDs, starting at age 68, just doing that, one would get $22.4k each year, ages 68, 69, & 70 (for a total of about $67,300) . Then take the remaining 5 years (age 65 through 70) of $1650/m compunded monthly in an online savings acount of 1.5%, and at age 70, it is $104647. If you were to take the matured CDs and add them to the savings accounts, that totals $70,800 for just them. So totally risk free, at age 70, one could have $175,500 at age 70. Investing that at a 5% ROR, generates $9k/yr. So, $6k difference per year than delaying (with low risk for this crowd and a $175,500 larger portfolio). If you pull that $6k/yr to equal the delay to 70 income, from the invested fund, it would take about 18 years to deplete. So “break even” now becomes age 88. Of course there is the market risk and an average of 5% is not totally risk free.

So take it another simple step, even, Now, take the $1250/m difference to add to your $1650/m SS and equal the delayed filing of $2900/m, from that $175,500 placed in a simple 1.5% savings. That reduces the total by roughly $12350 the first year, & an added $200 drop each added year. In 13 years, the fund is depleted. So at the same age 83, delaying just STARTS to pull ahead $15k/yr.

You can play these number games all day to justify one way or the other. It’s absolutely not about break even. All one has to do is pick the right age to die to justify. If you are single, and a typical investor on this forum, then file at age 62 is practically a no brainer. It is the longevity insurance if you die at 70, and your spouse is reduced to just the higher of the two SS, possible loss of your pension, and now paying taxes at the single rate that should determine ones position. In many (maybe most) cases, a surviving spouse at age 70, with a tax free or low tax COLA income for life of $35k a year plus the $840k portfolio beats the heck out of a $20k/yr SS and a $1M portfolio. Or for a max SS, $25k/yr vs $45k/yr and $200k difference.

Income and how much you have to have saved at all times determines which way one sways.

Thank you. I’m beginning to understand it better. I really appreciate the comparisons/analysis.