Joining the OTHER 1%

[Focus]

An important part of my retirement planning is waiting until age 70 to collect Social Security. I consider it my annuity equivalent. Curious to find out how many others are doing the same, I did a Google search. What I finally found was a bit shocking. Here are the 2010 numbers (the most recent, apparently):

45% collect at 62
10% collect at 66
1-2% collect at 70

The remainder begin collecting in other years.

Found the stats in this Pittsburgh Post-Gazette article.

I suspect a good number of the members here have joined or plan to join this OTHER 1%. Am I right?

 

[RunningBum]

Recently discussed in this thread: http://www.early-retirement.org/forums/f28/case-for-taking-ss-early-62-a-66739.html

I'm with you, I like the longevity insurance, but that thread points out that you might be able to invest the money you collect between 62 and 70 (or the money you don't have to pull out of your investments since you are collecting the SS benefit) and make up for not getting the bigger payout later. And there might be something to paying less tax spreading out a lower SS payment over more years, though you might just rebalance other income sources and accomplish the same thing. And the "get the money before they cut it or it goes away" argument might have merit. Finally, some people really don't have a good outlook for longevity, so it probably does make sense to collect early. Other arguments seem more emotional and less logical to me, but every case is different so that's for each person to decide.

I've got over 10 years before I have to make a decision. I'll keep evaluating and watching for changes, but my current plan is to wait til 70 to best protect against not outliving my money.

 

[seraphim]

Don't plan on collecting much SS insurance and, if heredity's an indicator, don't plan on living much past 70. Might as well collect what I can when I can. Save it or use it for vacations.

 

[Coolius]

I decided to start collecting at 62, right after my birthday, in September.

Reviewed and analyzed all of the arguments pro & con, mulled them over for months, and finally decided to take the money.

Primary factor in the decision is that I simply do not trust the government.

The indications for means testing, reducing benefits, full taxation, or pushing back FRA, etc etc in the future by a broke and insolvent government is a real and present danger, in my opinion.

FWIW.

 

[Alan]

DW has much less SS to come than me, so we plan on her taking it at 62, and me taking it at 70. Her immediate family has several members living into their late 90's, and she is as fit as a butcher's dog so I think the added insurance is worth it as she'll only get half my pension once I've kicked the bucket.

 

[padlin00]

DW @ 66, myself @ 70 is the plan, my fra ss is 3 x DW's. Longevity guessitmate for me is 82, DW is 95, based on her mother and both grandmothers.

I do plan on keeping my eye open in case circumstances warrant a change of plans.

I'm 56 looking to ER in 2-3 years.

 

[W2R]

I am 64, almost 65 and tentatively plan to start taking Social Security at 70. I don't need it right now.

I might claim SS earlier if we have another market crash like 2008-2009 sometime during the next five years. Otherwise, I think it would be nice to have a larger monthly automatic bank deposit from SS to rely upon in my very old age.

If I wait until 70 as planned, my SS will be high enough to cover my basic expenses and I won't give a hoot what happens to the market after that. Well, not much of a hoot. Five more years.

 

[Bikerdude]

After all the discussions about when to take SS it remains an individual decision. Do your homework, run the numbers, assess your particular situation and then do what you think is best for you. Good luck.

 

[pb4uski]

I plan to hold out until I am 70. However, if after I am 62 my retirement nestegg consistently underperforms my assumptions it is peace of mind knowing I can tap into it anytime I wish to. Longevity in both my and DW families is good so I think that is the best long run choice for us. If our health takes a turn for the worse then I would reevaluate.

 

[clifp]

Planning on 70 also. Along with all the other reasons mentioned, I have a couple of others. While I certainly don't want to think about it, single, with no kids,and much old siblings, I really only have a niece (and useless nephew) to look after me as I age. I suspect that I am reasonably vulnerable to be swindled in my old age.

Having a SS@70 puts a floor on my minimum income, no matter how the next Ann Nicole Smith convinces me to change my will.

 

[eytonxav]

I have 2 years to go until FRA, and most likely will take it then, as I think the odds of the gummit making some changes in the next 6 years if I were to hold out to 70 are pretty great.

 

[braumeister]

70 for me, too. My reason is that based on family history, I have an excellent chance to make it to my late 90s, and I worry about the possibility of inflation coming back like it did in the Carter administration. Not likely, but since I don't need the SS now it makes sense to hold off.

 

[MooreBonds]

I have 2 years to go until FRA, and most likely will take it then, as I think the odds of the gummit making some changes in the next 6 years if I were to hold out to 70 are pretty great.

While I understand your concern of the whole 'potential legislation thing', two aspects to keep in mind are that

1) Any changes regarding means-testing would likely hit ALL retirees, not just those retirees that haven't started taking SS yet (after all, I'm sure the masses would want to know why someone taking SS with a $250k income should be spared, while someone who hasn't started collecting SS yet and would have a $100k income plus SS should get whacked).

2) More importantly, how long does it take to start receiving SS? If the winds in Washington are starting to blow a certain direction, could you simply run down to the SS office and file immediately? Any legislation usually takes a few weeks to wind its way through committees, floor votes, then go to the other Congressional body for the same thing. It could be retro-active to the beginning of the year, but combining this with #1, given current SS distributions, I personally would take the chance and let SS accumulate until maybe 68-70 (assuming decent health) if my portfolio at that time isn't close to a marginal survivability...although I'm projecting a lifespan to age 81 or so given family history (and I believe 81-82 is the current approximate break-even for SS for men for delaying to 70 vs FRA), so I might end up taking it at FRA - which in 31 years, could very well end up being 70!

 

[HighRoller]

I signed up to take it at 62 since I simply do not trust the federal government. I don't care how many times they say that future changes won't affect those over a certain age. I don't believe it.

 

[freebird5825]

It will be 62 for me, in just a little over 7 years from now. I am single, so there are no spousal benefit considerations to muddle through in my decision. I look at estimating my longevity as a crap shoot at best.

I plan to put it right into my already established VWALX mutual fund and crank up those TE 30 day dividends.

 

[Independent]

I'm 65, my wife is 64, we haven't started yet.

My original play was for her to start at 66 (her only benefit comes from my work record) and me to start at 70. That's based on an insurance (aka worst case) perspective, not an investment (aka average case) perspective.

Her bout with cancer changed that. Now I'm looking at starting next year.

I don't give a lot of credence to the "start now because the gov't could reduce benefits" argument. IF they reduce benefits, it will probably be through some means test. By deferring SS, we spend down other assets, and hence reduce the "means" that will be tested.

 

[HighRoller]

Any changes regarding means-testing would likely hit ALL retirees, not just those retirees that haven't started taking SS yet .

Unfortunately I'm afraid you may be right and it makes me mad every time I think about it. To me it would be changing the rules (again) and punishing those of us who saved and/or were successful.

 

[sengsational]

I'm so far away from the first decision point, I'm leaving it open for now.

But what I've done in my models configure age 70 to start taking SS.

And the "get the money before they cut it or it goes away" argument might have merit.

Institutional risk is my least favorite thing about this planning process; with a stroke of the pen, our elected officials could decimate all of this planning. To address this risk somewhat, I've reduced the benefits in my models from what they are today by 30%.

 

[scrabbler1]

In Fidelity's RIP software, I entered age 67 as the year I will begin collecting SS, as that is the FRA for me. I have SS and two other what I call "reinforcements" I can begin tapping into once I near 60 years old in about 10 years from now: (1) Unfettered access to my IRA, (2) My frozen company pension, and (3) Social Security. I have some flexibility as to when I can begin collecting from these piles of money so I will evaluate each of them when I first become eligible although as many of you have pointed out already, there are interactive effects across them.

My main challenge is, of course, getting to age ~60 intact using only my taxable, non-retirement accounts. After 4 years, all is going quite well.

 

[pb4uski]

Unfortunately I'm afraid you may be right and it makes me mad every time I think about it. To me it would be changing the rules (again) and punishing those of us who saved and/or were successful.

For god's sake, have a glass of wine or your favorite adult beverage. If it happens, then you can stew.

 

[eytonxav]

While I understand your concern of the whole 'potential legislation thing', two aspects to keep in mind are that

1) Any changes regarding means-testing would likely hit ALL retirees, not just those retirees that haven't started taking SS yet (after all, I'm sure the masses would want to know why someone taking SS with a $250k income should be spared, while someone who hasn't started collecting SS yet and would have a $100k income plus SS should get whacked).

2) More importantly, how long does it take to start receiving SS? If the winds in Washington are starting to blow a certain direction, could you simply run down to the SS office and file immediately? Any legislation usually takes a few weeks to wind its way through committees, floor votes, then go to the other Congressional body for the same thing. It could be retro-active to the beginning of the year, but combining this with #1, given current SS distributions, I personally would take the chance and let SS accumulate until maybe 68-70 (assuming decent health) if my portfolio at that time isn't close to a marginal survivability...although I'm projecting a lifespan to age 81 or so given family history (and I believe 81-82 is the current approximate break-even for SS for men for delaying to 70 vs FRA), so I might end up taking it at FRA - which in 31 years, could very well end up being 70!

Good points, and considering that my port is primarily before tax $s, the waiting to 70 may make sense to reduce RMDs $s, but on the other hand family longevity is a mixed bag and may not be on my side.

 

[jon-nyc]

Annoying how the article uses "when to retire" and "when to start taking SS" as if its the same thing. As if its not even possible to pay your own way for a few years.

 

[HighRoller]

For god's sake, have a glass of wine or your favorite adult beverage. If it happens, then you can stew.

I do like your idea about having an adult beverage.

 

[jon-nyc]

I don't understand the idea of making a decision that you wouldn't otherwise make on SS because you don't trust the government not to change it. It would seem to me you could at least wait until such a proposal was being seriously discussed and had a decent chance to pass congress and get a presidential signature.

 

[RunningBum]

I don't understand the idea of making a decision that you wouldn't otherwise make on SS because you don't trust the government not to change it. It would seem to me you could at least wait until such a proposal was being seriously discussed and had a decent chance to pass congress and get a presidential signature.

Let's say you are 62 now and have a chance to collect $1000/month. You decide to wait until 70 when you can get $1800/month. (Suggest more reasonable numbers if these are off.)

8 years from now, the government decides it will cut SS payments in half. Perhaps it's due to means testing and in your case it will be half. So now you are getting $900 month. It's more than the $500/month you'd be getting if you started at 62, but you had 8 years of $1000/month. That moves the break even point a few more years out, doesn't it?

Waiting until something happens may be too late. Hopefully they won't make changes effective for people already eligible for benefits, but it's possible they will. It's also possible they would make them effective on anyone not yet collecting, even if you are eligible, but that seems unlikely.