My Social Security filing epiphany

[Dawg52]

Quote:

Originally Posted by sengsational Not everyone will have the same perceptions I have, nor will everyone agree that there is a contrast between using a fixed point in one model and a stochastic variable in the other. I had to throw in a big word, LOL!

Weeeeee doggie........that is big word. Just watched a Beverly Hillbillies episode and was inspired.

[nun]

If you live an average lifespan it doesn't matter when you take SS between ages 62 and 70 as you'll end up getting the same total amount of income. The benefit of taking SS later than 62 only starts to assert itself if you live into your late 80s.

I'll be taking SS at age 62 and any regret that I might have about not deferring will be more than offset by living long enough for that to happen.

[pb4uski]

What you say is true if you are a single or a couple with similar ages or SS benefits... but for a married couple that have a significant age difference or significantly different SS benefits then your SS strategy does make a difference due to joint mortality.

[imoldernu]

DW and I have been receiving Social Security since we turned 62. At the current equivalent of $25K/yr, that totals approximately $450K
The extra income mattered most in the beginning, as we were retired with limited assets. No regrets. The decision was made with the possible threat of not living to enjoy retirement.

IMHO, a personal decision, for which I would give no advice, but for those who choose to wait, our thanks, echoing pb4uski's comment:

Quote:

..... and we appreciate your contribution to the sustainability of SS

[nun]

Quote:

Originally Posted by pb4uski What you say is true if you are a single or a couple with similar ages or SS benefits... but for a married couple that have a significant age difference or significantly different SS benefits then your SS strategy does make a difference due to joint mortality.

Sure, the analysis gets more complicated with joint mortality. My point was that deferring isn't the right choice in all circumstances and for single people and many married couples it might be better ,or just as good, to take SS as early as possible.

[imoldernu]

Recent article on "file and suspend"
Mass confusion over new Social Security rules

[pb4uski]

Quote:

Originally Posted by imoldernu ...but for those who choose to wait, our thanks, echoing pb4uski's comment: Quote: ..... and we appreciate your contribution to the sustainability of SS

Funny imoldernu.... but to be clear.... my comment was directed to someone who didn't need to but take SS at 62 but was "because they can" and as a result have their benefits permanently reduced.... not to those who wait.

[nun]

Quote:

Originally Posted by pb4uski Funny imoldernu.... but to be clear.... my comment was directed to someone who didn't need to but take SS at 62 but was "because they can" and as a result have their benefits permanently reduced.... not to those who wait.

Of course the individual payment will be reduced if taken at age 62, but for many people the lifetime benefit will be better or as good as with deferring. Being single I will be taking SS at age 62.

[imoldernu]

Quote:

Originally Posted by pb4uski Funny imoldernu.... but to be clear.... my comment was directed to someone who didn't need to but take SS at 62 but was "because they can" and as a result have their benefits permanently reduced.... not to those who wait.

Yeah... ... and I'm thinking that their waiting leaves more money in the system so it doesn't "run out", before I do....

[youbet]

Quote:

Originally Posted by sengsational Point: Seems like "nobody" models that there is any chance that they'll die before the break-even point (i.e. seems like "nobody" models the bell curve of when they'll expire). Instead, they pick an age to use in their model. One age......... That seemed in contrast to modeling investment returns.

It's also seems that few model the time value of money and potential investment gains into the "when to take SS" decision. For example, I began SS in 2010 at 62. All those monthly payments have been continuously invested (DCA into TSM fund) and have done quite well due to the favorable market conditions that have existed during most of the time since then.

If things don't tank from here, the stash I'll have accumulated by the time I reach 70 will be more than large enough to cover the difference between my SS and what my SS would have been had I delayed.

Of course, things might have gone against me. The markets might have sucked and the accumulated stash would be much less. We all get to roll the dice........... I got lucky and actually have better longevity insurance and protection for DW than had I delayed.

[nun]

Quote:

For example, I began SS in 2010 at 62. All those monthly payments have been continuously invested (DCA into TSM fund) and have done quite well due to the favorable market conditions that have existed during most of the time since then. If things don't tank from here, the stash I'll have accumulated by the time I reach 70 will be more than large enough.

Even if take SS at 62 and just spend the money many single people and a lot of couples will end up taking more from SS that if they deferred to age 70. Like any annuity it all depends on how long you live. If you invest the SS you might do even better, or worse.

To get significant gains from deferring to age 70 you have to live into your late 80s. It's more probable that you'll die before then so do that calculation for your particular circumstance and go with the higher probability. If you are single I'd say take SS early.

[pb4uski]

Quote:

Originally Posted by imoldernu Yeah... ... and I'm thinking that their waiting leaves more money in the system so it doesn't "run out", before I do....

Got it. Good one. I like your sense of humor.

[samclem]

Quote:

Originally Posted by nun The benefit of taking SS later than 62 only starts to assert itself if you live into your late 80s.

I would say that a person/couple who waits to collect SS in order to make himself/ the surviving spouse more secure in old age begins deriving benefits immediately, they don't need to wait to be 80. The benefit: They know every day that their spouse has a reduced chance of being financially strapped in old age or in the event of a big market decline.

Do I/my family benefit from having term life insurance only if I die and collect? Clearly the answer is "no." Every day I owned that policy and it assured my family would be okay if I died, I was getting a benefit. A "real" benefit and an emotional benefit. One tangible benefit was that I could take more risk in my investments (= more likely gain) knowing that if I died that investment money wouldn't be needed immediately. SS benefits are similar: If I can count on a higher % of my baseline true spending requirements to be met by SS, my investments can be slightly more volatile and I'll be okay. That can improve returns.

The decision about when to take SS should not be about maximizing dollars received from SS (where these discussions too often end up), it should be about maximizing the utility of this benefit/asset. It has characteristics that make it unique, and of high utility in certain situations.

[rayvt]

Quote:

Originally Posted by panacea Only question that popped in my head was whether a surviving spouse would remain financially secure if the other died along with their Social Security benefits.

If it requires both SS benefits to be financially secure, then by definition you are not financially independent. That's this board, right? F.I. & R.E.

Optimizing SS benefits this way is how people who are not F.I. are able to retire.

[nun]

Quote:

Originally Posted by samclem The decision about when to take SS should not be about maximizing dollars received, it should be about maximizing the utility of this benefit/asset. It has characteristics that make it unique, and of high utility in certain situations.

I agree. Whether to defer, or not, depends on individual circumstances and the absolute possible amount of benefit should not be the major factor. That's the argument I always make when people scorn the SPIA. Being married makes the assessment of benefit a little more complicated, but for the single person the chances are that you won't see much of an advantage from deferring. So as a rule of thumb I'd advise single people to take SS as soon as they can. The combinations and permutations of market returns, longevity and spending patterns are an enormous space, but for my situation as a single male I value having SS income at 62 over waiting until 70 and expecting to live well passed my mortality age to see the gain. Deferring is a better bet if you are a woman. I won't have quite as much SS if I live into my 90s, but I have a pension and a UK SS check (at 67) so I don't need it. At 66 I expect to get around $20k in SS and assuming 3% annual inflation here are the numbers.

Starting Age	Starting Amount ($)	Total at 83 ($)	Total at 90
62	15k	458k	678k
66	20k	468k	729k
70	26.4k	451k	757k

[pb4uski]

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Originally Posted by rayvt ....Optimizing SS benefits this way is how people who are not F.I. are able to retire.

and how people who are FI optimize their charitable giving and inheritances to their beneficiaries.

[r2021t]

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Originally Posted by calico1597 I went ahead and started drawing at age 62, mostly because financially I didn't need to and decided to bank the $$. We decided to help out our granddaughter with college apartment expenses her last two years of college. I send her $1K a month for rent, utilities and rest toward groceries. She's a straight A student and working two jobs. I'm glad to be able to help her, don't know that we would have offered to be so generous if we didn't have the SS as extra $$$.

That is a really nice thing to do.

[sanfanciscotreat]

69.5 now waiting till SS will give me 40K per annum in another couple of months.

[HadEnuff]

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Originally Posted by ripper1 My wife will take hers in a few months when she turns 62....WHY....because she can.

I did this. Well, almost. I waited a few months because I wasn't quite done w*rking...I had several thoughts.

1. If I don't take it, I'll have to take more of my assets out of investments ,in order to support my lifestyle

2. When someone puts money on the table, take it. They may change their minds later. Or change the rules. Or not have it. Take it. (My approach, not saying it should be everyone's)

[misanman]

Quote:

69.5 now waiting till SS will give me 40K per annum in another couple of months.

This is my situation too. Turn 70 in July. Spending down IRA and doing Roth conversions while drawing spousal benefit (DW started SS at 62). Goal is to avoid future "tax torpedo" with RMDs, especially important when one of us dies. Also trying to leverage how SS/investment-income blend affects overall taxation.