My Social Security filing epiphany

[mystang52]

[sorry for lengthy note]:
Rather than commit thread creep of my own thread about the FA, I thought I'd start a new one. In the days prior to the scheduled meeting with that FA, I did some simple "what-ifs" with different filing date scenarios.
Sure, if I went back to work until age 80, and then collected Social Security until age 150, I'd be way ahead of the game. But even when I factored in real world scenarios, the difference was not so great that it mattered.
Like most, or all, of us on this site DW and I are financially secure. So, whether I ultimately collect an aggregate gazillion dollars in SS benefits, or some percentage less than that, it really doesn't matter,
At some point, we have to ask "what price glory?" If I die early and in hindsight should have filed sooner, I won't know 'coz I'll be dead. And if I outlive projections and [in hindsight] should have filed later, living longer sure is nice alternative compensation. Either way, the money difference won't impact our lifestyle
Last year, DW and I talked about me collecting as of my 63rd birthday in August. We decided that it would be better to wait, and revisit the issue for age 64 August 2016. We're now going to wait one more year to 2017.
That decision was right for us, and we're comfortable with it. Surprise, surprise didn't need any FA to figure it out.

 

[pb4uski]

While I'm only 60 so I have a couple years to figure this out, I think I am in a similar place. While I plan to wait until 70 from 62 onwards I view filing for SS as an option that I can exercise at any time. While I think it is unlikely, IF our investments do poorly then I can exercise the option.... if they continue to do well (and I expect that is most likely) then I'll continue to defer.

I feel blessed to have a choice and not have to file at 62 because we need the cash flow.

 

[Big_Hitter]

Surprise, surprise didn't need any FA to figure it out.

reading this forum is about the best free financial advice one can get, IMO

 

[tmm99]

While I'm only 60 so I have a couple years to figure this out, I think I am in a similar place. While I plan to wait until 70 from 62 onwards I view filing for SS as an option that I can exercise at any time. While I think it is unlikely, IF our investments do poorly then I can exercise the option.... if they continue to do well (and I expect that is most likely) then I'll continue to defer.

It sounds like a good plan. I am planning to do the same.


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[Options]

I recommend taking no action regarding SS before reading this excellent book by Kotlikoff, et al:

Get What's Yours: The Secrets to Maxing Out Your Social Security (The Get What's Yours Series): Laurence J. Kotlikoff, Philip Moeller, Paul Solman: 9781476772295: Amazon.com: Books

You could end up leaving tens, if not hundreds, of thousands of dollars on the table if you get it wrong (as I realized my mother did after I read the book; had I read it years ago, her life could have been much more comfortable as early as age 62).

 

[ripper1]

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

 

[pb4uski]

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

 

[panacea]

[sorry for lengthy note]:
Rather than commit thread creep of my own thread about the FA, I thought I'd start a new one. In the days prior to the scheduled meeting with that FA, I did some simple "what-ifs" with different filing date scenarios.
Sure, if I went back to work until age 80, and then collected Social Security until age 150, I'd be way ahead of the game. But even when I factored in real world scenarios, the difference was not so great that it mattered.
Like most, or all, of us on this site DW and I are financially secure. So, whether I ultimately collect an aggregate gazillion dollars in SS benefits, or some percentage less than that, it really doesn't matter,
At some point, we have to ask "what price glory?" If I die early and in hindsight should have filed sooner, I won't know 'coz I'll be dead. And if I outlive projections and [in hindsight] should have filed later, living longer sure is nice alternative compensation. Either way, the money difference won't impact our lifestyle
Last year, DW and I talked about me collecting as of my 63rd birthday in August. We decided that it would be better to wait, and revisit the issue for age 64 August 2016. We're now going to wait one more year to 2017.
That decision was right for us, and we're comfortable with it. Surprise, surprise didn't need any FA to figure it out.

That all makes sense to me. 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. As you probably know, waiting until age 70 can be particularly helpful to increase the remaining SS benefit for the rest of the survivor's life. Of course, it all depends on each household's financial situation.

 

[gerntz]

You waiting till 66 & assuming spouse takes spousal benefits rather than her own, her spousal benefit is maximized at 1/2 your benefit by her waiting till 66 also.

 

[sengsational]

from 62 onwards I view filing for SS as an option that I can exercise at any time.

Yep. And it's a ways off, so no need to fret. Too bad most models want you to tell them when you're taking it

 

[Mulligan]

I recommend taking no action regarding SS before reading this excellent book by Kotlikoff, et al:



Get What's Yours: The Secrets to Maxing Out Your Social Security (The Get What's Yours Series): Laurence J. Kotlikoff, Philip Moeller, Paul Solman: 9781476772295: Amazon.com: Books



You could end up leaving tens, if not hundreds, of thousands of dollars on the table if you get it wrong (as I realized my mother did after I read the book; had I read it years ago, her life could have been much more comfortable as early as age 62).

I wish I had the opportunity to leave tens of thousands on the table and thus have a need to read the book. Unfortunately I am only getting $105 at 62 so little damage can be done no matter how much I screw up.


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[harley]

I recommend taking no action regarding SS before reading this excellent book by Kotlikoff, et al:

Get What's Yours: The Secrets to Maxing Out Your Social Security (The Get What's Yours Series): Laurence J. Kotlikoff, Philip Moeller, Paul Solman: 9781476772295: Amazon.com: Books

You could end up leaving tens, if not hundreds, of thousands of dollars on the table if you get it wrong (as I realized my mother did after I read the book; had I read it years ago, her life could have been much more comfortable as early as age 62).

If you're going to read this, make sure you get the updated version that covers the changes in SS that were made this year. I read the previous version last year, and made a number of plans regarding SS, only to have the gov't pull the rug out from under them. Since the file and suspend/spousal benefit was pulled, unless you've got other issues like ex-spouses, dependent children, or disability, I doubt the book will be that much help. But as I say, I haven't read the new edition yet.

 

[calico1597]

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

 

[harley]

I'm still planning to wait until 70 to maximize DW's benefit in case I die first. Our next dilemma is whether to go ahead and take hers in a couple of years when she turns 62. There's no real gain to waiting or taking it, financially. I'm thinking of delaying at least until 66, just to give us a few more years of having space to do Roth conversions in the 15% bracket. As soon as we start SS we'll get bumped either out or pretty close to the limit of the 15% bracket. Once I start SS and our RMDs kick in we'll be well over. Although hopefully by then our small side business will be closed down, giving us a downward bump in income. Hard to believe I'd be happy about less income, but between the tax code and the fact that we have more than we need already it makes some sense.

 

[jabbahop]

Harley - I think we are planning to use the same strategy. Delay mine and be flexible on my wife's.


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[sengsational]

Surprising how many people insist on monte carlo or otherwise insist on trying a spread of investment returns when calculating withdrawal rate, but automatically lock-in a high age, well beyond 70, when making the SS decision. I guess it causes cognitive dissonance to be planning so hard on spreading out funds, only to not be able to use them.

 

[harley]

Surprising how many people insist on monte carlo or otherwise insist on trying a spread of investment returns when calculating withdrawal rate, but automatically lock-in a high age, well beyond 70, when making the SS decision. I guess it causes cognitive dissonance to be planning so hard on spreading out funds, only to not be able to use them.

I'm not quite sure what point you are making here. Seriously, I reread the post a number of times and am just missing the point. Maybe I need smaller words.

In my case, it's easy to lock in on the high age for SS. In the first place, we don't need the money and never counted on it in our calculations. Also, and I think this applies to many here, I'm a natural born delayed gratification person. It's not a hardship to think about delaying SS. And I'm very protective of DW, who is not a person who does financial stuff for fun, so locking in the maximum annuity for her is a no brainer for me. If we needed it to make our stash last, it would be a different story. But we've even got a fair amount of play in our SWR, so not a problem.

 

[samclem]

If we needed it to make our stash last, it would be a different story.

Agree with your post. But, even in the situation above, if you needed to take SS before 70 to make your stash last, you'd probably be in a situation where your monthly income (from investments or whatever) was very close to your min monthly spending needs. And in that case, and not knowing how long you or your spouse will live, using your stash to increase that SS check by 8.4% to 6.5% per year--for the rest of your life, and adjusted upward for inflation, would still probably be the smart move.

 

[sengsational]

I'm not quite sure what point you are making here.

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. Most people here seem to put less credit on models that use a static average return (i.e. 6% for stocks and 3% for bonds), and more credit on variable returns (FIREcalc or Monte-Carlo).

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!

 

[Independent]

[sorry for lengthy note] Like most, or all, of us on this site DW and I are financially secure. So, whether I ultimately collect an aggregate gazillion dollars in SS benefits, or some percentage less than that, it really doesn't matter,

I suppose your epiphany is the paragraph above.

I agree. Most people who post here have belt-and-suspenders retirement plans. The difference between claiming earlier or later, even if it appears "wrong" when their DoD becomes known, is small relative to their total assets.

 

[Dawg52]

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:

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

 

[nun]

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.