my SS question

[ducky911]

Hi ,

Sorry for this as I we go over this a lot.

I am full retirement age and although I do not need it I would like to start my SS now.

current: yearly 31,200
at 70: 41,200

So my frustration is I can collect 31200 times 4 years, about 125k. Or wait and get 10k per year more for life. With increases!

10k on 125k is 8%....pretty nice investment! Of course I will never get the original 125k back

Darn looks like I have to wait. Any advice?

 

[Sunset]

Some folks who do not need it, hold off since SS is like a great annuity. If the market tanks like 2008, that is when they sign up for SS so they won't be spending so much of their savings which dropped in value.
Saves them from selling off investments at low prices.

Right now at high prices is the time to live off investments and let SS grow.

 

[97guns]

Nobody knows what tomorrow brings, take it now

 

[HadEnuff]

There is no wrong or right answer. I'm a "take it now" guy. That's what I'm happy with, but that doesn't make me right or wrong.

After I die, if someone wants to crunch the numbers on how my investments that I didn't have to spend did, and how long I lived, and what taxes I had to pay, and which taxes I avoided or delayed....maybe they'd know if I was right or wrong.

 

[pb4uski]

In theory, if you are single then it doesn't matter as the premiums and discounts from your FRA benefit are supposed to be actuarially neutral. However, if your family longevity is good and you are in good health then IMO it is better to wait as it is likely that you will outlive the actuarial assumptions. If not, then take it early.

If you are married then it gets more complicated.

Either way, plug your situation into SSAnalyze - Bedrock Capital Management and see what it suggests.

 

[Texas Proud]

Nobody knows what tomorrow brings, take it now

Why does a number of people just jump to 'take it now' without getting any more info... this is not the answer for everybody...


To the OP...

Do you have a spouse?
Does spouse have their own SS record?
If not, will they get a gvmt pension? (this would offset or eliminate any spousal SS)

Is spouse younger than you? (women live longer and if they do not have a SS record or a small one then delaying yours might be the best)...


What about family history? Do people live long in your family?

My mom is 97... her dad died at 98... other GPs dies in their 80s or early 90s... I am hoping I live long also... but, I have a friend whos dad died in his 50s... GPs also died young... has aunts and uncles that have died young... he is single and he plans to take it ASAP...

 

[pb4uski]

+1 IMO bad advice to say an unqualified "take it now" without more information on family longevity, health status, spouse, etc.

 

[Sunset]

Nobody knows what tomorrow brings, take it now

Sort of like my friend: don't save, spend it all now because you might not live long enough to retire.

 

[GrayHare]

The 8% return is a common misconception. First, realize SS is your money being given back to you. Here's a simple example. Your friend borrows $1000 from you, and says, "I can pay you back $500 this year and another $500 next year. Or, instead of that I can pay you back $1000 next year. By waiting until next year you'll be getting twice as much!" If you see the fallacy in that, you can also see that delaying SS is not an 8% return, instead it's your money plus a COLA being paid back to you over a shorter time. The only way you "win the SS game" is by living longer than the actuarial table guesses you will.

 

[pb4uski]

The best way to look at it is the way the OP framed it... he would be paying (or really foregoing) $31,200 for 4 years, or ~$125,000 in exchange for an extra $10,000 for life.

That is an 8% payout rate, which is pretty attractive for a COLA annuity issued to a 70 year old... certainly better than he would get in the commercial market.

 

[HadEnuff]

While I agree that jumping to a "take it now" conclusion may not be right for everyone, I wouldn't put much stock in the the "family longevity" issue. My mom and her mom both died in the same year. My Dad lived to 88, but had one sibling who who never saw 35, and another who never saw 75.

My SIL just passed away at 63, while her 88 year old mom is thriving.

 

[ducky911]

The best way to look at it is the way the OP framed it... he would be paying (or really foregoing) $31,200 for 4 years, or ~$125,000 in exchange for an extra $10,000 for life.

That is an 8% payout rate, which is pretty attractive for a COLA annuity issued to a 70 year old... certainly better than he would get in the commercial market.

Yes, pretty attractive. If available commercial today I would be all over it.

 

[mystang52]

I ER'd at 60, and our initial plan was to start taking SS at 62. But we realized we didn't need the money, and deferred taking it. But to ease the stress of the decision process, we revisited the issue every 6 months. That made it simpler; we didn't have to overanalyze the long term implications. Rather, it became simply one of "we're comfortable waiting another 6 months."
Fast forward to the present, and we decided I will start taking SS come this August, when I turn 65. That is the right decision FOR US.
As so many will say, there really is no right or wrong decision here. But rather than decide take it now or wait to age 70, maybe follow my process and simply revisit the deferral decision every few months.

 

[97guns]

Nobody knows what tomorrow brings, take it now

Nobody knows what the future holds for SS also, they are in a big heap of trouble

 

[Ed B]

I ER'd at 60, and our initial plan was to start taking SS at 62. But we realized we didn't need the money, and deferred taking it. But to ease the stress of the decision process, we revisited the issue every 6 months. That made it simpler; we didn't have to overanalyze the long term implications. Rather, it became simply one of "we're comfortable waiting another 6 months."
Fast forward to the present, and we decided I will start taking SS come this August, when I turn 65. That is the right decision FOR US.
As so many will say, there really is no right or wrong decision here. But rather than decide take it now or wait to age 70, maybe follow my process and simply revisit the deferral decision every few months.

+1

I like your process.

 

[evilanne]

Breakeven point to recoup the $125K would be 12.5 years--if you start at age 70 and live past 82.5 years of age you come out even, live longer & you come out ahead. The Government is betting that you won't . Another way to look at it if you don't need the money is to calculate how much it would be if you took it and invested it all but I think you would need a pretty high rate of return to make this an advantageous option if you expect to live to mid 80's or beyond

 

[Refresher]

Hi ,

Sorry for this as I we go over this a lot.

I am full retirement age and although I do not need it I would like to start my SS now.

current: yearly 31,200
at 70: 41,200

So my frustration is I can collect 31200 times 4 years, about 125k. Or wait and get 10k per year more for life. With increases!

10k on 125k is 8%....pretty nice investment! Of course I will never get the original 125k back

Darn looks like I have to wait. Any advice?

If your single an don't need it why take it now?
It's highly unlikely but something can happen to your current portfolio.

If you wait you will have a bigger check.
If you leave this world earlier than breakeven age
Is the money really important anymore?

 

[Which Roger]

The first question I would ask the OP, even before all of the other important questions raised in the replies, is this: Is it more important for you to maximize the expected amount you will receive, or to minimize the probability of dying broke?

 

[Texas Proud]

While I agree that jumping to a "take it now" conclusion may not be right for everyone, I wouldn't put much stock in the the "family longevity" issue. My mom and her mom both died in the same year. My Dad lived to 88, but had one sibling who who never saw 35, and another who never saw 75.

My SIL just passed away at 63, while her 88 year old mom is thriving.

Not saying that there can be some who die young while others live much longer.... but if almost everyone in the family tree lived a long life except for some who died because of an accident, then I would say there is a strong probability that you would live long also....

 

[dtbach]

Another consideration is taxes on traditional IRA's. I plan to spend down some of the amount in them as I wait longer for the SS. Then at 70 I won't have as much of an MRD to take from them.

For me right now, I have a mortgage and kid's in college that help mitigate the taxes taken from my IRA's. And the wife is 6 years younger than me with a much smaller SS. I look at it as a insurance policy for her if I kick the bucket before her.

NOTE: My mother lived to 93, Dad is still going at 97 and most of my GP died in their 80's.

 

[Curmudgeon]

The 8% return is a common misconception. First, realize SS is your money being given back to you. Here's a simple example. Your friend borrows $1000 from you, and says, "I can pay you back $500 this year and another $500 next year. Or, instead of that I can pay you back $1000 next year. By waiting until next year you'll be getting twice as much!" If you see the fallacy in that, you can also see that delaying SS is not an 8% return, instead it's your money plus a COLA being paid back to you over a shorter time. The only way you "win the SS game" is by living longer than the actuarial table guesses you will.

That's just wrong, in so many ways. First of all, if your friend pays you half now and half later, how does 1/2 + 1/2 add up to more than 1? But 8% of 1 plus 1 DOES add up to more than 1
Most importantly, the 8% is not a COLA. When there are COLAs, those get ADDED to the 8% - so he will likely make MORE than +8%.
The 8% is an actuarial adjustment - that is, if typical life expectancy is 80, and they start paying you at 65, they have to stretch that money out over 15 years. If you start taking at 70, it only has to be stretched over 10 years, so you get a lot more each year. If you live to be exactly 80, it adds up to the same amount. If you live longer than 80, then you come out ahead - because SS continues to pay, at the higher rate, until you die.