Opinois needed: I delayed SS, now 63 = Mistake?

[Orchidflower]

After reading a few topics on taking or delaying taking Social Security, here is my dilemma:

I will be 63 this month. I did not take my Social Security yet. If I sign up for it now, I will receive it in something like 3-4 months, but I think I have screwed myself out of one year's and a couple month's worth of moola.
My Personal Investing professor at the local community college last year really urged us to take it at 70, which is what I listened to since my own parents are making it to 90...although the grandparents died in their 70's and 80's.
Let me add: I have never had anything wrong with me to date healthwise that I know of (no diabetes, no bad heart, nothing that I know of).
If you were me, would you just go ahead now and sign up for Social Security--and lose a little over a year's worth of money from them--or just continue waiting until 70?
I'm concerned now....what to do? What to do? Worry, worry, worry!

 

[landover]

After reading a few topics on taking or delaying taking Social Security, here is my dilemma:

I will be 63 this month. I did not take my Social Security yet. If I sign up for it now, I will receive it in something like 3-4 months, but I think I have screwed myself out of one year's and a couple month's worth of moola.
My Personal Investing professor at the local community college last year really urged us to take it at 70, which is what I listened to since my own parents are making it to 90...although the grandparents died in their 70's and 80's.
Let me add: I have never had anything wrong with me to date healthwise that I know of (no diabetes, no bad heart, nothing that I know of).
If you were me, would you just go ahead now and sign up for Social Security--and lose a little over a year's worth of money from them--or just continue waiting until 70?
I'm concerned now....what to do? What to do? Worry, worry, worry!

I suggest you read this thread from best of board.

 

[Martha]

If you end up deciding to take benefits early, here is the Social Security Administrations explanation of the extent benefits are reduced. . Pick the year you were born and read the appropriate link:
Social Security Benefit Publications


Edit to fuss around a little to address taking benefits before full retirement age but after age 62. See this page of the social security handbook: SSA Handbook §0723

 

[FIRE'd@51]

I will be 63 this month. I did not take my Social Security yet. If I sign up for it now, I will receive it in something like 3-4 months, but I think I have screwed myself out of one year's and a couple month's worth of moola.

No you haven't. At 62, you get 75% per month of what you would have gotten at 66. If you start SS somewhere between 62 and 66, your benefit is prorated. So if you started at age 63 and four months, you would receive 83.3% of your age 66 benefit per month.

 

[haha]

After reading a few topics on taking or delaying taking Social Security, here is my dilemma:

I will be 63 this month. I did not take my Social Security yet. If I sign up for it now, I will receive it in something like 3-4 months, but I think I have screwed myself out of one year's and a couple month's worth of moola.
My Personal Investing professor at the local community college last year really urged us to take it at 70, which is what I listened to since my own parents are making it to 90...although the grandparents died in their 70's and 80's.
Let me add: I have never had anything wrong with me to date healthwise that I know of (no diabetes, no bad heart, nothing that I know of).
If you were me, would you just go ahead now and sign up for Social Security--and lose a little over a year's worth of money from them--or just continue waiting until 70?
I'm concerned now....what to do? What to do? Worry, worry, worry!

If you need or want it now, take it. You don't lose anything. Every month you delay beyond age 62 adds a bit to your starting monthly payment, in a totally seamless way. Your birth year makes your full retirement age 66. Each year you delay adds 8% (which is subsequently adjusted for inflation) to your starting monthly benefit. Divide that 8% by 12 months, and each month you wait gives you an additional .67% of starting benefit.

I am curious- what has made you question your personal finance professor's advice to wait?

Ha

 

[FIRE'd@51]

Each year you delay adds 8% (which is subsequently adjusted for inflation) to your starting monthly benefit. Divide that 8% by 12 months, and each month you wait gives you an additional .67% of starting benefit.
Ha

I believe it's actually 6.25% per year, or 0.52% per month.

Edit to clarify above sentence: I guess it depends which number you are using as the base. I was using the age 66 number. It appears that HA is using the age 62 number. Either result in the same $ amount per month.

 

[gerrym51]

After reading a few topics on taking or delaying taking Social Security, here is my dilemma:

I will be 63 this month. I did not take my Social Security yet. If I sign up for it now, I will receive it in something like 3-4 months, but I think I have screwed myself out of one year's and a couple month's worth of moola.
My Personal Investing professor at the local community college last year really urged us to take it at 70, which is what I listened to since my own parents are making it to 90...although the grandparents died in their 70's and 80's.
Let me add: I have never had anything wrong with me to date healthwise that I know of (no diabetes, no bad heart, nothing that I know of).
If you were me, would you just go ahead now and sign up for Social Security--and lose a little over a year's worth of money from them--or just continue waiting until 70?
I'm concerned now....what to do? What to do? Worry, worry, worry!

if it's going to keep eating at you then take it now

 

[Rich_by_the_Bay]

I wonder how a finance professor can give general advice to wait until age 70 without knowing the individual circumstances. Life expectancy, desire to work prior to full retirement age, expenses, health issues, other investments come to mind.

 

[packrat44]

You are okay. After evaluating information on the pros and cons of early or later receiving of SS, then make up your mind which is best for YOU (not someone else).

I am also 62, turn 63 next month. I have moved my TSP funds into a traditional IRA and have been then converting to a ROTH. After converting all of mine over, I will do the same for my DW.

Presently I am using the top of the 28% tax bracket as to how much to convert each year. It will take about 4 more years to complete the conversion at this rate. If I were to begin receiving SS now, it would be taxed at the 30% bracket (for 85% of SS) or I would have to reduce my yearly conversion to the ROTH which would delay the conversion by about 1 year. Since I strongly believe personal taxation will be increasing in the very near future, I want to complete the ROTH conversion as soon as possible.

My parents are both in their 90s; DW parents are in their upper 80s. All grandmothers on both sides lived to their upper 90s.

My intent at the moment is to begin SS at between 68 and 70, with my DW starting at 62. Since she is 8+ years younger, she will probably outlive me by 12 years. With this plan, she could collect my higher SS payment at the time of my death.

Delaying the receipt of SS payments at this time is the best for me. You need to work the details and decide what is best for you.

 

[cute fuzzy bunny]

Easy. Do you want or need more spending money now or would you like more in your early to mid 80's and beyond, when you'd reach a break-even?

And how comfortable are you that congress wont cut the benefits sometime in the next 20-25 years?

 

[ziggy29]

If you don't need the money AND you are healthy, waiting is probably a good idea.

 

[Sam]

If you don't need the money AND you are healthy, waiting is probably a good idea.

Sounds like a good advice to me.

 

[W2R]

Sounds like a good advice to me.

Me too. I plan to wait until at least 66 due to longevity in my family. Plus, I know I will have enough money to get by from 62-66 either way, and I am more concerned about having enough when I am elderly.

 

[Sam]

Want2retire,

I agree with you, but I have exceptions to the general rule.

Let's say I'm 62 today, I have no need for SS because I'm withdrawing from my saving/retirement account at a percentage I'm comfortable with.

I'm now 63, the market tanks. My portfolio took a 10% hit in inflation adjusted dollar. I bite my tongue, and continue to uncomfortably withdraw from my account at a higher percentage.

I'm now 64, and the market tanks again. I'm no longer comfortable with the now too high percentage rate of withdrawal. I would start my SS now to reduce the burden on my portfolio.

Would you do the same?

 

[haha]

Me too. I plan to wait until at least 66 due to longevity in my family. Plus, I know I will have enough money to get by from 62-66 either way, and I am more concerned about having enough when I am elderly.

Sounds like a good plan. Mostly yuppies in my building. And a couple of older single women who live in studios in the basement. I thought these were storerooms until one day I met one of the women coming out her door while I was on my way to the laundry room. Not an ideal living arrangement! But it is in the city and near buses, doctors, markets etc.

There is a lot of loose talk on this board about how money is worth much more to you when you are young than later. I say B.S! When you are young all you need is some cheap wine and a boy/girl to entertain yourself with and you are OK. And if not, things will always get better with time.

Not so when you are no longer young. I have been looking at co-op apartments. I see lots of young and middle-aged single people living in them, and some "empty nester" couples as well as some very old ladies. I have been so impressed by what a great difference living conditions can make for these women. Often they are volunteer gardeners at the building. The grounds look beautiful, and they are the main reason why. There are always residents going in and out who chat with them and express their appreciation for the excellent work they are doing. (As I do too! I am developing an army of old ladies looking for upcoming vacancies for me to check out.)

These women are gifted in many ways, but it would be harder for them to express these gifts without the money to own and maintain one of these apartments.

My personal motto is to shoot for the moon, but remember that there can be "many a slip twixt cup and lip".

Ha

 

[Bikerdude]

Want2retire,

I'm now 63, the market tanks. My portfolio took a 10% hit in inflation adjusted dollar. I bite my tongue, and continue to uncomfortably withdraw from my account at a higher percentage.

I'm now 64, and the market tanks again. I'm no longer comfortable with the now too high percentage rate of withdrawal. I would start my SS now to reduce the burden on my portfolio.

I think this is a reasonable plan to follow should someone decide to delay SS.

 

[ERD50]

I am curious- what has made you question your personal finance professor's advice to wait?

Ha

Orchidflower, I'd also like to know the answer to Ha's question.

Regardless of the opinions other people have one way or the other, why the sudden change and worry for you?

-ERD50

 

[W2R]

Want2retire,

I agree with you, but I have exceptions to the general rule.

Let's say I'm 62 today, I have no need for SS because I'm withdrawing from my saving/retirement account at a percentage I'm comfortable with.

I'm now 63, the market tanks. My portfolio took a 10% hit in inflation adjusted dollar. I bite my tongue, and continue to uncomfortably withdraw from my account at a higher percentage.

I'm now 64, and the market tanks again. I'm no longer comfortable with the now too high percentage rate of withdrawal. I would start my SS now to reduce the burden on my portfolio.

Would you do the same?

Hmm! Interesting scenario. Although I plan to take SS at 66, I do plan to be open to re-evaluation and re-assessment of my SS decision every year. And that would apply to taking it later than 66, as well as earlier than 66. If I do spectacularly well in the market from ages 62-70, I might even put off taking my SS to 70.

Did I mention that my mother will be 98 in October? Like RichInTampa said or implied, different people have different situations to plan for and different priorities.

 

[Sam]

Although I plan to take SS at 66, I do plan to be open to re-evaluation and re-assessment of my SS decision every year. And that would apply to taking it later than 66, as well as earlier than 66. If I do spectacularly well in the market from ages 62-70, I might even put off taking my SS to 70.

That's it. Good planning.

 

[W2R]

But I'm also setting aside a bucket of cash from my nestegg (which will be in laddered CD's when I retire) that is enough to pay myself social security from 62-66. Sounds ironclad, but then NOTHING in life is that ironclad; Katrina taught us that. Even with insurance, if a tornado/earthquake/hurricane/fire destroyed my home, I might have to get into that bucket, for example.

Chances are pretty good I'll make it to 66 before having to claim my SS, though. Maybe more certain than if I put everything in the market.

 

[ERD50]

Want2retire,

I agree with you, but I have exceptions to the general rule.

Let's say I'm 62 today, I have no need for SS because I'm withdrawing from my saving/retirement account at a percentage I'm comfortable with.

I'm now 63, the market tanks. My portfolio took a 10% hit in inflation adjusted dollar. I bite my tongue, and continue to uncomfortably withdraw from my account at a higher percentage.

I'm now 64, and the market tanks again. I'm no longer comfortable with the now too high percentage rate of withdrawal. I would start my SS now to reduce the burden on my portfolio.

Would you do the same?

My only problem with that, is we can only know that the market has *been* down for the past two years, we don't know that it will continue.

So, after a two year bear, you might decide to supplement with SS to reduce your withdraw rate. Then, the next four years, the market looks rosy, and you wonder what all the excitement was about.

I'm just not sure I would know what to do two years into a bear. I would know what I *should* have done looking in the rear-view mirror. But that is easy (but so *hard* to avoid!)

-ERD50

 

[Sam]

And that's fine. Everyone has a different level of "courage". I was just giving an example. You could extend that example to 3, 4, or more years.

When I look at the historical data for 1973 and 1974 (2 consecutive very bad years), I know I had to do something.

 

[SecondCor521]

Orchidflower,

I can't tell from your post, but you actually can start taking your Social Security any time after your early retirement age. For every month your SS start date is before your full retirement age, your monthly benefit amount is cut by a certain percentage. For every month your SS start date is after your full retirement age, your monthly benefit amount is increased by a certain percentage. However, your monthly benefit amount will not increase after age 70.

Also, I don't think there is any way to tell the government that you changed your mind and want to start taking at age 62 last year, and would they please pay you the year of SS you missed. It's water under the bridge now.

I have no advice as to when you should start taking it except I would definitely start it by age 70, since there is absolutely now benefit to starting it beyond that date.

2Cor521

 

[Independent]

Want2retire,

I agree with you, but I have exceptions to the general rule.

Let's say I'm 62 today, I have no need for SS because I'm withdrawing from my saving/retirement account at a percentage I'm comfortable with.

I'm now 63, the market tanks. My portfolio took a 10% hit in inflation adjusted dollar. I bite my tongue, and continue to uncomfortably withdraw from my account at a higher percentage.

I'm now 64, and the market tanks again. I'm no longer comfortable with the now too high percentage rate of withdrawal. I would start my SS now to reduce the burden on my portfolio.

Would you do the same?

I'm pretty sure that this is true:

If you have a crystal ball, and it tells you that market returns are going to be good, then you want to take SS now. This lets you keep more money in the market so you ride it up. If the crystal ball tells you that the market is going down, then you want to defer SS. Get the money out of the market, buy stuff with it today before it shrinks. Meanwhile, your SS benefit grows.

But if that's true, then I think I make a different decision at 64 then you do (maybe I'm reading the post wrong).

If the two years of poor markets after 62 make you think that a sharp upturn is coming, then you may want to get SS now. If the two poor years make you think that the market is going to continue down, then you want to keep deferring.

If the two poor years simply tell you that the market has ups and downs and you don't have a crystal ball, then you don't have any new information about where the market will go in the future. In this case the two poor years shouldn't make you change your plans.

 

[chinaco]

Taking SS at 62 vs 66.x vs 70 depends on your situation. What other finances you have, other income sources during retirement, Do you have a spouse, expected longevity, etc.

Sorry, but there is not a simple answer. In the end, if you can afford to wait (money wise), you will need to make the decision based on your expectations of what the future holds.