Social Security

[almost there]

My plan is to take it at 62 (in 4 yrs, would add 36k / yr.) and stay in the lower income tax bracket. Based on future projections..(Guesstimates)
They are betting I am going to die, I am betting I am going to live a long time. lol lol

 

[joeea]

My plan is to take it at 62

They are betting I am going to die, I am betting I am going to live a long time.

Depending on spousal situation, many folks betting on longevity would make exactly the opposite move and delay claiming their benefits.

 

[pb4uski]

+1 what almost there wrote makes no sense at all depending onat he means by living a long time.

 

[UnrealizedPotential]

Without context, it's difficult to say. But if by "they" he means doctors, then yes, I would take it at 62. If that's the case though, I am not sure why he thinks he will live longer.

 

[burned out shift worker]

Yes one year I maxed at 73,000 years latter could not max at 100,000 so the year I made 73K counted more to my SS calculation then the 100K year.

I left at 57 1/2 YO and will earned 0 from now till I collect if at 62 YO the lack of earnings will cost me about 100 bucks a month. last 14 years I maxed out.
Thanks, Joe

 

[pb4uski]

Without context, it's difficult to say. But if by "they" he means doctors, then yes, I would take it at 62. If that's the case though, I am not sure why he thinks he will live longer.

I assumed that by "they" he meant the SSA and the mortality tables underlying the discounts and premia for taking early or delaying.

 

[joeea]

I assumed that by "they" he meant the SSA and the mortality tables underlying the discounts and premia for taking early or delaying.

I assume the same, which was why the "take it at 62" conclusion doesn't seem to make much sense.

 

[UnrealizedPotential]

I assume the same, which was why the "take it at 62" conclusion doesn't seem to make much sense.

I think you both are right. If that's true, then taking at 62 doesn't make sense if he thinks he will live longer.

 

[schellem]

The 'working until full retirement age' can be deceiving. Am 57 looking at ER and concerned with getting a close SS payment calculated at my FRA of 67, if I retire this year. I've been fortunate with salary always being above average and mySS site says I will get 2,858 if I continue until FRA.

Talking to SSA, if I quit working now my payment would be 2717. I ain't looked at a pay stub in a while but guess I'd be loosing money here if I kept working to get only 141 more a month 10 years from now.

 

[RunningBum]

Yes one year I maxed at 73,000 years latter could not max at 100,000 so the year I made 73K counted more to my SS calculation then the 100K year.

How do you figure that?

 

[joeea]

The 'working until full retirement age' can be deceiving.

Talking to SSA, if I quit working now my payment would be 2717. I ain't looked at a pay stub in a while but guess I'd be loosing money here if I kept working to get only 141 more a month 10 years from now.

Presumably, you would get a paycheck if you kept working, and thus wouldn't actually lose any money.

Some folks would welcome an additional inflation-protected, guaranteed $141/month for the rest of their lives, and potentially the rest of their spouse's lives as well.

And of course it would be even more than $141 if you delayed until 70.

 

[almost there]

There's about a 40% chance a 60-year-old man won't reach age 80.
And they (SS) knows it.
For me, spending SS early, allowing more potential inheritance is smart.
Also, If I wait till 70, there is no way I could stay in the tax bracket I want to be in. Its a personal decision. Also, you could pretend to wait those 8 years between 62 and 70 (and actually take it) and invest it, bank it what ever. Then at 70 (in my case) have an extra $300k+ sitting there. That would not exist if you were hit by lightning etc. at 70.
Not here to change anyone's mind.
Just what I have come up with.

 

[Dtail]

There's about a 40% chance a 60-year-old man won't reach age 80.
And they (SS) knows it.
For me, spending SS early, allowing more potential inheritance is smart.
Also, If I wait till 70, there is no way I could stay in the tax bracket I want to be in. Its a personal decision. Also, you could pretend to wait those 9 years between 62 and 70 (and actually take it) and invest it, bank it what ever. Then at 70 (in my case) have an extra $300k+ sitting there. That would not exist if you were hit by lightning etc. at 70.
Not here to change anyone's mind.
Just what I have come up with.

Agree on a couple of points, but if one had a very high percentage of TIRA/401k, they could have more Roth conversions and spend down of TIRA between 62 and 70 in order to reduce the tax torpedo at RMD time by delaying SS.

 

[almost there]

Agree......

 

[Clone]

How do you figure that?

I assume the question is 'How does a $73K year become worth more than a $100K year?' If I misunderstand, then apologies for the following explanation.

The indexing factors for Earnings can be found here: https://www.ssa.gov/OACT/COLA/awifactors.html

If you earned $73K in 2002, that is multiplied by an adjustment factor of 1.51. This goes into the average earnings calculation as $110K. If you earned $100K in 2014, that would be indexed by a factor of 1.08, or $108K in the average earnings calculation.

In my record, 1994 is my 3rd highest earning year, because of the indexing factors. What I earned in 1994 is multiplied by 2.12.

If I look at my 35th highest earning year, I find that it has an indexed value of $95342. If I were to work one more year, and max out the SS earnings, $132900, it would raise my career average monthly earnings by $89, and my monthly benefit at FRA would increase by $13 each month. (15% of the increase in Average monthly earnings).

 

[RunningBum]

I assume the question is 'How does a $73K year become worth more than a $100K year?' If I misunderstand, then apologies for the following explanation.

The indexing factors for Earnings can be found here: https://www.ssa.gov/OACT/COLA/awifactors.html

If you earned $73K in 2002, that is multiplied by an adjustment factor of 1.51. This goes into the average earnings calculation as $110K. If you earned $100K in 2014, that would be indexed by a factor of 1.08, or $108K in the average earnings calculation.

In my record, 1994 is my 3rd highest earning year, because of the indexing factors. What I earned in 1994 is multiplied by 2.12.

If I look at my 35th highest earning year, I find that it has an indexed value of $95342. If I were to work one more year, and max out the SS earnings, $132900, it would raise my career average monthly earnings by $89, and my monthly benefit at FRA would increase by $13 each month. (15% of the increase in Average monthly earnings).

Oh, OK, it's because of the indexing factors, and inflation of 2002 dollars vs 2014. That's a clearer explanation than "because I maxed out" or didn't max out.

 

[pb4uski]

There's about a 40% chance a 60-year-old man won't reach age 80.
And they (SS) knows it. ...

and there is a 60% chance that a 60-year-old man will live beyond 80.

I'm an averages player, so I'll take those delayed retirement credits since it is more likely that I'll benefit than not.

 

[almost there]

Not 100% sure, have you factored in the return and lump on the 8 yrs 62-70 of SS if invested? (even 3% CD's) From say 70-80+ yrs.? Just curious if it still works out better for you.
Amusing your TIRA is under control... Thats the one thing few discuss.

 

[joeea]

There's about a 40% chance a 60-year-old man won't reach age 80.
And they (SS) knows it.

And clearly they also know that there's about a 60% chance a 60-year-old man reaches 80.

For me, spending SS early, allowing more potential inheritance is smart. Also, If I wait till 70, there is no way I could stay in the tax bracket I want to be in. Its a personal decision. Also, you could pretend to wait those 8 years between 62 and 70 (and actually take it) and invest it, bank it what ever. Then at 70 (in my case) have an extra $300k+ sitting there. That would not exist if you were hit by lightning etc. at 70.

If getting hit by lightning at 70 is a big worry, then it might make sense to start benefits at 62. Of course having a spouse who would benefit from a maximal survivor benefit might matter as well. I guess it depends.

Not sure what to do if getting hit by lightning before 62 is a big worry. Maybe just stay indoors a lot.

 

[almost there]

It was just a silly example. I could have said over 5000 die from choking a yr. in the USA. Carry on.........Bottom line...... 40 out of 100 of here will not make it. But all 100 believe they will. lol lol

 

[Ian S]

There's about a 40% chance a 60-year-old man won't reach age 80.
And they (SS) knows it.

Of course but how meaningful is that statistic to an individual who is 60 but in good health? After all, SS lumps everyone together including those with diabetes, cancer, heart disease, etc. There are a number of sites with longevity calculators where you can input more parameters specific to you as an individual. Do that and you may find you're likely to live into your 90's. Of course if you aren't in good health, then taking SS as early as you can is the other side of that coin.

 

[joeea]

It was just a silly example. I could have said over 5000 die from choking a yr. in the USA.

Yup, that's pretty silly too. How many of those choking deaths happen between 62 and 80 or so?

Bottom line...... 40 out of 100 of here will not make it. But all 100 believe they will. lol lol

Yup. You get to consider your personal health, family history, lifestyle, etc, and to consider if you will be part of the unlucky 40% or not. Or you could just throw up your hands and say "YOLO, maybe I'll get hit by lightening".

And you get to decide if you prefer to plan for the less likely case, or the more likely case.

Finally, you get to decide if it would it be better to delay and risk dying young having collected nothing, or claim early and risk dying very old while collecting something less than you could have, and potentially leaving lower benefits to a surviving spouse.

We all get to choose. Ya makes yer choices and places yer bets.

 

[jollystomper]

There's about a 40% chance a 60-year-old man won't reach age 80.
And they (SS) knows it.
For me, spending SS early, allowing more potential inheritance is smart.
Also, If I wait till 70, there is no way I could stay in the tax bracket I want to be in. Its a personal decision. Also, you could pretend to wait those 8 years between 62 and 70 (and actually take it) and invest it, bank it what ever. Then at 70 (in my case) have an extra $300k+ sitting there. That would not exist if you were hit by lightning etc. at 70.
Not here to change anyone's mind.
Just what I have come up with.

I have done a similar analysis, with similar results, except that I use 64 as my earliest SS date, primarily because at that is the earliest age my SS + DW SS + my pension fully covers our planned living expenses, and our savings/investments become extra money to spend/build an estate from. From opensocialsecurity, the projected lifetime difference of taking it at 64 is around $100K less that the optimal strategy... which is not a lot to sway me strongly to delay to 70. Or, perhaps I should say, there would have to be additional reasons beyond this difference to make delaying until 70 a strong case in my situation.

 

[almost there]

Am in great health. Thats why I am taking it early.
Plan to pull on it for over 30 years.
And those 8 yrs will produce $288000 in my case.
And between 70 and 92 it would grow to
just over $600k with a 3 1/2% return.
Not sure how I could ever make that up waiting to take it at 70.
Would have to live a long long Guinness book time...............
And it would be in my account, not SS's...
There is no right answer. Thats why we have options.
Just posting the other side of waiting till 70 coin.
No harm, no foul.

 

[joeea]

I have done a similar analysis, with similar results, except that I use 64 as my earliest SS date, primarily because at that is the earliest age my SS + DW SS + my pension fully covers our planned living expenses, and our savings/investments become extra money to spend/build an estate from.

Excellent! You have done well to get yourself in that position where you can choose.

From opensocialsecurity, the projected lifetime difference of taking it at 64 is around $100K less that the optimal strategy... which is not a lot to sway me strongly to delay to 70.

What do you feel you are gaining in exchange for giving up this $100k?