Social Security future? Applying at 62?

[LRDave]

GPO whacks the spousal and survivor benefit for DW. The survivor benefit for DW was the most compelling reason to wait, so we will just look at it closely as I near 62.

[Tom52]

I am waiting till FRA which is 66. That is about another 13 months away. We don't need the money now and it will allow me to get an ACA month!y subsidy of over $1,500 for DW. She will also wait till she is at least eligible for Medicare before starting SS.

[Aerides]

There are as many opinions on this as forum members!

Here's a recent lengthy thread - granted this was started by a regular troll, and ultimately closed, but will give anyone ample to read on the topic!

http://www.early-retirement.org/foru...why-88951.html

[truenorth418]

Have you considered a bridging strategy?

Many analysts recommend waiting until age 70 to tap SS because the annual payout is much greater than at 62.

If you have a large enough portfolio, go on the SS website and determine your your age 70 payout. Multiply that number by 8. Then carve out 8 years worth of payouts and invest that money in safe investments like CDs or treasuries. The remaining portfolio is invested in any asset allocation you are comfortable with.

Then for the next 8 years spend one years worth of your SS reserve money and whatever withdrawal % of the the remaining portfolio you want - 3%, 4% whatever.

Once you hit age 70 the SS reserve will be depleted but your SS payouts will begin and you can continue spending at the same rate as before.

Run the numbers. You are likely to find you can spend more money overall - very safely - using a bridging strategy than if you take SS at age 62.

[martyp]

Quote:

Originally Posted by truenorth418 Have you considered a bridging strategy? Many analysts recommend waiting until age 70 to tap SS because the annual payout is much greater than at 62. If you have a large enough portfolio, go on the SS website and determine your your age 70 payout. Multiply that number by 8. Then carve out 8 years worth of payouts and invest that money in safe investments like CDs or treasuries. The remaining portfolio is invested in any asset allocation you are comfortable with. Then for the next 8 years spend one years worth of your SS reserve money and whatever withdrawal % of the the remaining portfolio you want - 3%, 4% whatever. Once you hit age 70 the SS reserve will be depleted but your SS payouts will begin and you can continue spending at the same rate as before. Run the numbers. You are likely to find you can spend more money overall - very safely - using a bridging strategy than if you take SS at age 62.

I already have $400k in savings that I could leave untouched and mentally apply to the gap between 62 and 70.

[Mdlerth]

I wonder if concerns regarding the future solvency of SS may become self-fulfilling. If everybody taps it sooner, won't it deplete its reserves sooner?

Sure, it's supposed to be actuarially neutral over one's lifetime, but does that also mean it's cash-flow neutral? I doubt it.

[martyp]

I had always planned to take SS at my full retirement age of 66+. I just surprised myself with my change of heart. I have had some life changes too. Divorced this year and moved to Thailand. However, the election has changed my confidence and inclined me to believer that there are plenty of changes ahead and that SS will not be immune. I feel like I can lock my place in the system to minimized the changes.

I'm not obsessing about a couple of hundred dollars/month but I don't really want to do anything stupid. Most published financial advice (which we all know is pretty useless) advocates taking SS later. Some advice says to enjoy some extra money now when you can which is consistent with most of us that retire early. Enjoying life while I'm younger and healthy was certainly a significant factor in my retiring at 55.

[RunningBum]

Good advice I've learned here is to start taking SS in a down market anytime between 62 and 70. That way you are selling less of your investments at a low. Basically you are betting that the additional investments you are able to keep in the market will rebound at a better rate than you'll get in SS increases by deferring.


Some people think they can beat SS increases in any market. Certainly possible, but not without risk.


The possibility of future SS cuts certainly makes a case for taking SS early.


Longevity insurance is a strong case for taking SS late if you have other funds to get you there. You can still spend the same way as you would if you took it at 62, it'll just be coming out of your other investments, knowing that you'll be getting a bigger SS check at 70.


Your personal life expectancy outlook certainly plays a factor.


Some people just don't have the other funds available to wait to take SS.


There are married/family situations that may apply. Since I'm single I don't keep up with those.


There are other factors I've either forgotten, or don't feel have much merit.


Most likely, it won't make all that much difference when you take it.


Personally, with 6 years to go, longevity insurance is my goal, but the possibility of cuts after I become eligible and timing a down market means that waiting until 70 isn't necessarily the right choice for that.


EDITED TO ADD:
Keeping income low to qualify for ACA subsidies is a good case for deferring until at least 65. Leaving room to do a tIRA->Roth conversion under the 15% cap is another reason to defer.


EDIT #2:
The "hold harmless" provision limits Medicare part B rate increases to your benefit increase rate, but only if you've started collecting SS. This makes a case for taking at 65. Thanks to Sunset for reminding me.

[IMATERP]

As a member of the NC State Retirement plan (or scam,) I have the option of:

a. Taking my pension at 60

B. Taking a blended amount at 60 which includes a social security leveling component. Hence, my adjusted pension amount would be higher between 60 and 62, but be adjusted lower at age 62 once Social Security kicks in.

I am retiring in 3 weeks and 4 days (where I turn 57) and I'm opting to wait until age 60 to make my decision. It really depends if I need a side hustle for my own sanity. Otherwise, I'd rather play with the house's money for a while.

I

[RunningBum]

Quote:

Originally Posted by Mdlerth I wonder if concerns regarding the future solvency of SS may become self-fulfilling. If everybody taps it sooner, won't it deplete its reserves sooner? Sure, it's supposed to be actuarially neutral over one's lifetime, but does that also mean it's cash-flow neutral? I doubt it.

I don't think so, because people will be getting less. If in 2034, incoming revenues can only handle 75% of benefits, but everybody took early such that they are only receiving 75% of full retirement benefits, then it'll be ok. I doubt the math works out entirely like that, but there's something to it.

The worst case for solvency is having more people live longer than expected. This is exacerbated if those people waited to take the largest payment, collecting big checks beyond the breakeven point.

[REWahoo]

Excellent summary RunningBum.

Quote:

Originally Posted by RunningBum Good advice I've learned here is to start taking SS in a down market anytime between 62 and 70. That way you are selling less of your investments at a low. Basically you are betting that the additional investments you are able to keep in the market will rebound at a better rate than you'll get in SS increases by deferring.

^ This was my motivation for taking SS at 62, since I hit that mark in late 2008 when the market was on life support. Couldn't bear the thought of continuing to live entirely off a rapidly dwindling nest egg when I could reduce the bleeding by starting my SS benefits. Absolutely no regrets.

[martyp]

Quote:

Originally Posted by RunningBum Good advice I've learned here is to start taking SS in a down market anytime between 62 and 70. That way you are selling less of your investments at a low. Basically you are betting that the additional investments you are able to keep in the market will rebound at a better rate than you'll get in SS increases by deferring. Some people think they can beat SS increases in any market. Certainly possible, but not without risk. The possibility of future SS cuts certainly makes a case for taking SS early. Longevity insurance is a strong case for taking SS late if you have other funds to get you there. You can still spend the same way as you would if you took it at 62, it'll just be coming out of your other investments, knowing that you'll be getting a bigger SS check at 70. Your personal life expectancy outlook certainly plays a factor. Some people just don't have the other funds available to wait to take SS. There are married/family situations that may apply. Since I'm single I don't keep up with those. There are other factors I've either forgotten, or don't feel have much merit. Most likely, it won't make all that much difference when you take it. Personally, with 6 years to go, longevity insurance is my goal, but the possibility of cuts after I become eligible and timing a down market means that waiting until 70 isn't necessarily the right choice for that.

I like the strategy of using current savings to enable taking SS later but that doesn't work if you think there will be cuts later. All investment choices are a risk.

[Freedom56]

Everyone in early retirement should take SS starting at age 62. If you wait until 66, the break-even is age 78. It makes no sense to wait.

[RunningBum]

Quote:

Originally Posted by martyp I like the strategy of using current savings to enable taking SS later but that doesn't work if you think there will be cuts later. All investment choices are a risk.

I found that it just moves the breakeven point to later. It can work, but you probably have to outlive the average.

[PandaBear]

My dh plans to start his at 62. I didn't pay into SS myself and my pension is way more than his benefits regardless of when he starts. If he goes first then so do the payments.

[Lawrencewendall]

If your investments are making more than 5%/6.6%/8%, numbers show it's better to take SS at 62 and keep your investments working for you. (Born after 1960)

https://www.ssa.gov/OACT/ProgData/ar_drc.html

[VanWinkle]

Waiting til DW and I are on Medicare. We have to defer SS income to stay in the "sweet spot" for ACA subsidies and cost sharing. We could take the SS now and then pay it all out in Health premiums, or wait to 65 and pay less for out health insurance.

I agree that if you need the cash flow now, take it early. I am not a fan of waiting past FRA (66) as then i think you are gambling on your life expectancy.

I have done all of the break even calculations, but am not impressed with making the decision based on break even analysis.

This is a personal decision and is different for each person.

VW

[VanWinkle]

Quote:

Originally Posted by foxfirev5 Taking it at 62 and hoping I live long enough to regret the decision.

+1

[Car-Guy]

Quote:

Originally Posted by martyp I am about to become 62 and I’m contemplating applying for Social Security benefits. To be honest, I’m suffering from a bit of paranoia about US politics of the last couple of years. SS is supposed to be solvent until 2034 but I’m concerned that either the economy or the crazy politics will lead to tinkering with the system before then. Past discussion of SS reform has exempted people in the system or those over 55 but I can’t help feeling it’s safer to be in the system rather than out.

Similar concerns but even more so back when I turned 62. Didn't need it then and I suspect I never will but I took it at 62 and have never regretted it. I want to get back as much of my money that I can, that I was "forced" to pay in all those years. It seems funny to me that I needed the money most of the years I was paying it in, now I don't.

[golfnut]

Quote:

Originally Posted by garyt Kidding aside, that doesn't mean a thing either. Sure if your only goal is to get as much back from Uncle Sam as possible it may matter. I could couldn't care less if I maximize the exact amount I get back. I want to maximize the enjoyment I get out of whatever money I do get. My Dad took SS at 62 and he's now 93. So he technically left money on the table. But he couldn't have retired at 62 without SS and he had a physical job that would've really wore him out had he tried to stay to 65. At 93, a couple extra hundred or so a month is meaningless to him.

Good for your dad. Who knows he may not have lived this long if he waited to take SS early given his physical job.