Social Security future? Applying at 62?

[MRG]

I'm 60 and haven't made up my mind. The notion of starting it to help against a down market is appealing. However ACA subsidies today make sense too.

One thing I've never really understood is the thought of if I start at 62 that insulates me from changes in the plan.

[pb4uski]

Turn 62 this month but will not take it now as it will reduce my opportunity to continue taking low tax-cost Roth conversions that save me 15% or more in taxes. I'll wait to FRA or 70 unless there is a recession that causes my portfolio to plummet.

[aboatguy]

BLUF: haven't decided on 52,66 or 70.

I'm retired military and currently a GS employee. I don't plan on staying long enough to qualify for the FERS pension.

Currently we (married) live on my military/va pension/s and bank/invest my salary.
Now for the SS age question:
According to personal capital's retirement planner (I've run multiple scenarios) we can safely spend more money in retirement by collecting @ age 62, (about 50% more than our current spending). All of the scenarios I've run have the potential for leaving a decent amount for our children. But it looks like collecting SS early ensures leaving money to the kids and bridges a gap in my 50s where (worst case scenario in the markets) we'd have to buckle down and only spend what we spend now.


So back to the OP, my gut wants me to wait to 70, but "our" numbers seem to suggest 62 gives me more security to spend more $$$$ and if we are able to get everything converted to ROTH significantly reduces money going back to Uncle Sugar. (lower tax rate)

The good news is I have a while to wait before we have to make the decision (I will retire @ 55 been doing the OMY since I retired from the Navy)

[Ronstar]

We have had numbers run by accountants over the years and they come up with scenarios by which we collect the most dollars. Most suggest me taking SS at 66 and DW at 70. But all of these calculations work out fine only if we live long enough. And no calculations account for reduced value of money as we age. IMO, the personal value of the extra $ I would get in my 80’s wouldn’t be worth waiting until 70 to collect. I will get far more satisfaction from a reduced amount in my 60’s than from an increased amount in my 70’s or 80’s. So I will probably take ss at FRA or sooner.

[PatrickA5]

The SS analyzers I've run show me at 62 and DW at 70. If DW is still working, we'll delay mine. Also, ACA could change things if DW stops working. Wanting to do more Roth conversions could also cause a change of heart. I'm a couple of years (and many more calculations) away from having to decide. Or, maybe we'll both take at 62 just to quit worrying about it.

The fact that there might be a possible cut a couple of decades from now is way down the list on my worries list.

My dad is 96, so he's been collecting for 31 years. I don't think he even knew about waiting until 70, so he hasn't missed it or needed it. He easily lives on his SS and small pension - for now anyway.

[Sunset]

Quote:

Originally Posted by VanWinkle ..... 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. ....

Everyday I'm gambling on my life expectancy, so far it has paid off.

That is why I saved for retirement, if I didn't expect to live long, I would have spent every penny I earned as I earned it.

This is how I retired early, I gambled I would live past the old age of 30 then 40 then 50. So I saved.

[Bir48die]

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. I’m currently healthy. I have about $400k in savings. I have a very good COLA adjusted pension. Any thoughts about this? Has current politics made anyone revise their views about the future of Social Security? Ultimately I realize that this is like any investment decision depending on personal comfort with risk and peace of mind. One wrinkle is that though I have a great health care plan in the US, I am living in Thailand. Health care here in relatively inexpensive but right now I’m self insured. I’m looking for something like a catastrophic health care plan now.

Ok. Not sure where would come up with the idea that SS will be drastically changed in the next number of years. Also not sure where your economic concerns come from as 2018 is projected to be another strong year.

Politics has been crazy for the last 40 years. All SS withdrawal decisions should be based on longevity and portfolio makeup. I am waiting to see if there is a significant market downturn and can pull the trigger any time but it's not my goal to take earlier than later.

[Sunset]

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. 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.

One factor that will add to the "don't wait until 70" is that medicare cost increases get controlled by taking SS at age 65 (when medicare is required).

[RunningBum]

Quote:

Originally Posted by VanWinkle 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. ... This is a personal decision and is different for each person. VW

Interesting. I view the gambling the opposite way. If you take it early, you are gambling that you aren't going to live a long life where the larger benefits will be more useful, especially if you drain other resources. If I wait to collect but die early, I haven't really lose any bet because I didn't run out of money.

Put another way, my goal is to try to insure I have enough money to live comfortably no matter what age I die, rather than make sure I optimized the benefits for likely departure dates. If I wait to collect but die early, I won't have "beat the system", but I certainly will have had enough money during those few years so it won't bother me. Unless you know when you are going to die, it makes more sense to me to make sure you are covered for all ages rather than trying to squeeze more money out in an early death.



As you say, it's a personal decision.

[REWahoo]

Quote:

Originally Posted by Sunset One factor that will add to the "don't wait until 70" is that medicare cost increases get controlled by taking SS at age 65 (when medicare is required).

+1

The 'hold harmless' provision is definitely a factor supporting not waiting beyond 65 to begin your benefits and should be included in each individual's when-to-take-it calculation.

[RunningBum]

Quote:

Originally Posted by Sunset One factor that will add to the "don't wait until 70" is that medicare cost increases get controlled by taking SS at age 65 (when medicare is required).

Thanks, I updated my post again to reflect that. That's one of those things I'd forgotten and never really appreciated or fully understood.

[Another Reader]

Took it at 62 and "invested" it in paying off rental mortgages. Family history supports the decision as well.

[USGrant1962]

Quote:

Originally Posted by martyp Any thoughts about this? Has current politics made anyone revise their views about the future of Social Security? Ultimately I realize that this is like any investment decision depending on personal comfort with risk and peace of mind.

No.

There's nothing new here and as far as I know there is no current political action on SS. We've been spending down the Trust Fund for approaching a decade now and it is forecasted to run out in the mid-2030s - again nothing new.

There is likely to be (really, has to be) some adjustment some time in the future (on either or both revenue and benefits). If changes are on the benefit side they are unlikely to change to the break-even math.

[Sue J]

I turned 62 last February and decided to wait until Medicare age of 65 because of the Obamacare subsidy. Additional taxable income costs us about 16% in reduced subsidies and then there is the income tax on the SS benefit (15% on 85% of SS, or....maybe it will be 12% on 85% if tax law is changed). It's another chunk in taxes to be considered.

My expected SS benefit is small, only $604/mo right now and growing at 3 or 4 dollars a month. So none of this is big money, it's the idea of losing such a hefty percentage to lost subsidy and taxes that has me waiting.

We don't need the money to live. DHs pension is not large but our cost of living is very low so we are still living nicely on the pension. I make $4,000-$5,000/yr at a very part time job that I enjoy and I put my total gross income into an IRA.

For 2018 our Obamacare offerings included an HSA plan. With the opportunity to have a deduction for the HSA, I'm now considering starting my SS in 2018. I could offset the entire amount with the HSA contribution so it would not decrease our subsidy.

I'm going to play with a spreadsheet (one of my favorite activities) and make sure this works out. My hesitation is that Obamacare seems to be unpredictable from year to year. Our net costs can change drastically from one year to the next, even if our income stays the same. In 2014 and 2015 we had access to HSA plans. In 2016 and 2017 we did not and now it's back and very attractive. As we've all seen, SLCSP prices have skyrocketed, leaving a subsidized Bronze plan less expensive.

I don't know if there will be an HSA option in 2019. Without an HSA deduction my SS benefit would be hit pretty hard by subsidy loss and taxes. But in the big picture, it's not a lot of money. It's the idea that I'd be losing money from my already small benefit.

Something to think about. And I see this as a GOOD problem to have!

[Bigdawg]

Quote:

Originally Posted by aboatguy BLUF: haven't decided on 52,66 or 70. I'm retired military and currently a GS employee. I don't plan on staying long enough to qualify for the FERS pension.

You only need 5 years for a deferred FERS retirement pension at age 62

[joeea]

I'm 63, my wife is 62. Our current plan is to wait until I'm 70 to start drawing SS benefits.

We can afford any option, but this appears to provide the best possible longevity insurance for my wife. And it gives us very favorable ACA subsidies until we hit Medicare age.

That said, I was diagnosed with lymphoma a few weeks back. Right now, after doing some spreadsheet analysis, I don't think this will affect our decision. But I'm going to run a few scenarios by our financial advisor and see what they suggest.

[Lawrencewendall]

Didn't see this thread when I posted this in a new thread:

To calculate what your SS benefits will be:
https://www.ssa.gov/pubs/EN-05-10070.pdf

To see the effect of postponing claiming SS benefits
https://www.ssa.gov/OACT/ProgData/ar_drc.html

To calculate how much of your SS is taxable
https://www.fool.com/retirement/2016...etirement.aspx

[Perryinva]

If you have to take it at 62 in order to enjoy a specific lifestyle, then take it. If your lifestyle will be exactly the same but you want a higher COLA annuity and lower RMDs, then delay. If I were to delay until 70 (not saying I will), I could chose a $6k/yr higher income from age 62, than by claiming at 62.

[Which Roger]

Quote:

Originally Posted by RunningBum Interesting. I view the gambling the opposite way. If you take it early, you are gambling that you aren't going to live a long life where the larger benefits will be more useful, especially if you drain other resources. If I wait to collect but die early, I haven't really lose any bet because I didn't run out of money. Put another way, my goal is to try to insure I have enough money to live comfortably no matter what age I die, rather than make sure I optimized the benefits for likely departure dates. If I wait to collect but die early, I won't have "beat the system", but I certainly will have had enough money during those few years so it won't bother me. Unless you know when you are going to die, it makes more sense to me to make sure you are covered for all ages rather than trying to squeeze more money out in an early death. As you say, it's a personal decision.

+1 The answer to the question of when to take SS is always "it depends", and I think the first thing to consider is whether your primary goal is to ensure you never go broke, or to maximize the $ amount you expect to receive.

[ShokWaveRider]

My theory is, it takes the policy makers ages to do anything and currently it seems to take even longer. While that may change down the road, I figure I have at least 4... make that 3 years to make a final decision. I m sure nothing of any significance to SS will happen before then.

So the current plan is to take it when I start Medicare, either immediately at 65 or at FRA, I am 64 in January 2018. The ONLY reason I did not take it at 62 was so I could get the Maximum subsidy from the ACA. Otherwise I would have started at 62 for sure. DW will most likely do the same for as log as the ACA lets her, she is 59 next month.