Started Social Social Security at age 62 but my break even date is well into my 80s

[Blueskies123]

"Money in my pocket now is worth more than J dollars in the future. "


I know many people feel this way but this comment is incorrect. I agree that at an emotional level is does make one feel better for now. At 8% growth a dollar tomorrow is worth more than a dollar today.

 

[Dawg52]

I took SS at 62. Going with the KISS formulae. Money in my pocket now is worth more than J dollars in the future.

I understand. I filed last Saturday and had my follow up phone call yesterday. Will receive my first deposit on the 4th Wed of February. I debated this back and forth and finally decided to go for it. Being single with a family longevity history all over the map, it just seemed like the way to go. But I do understand the logic of waiting..... particularly for married couples.

 

[rayvt]

However, the break-even point calculation does not consider the rate of return if one invests the money received at 62 instead of spending it.

Yes. The spreadsheet link I posted will calculate that effect.

If you can invest and get 5% above inflation, the break-even age is 91.
At 5.5%, the BE is 94.
At 6.0%, the BE is 98.

FWIW: Have you seen that Jerry Lewis video interview that went around a few days ago? Jerry is still alive and is 90 years old.

Googling around, it appears that the accepted number for after-inflation long-term return for stocks is 7%

If you get 7% above inflation, the BE is somewhere after age 108.
At 6.5%, the BE is 105.

Frankly, to me it's merely academic. The money is much more useful to you at 62 than at 72 or 81. At 62, most people can climb Machu Pichu. At 82, not so much. Climbing the stairs in your house would be about it.

 

[RunningBum]

Most people won't go 100% stocks in retirement.


My parents just increased their spending in their early 80s, by moving into a place where all meals are provided. It's more of a luxury than a necessity right now but it is heading towards necessity. They are finding money just as useful in their 80s as before, maybe even more so to stay comfortable and safe when they are less able to take care of themselves. Travel isn't the only way to spend money.

 

[travelover]

Most people won't go 100% stocks in retirement.


My parents just increased their spending in their early 80s, by moving into a place where all meals are provided. It's more of a luxury than a necessity right now but it is heading towards necessity. They are finding money just as useful in their 80s as before, maybe even more so to stay comfortable and safe when they are less able to take care of themselves. Travel isn't the only way to spend money.

My thinking, too. Right now we do a lot for ourselves that we will pay for as we age. And, of course, at the very end, the costs can go through the roof. I sleep better knowing that one of us won't be eating cat food to keep the other in long term care.

 

[NW-Bound]

Choosing SS at 62 or 70 is like deciding whether to live in the city close to shopping and other amenities vs living in the boondocks with open space and close to nature. There are pluses and minuses to both.

So, I have two houses. Maybe I can do the same with SS, by taking my wife's early and mine late.

 

[pb4uski]

We'll most likely both take at our FRA's as 1/2 of mine is a lot more than hers but she can't get the bumped up spousal benefit until I file (I'm 8 months younger). I was planning on FRA for her and 70 for me until they blew up the file and suspend strategy last year.

According to SSAnalyze - Bedrock Capital Management using a 6% discount rate and their recommended longevity, the PV difference is only $13k higher between my taking at FRA and 70 so not a big deal for us.... (eliminating file and suspend cost us ~$13k).

Interestingly even if we both take at 62, using the same assumptions the PV difference is only $23k... so not a huge decision between as early as possible (both at 62) or as late as possible (her at FRA and me at 70).

 

[Carpediem]

Really dumb question here from a newb - What is the definition of 'discount rate' on the SSAnalyze tool? Am I safer leaving it the pre-filled amount of 2%?

Thanks.

 

[ls99]

"Money in my pocket now is worth more than J dollars in the future. "


I know many people feel this way but this comment is incorrect. I agree that at an emotional level is does make one feel better for now. At 8% growth a dollar tomorrow is worth more than a dollar today.

Unfortunately, unlike some clairvoyants, I missed the line when they were handing out positive knowledge of the future.

 

[thatguy]

I took SS at 62 but, as we phased into retirement, our least income would be 4 years later when DW retired. I should have waited those 4 years to my FRA. 10 years later, hindsight is so clear.

 

[NW-Bound]

Really dumb question here from a newb - What is the definition of 'discount rate' on the SSAnalyze tool? Am I safer leaving it the pre-filled amount of 2%?

Thanks.

It's the expected rate of return if you invest the money you receive. I do not know why it is prefilled at 2%, which they anticipate to be the future inflation. I guess they assume a very safe investment that barely keeps up with inflation.

The other rate is the COLA, which is prefilled at the 2.39% average of the last 25 years. This is curious, because it is mixing past inflation for SS payout with future inflation for market returns.

It is the difference between the two that matters. For example, you can increase the COLA from 2.39% to 12.39% and the discount rate from 2% to 12%, then see that the recommendation does not change.

I would use a higher discount rate than that 2%. The S&P is paying 2% dividend, so a value of 2%+2.39% = 4.39% return rate would not be outrageously high.

 

[jimz]

I say Take it Now

Five years ago when I was 61 years old I read everything I could about what is the best age to start collecting Social Security. ALL the experts told me that I should wait until I am seventy to start collecting because I would make 134% of what I would get at age 66.

I lost my job at age 62 and have not worked since. I am not married and have no kids.

I had two choices:

1) Not apply for Social Security until I was seventy (70)- as per the experts- and pull $ out of my investments to cover the amount of what I would get in Social Security from age 62-70. ($1400 a month adjusted to inflation for eight years (about $134,000 plus unknown inflation increases)

This option would take that money out of circulation and I would not have it to invest in the stock and bond market.


2) Start collecting the reduced early Social Security at age 62 and get $1400 a month to add to my pension and retire comfortably.

After much thought, I decided to ignore the experts and collect at age 62 and invest the money I would have pulled out of savings and my 401k account to pay for my living expenses if I would have waited until I was 70 to collect.

So far with great investment returns I am doing great and my projected break even date has moved into my mid 80s.

(Has anyone else considered that if you use invested assets to pay living expenses while waiting to get to age seventy to collect Social Security, you are losing the value of those assets? Even if I don't get a 7% annual increase promised if I wait to collect, I move my break even date up significantly by getting more checks and investing the money I would have spent.)

Your thoughts?

One day, I suddenly realized I had already passed the 62 start, as I was now nearly 64... I applied immediately. I remembered my Dad running the numbers back when he was eligible and doing the research... he took his right away, had retired from the company at 59, (an early out) and was Dead at 63... my identical twin Never collected a dime, because He dropped dead at 59-1/2 and a day... I Nearly joined him due to a widow-maker heart attack (likely His c.o.d.) and nearly missed turning 60. SO... I say Take it Now, because you Never know What lies ahead... you can always invest whatever you don't 'need'. just sayin' imhbao

 

[sheehs1]

One consideration I have not seen mentioned is that at age 65, Medicare and it's associated parts is deducted from the SSN payment.

Those claiming at 62 will not have those deductions until they hit their Medicare age so those dollars in a way could be considered more valuable before 65-67 than after.....BUT and EXCEPT that they are having to pay for/arrange for health insurance otherwise.

For those like myself whose private, non-subsidized ACA compliant policies are high, the SSN payment at 62 goes a long way to pay all of that premium and more.

On then flip side, one can argue that by waiting it further ensures one's ability to pay for their health care because who knows what Medicare will cost by the time we get there.

Just still mulling over reasons to take at 62 or wait. I keep coming back to "I don't need it" so I will probably go year by year.

 

[racy]

We're 55 and 56, so we still have 7 more years of reading threads on this topic .....

I feel for ya

 

[Teacher Terry]

Meals on Wheels will take care of that)

 

[mathjak107]

By the way, the chance of making it to 90 is better than 21% for the people reading this forum. How so?

Look at the number that Sheesh1 posted above. Out of 100,000 people, 83,251 make it to 65, and then 20,898 make it to 90.

So, if you are already about 65, then the odds that you will live till 90 is 20,898/83,251 = 25%.

I still do not think I am among those 1-out-of-4.

The statistics show that 12% did not make it to 60. I was almost among those poor guys due to an unexpected grave illness! Not even SS at 62, let alone 70.

odds of one in a couple seeing 90 if they are 65 is just under 50% today (47%) 2 horses in one race with one bet is always way better odds .

 

[Runner]

I started a thread on this topic early in the year and was reminded then that it surfaces every few months and always generates a lively discussion.


If circumstances force you to take SS at the earliest possible date, take it and don't look back.


I decided, after all the discussion on my thread, to take it at 66 rather than 70 even though I have no financial need and am in excellent health. I have simply been putting most of it aside or using it to benefit family members in need. I thought I would show a major increase in income tax, but TurboTax says not. Some, yes, but not the thousands of dollars I had been anticipating.


It appears to me that most people at forums like this greatly over-analyze financial matters, as though earning 7.29% instead of 4.67% were the purpose of life. Life circumstances can change so drastically, so fast, that it strikes me as largely a waste of time. Worrying now about my financial circumstances when I'm 87 or 92 strikes me as almost comical. ("Oh, yeah?" someone will say. "It won't seem so funny when you're 92." To which I will respond: "Everything will seem funny when I'm 92.")

 

[gerntz]

If anything, people are living longer, and that's one reason the SS fund is running out of money. There's talk about raising FRA to 69!

This says USA people aren't living longer:

Life Expectancy for White Americans Declines - WSJ

 

[Bryan Barnfellow]

I believe that 62 vs. up to FRA is actuarially neutral overall, yes. However, I also believe that there are things that our elected representatives in congress can do to screw that up royally:

1. Apply wealth conditions on the amount of our "entitlement."
2. Change the FRA and *not* grandfather those 62+ who postponed.
3. Continually re-define "cost of living" by some definition that goes against SS recipients but favors federal budgets. This is already an issue in government.

So, 62 for me and not a day later. It's a trust issue.

-BB

 

[NW-Bound]

odds of one in a couple seeing 90 if they are 65 is just under 50% today (47%) 2 horses in one race with one bet is always way better odds...

Yes. Hence, optimizing SS for a couple is different than doing for one. Women also have better longevity than men.

...It appears to me that most people at forums like this greatly over-analyze financial matters, as though earning 7.29% instead of 4.67% were the purpose of life...

It's not?

ER's got to where they are by managing their finances better than their Joe and Jane Blow counterparts. One cannot expect them to stop once they reach FI.

This says USA people aren't living longer:

Life Expectancy for White Americans Declines - WSJ

The link talks about "increases in death rates from suicides, drug overdoses and related causes". So, we need to know what age groups that occur in.

If it is the youngsters who die early, that may cancel out the improving longevity of the geezers. If so, there will be fewer workers paying into the system, while retirees are drawing from it for longer.

 

[growing_older]

So, 62 for me and not a day later. It's a trust issue.

As much as I strongly believe that thinking of SS as longevity insurance is right for me and I am strongly inclined to wait as long as possible, I completely agree that this is a legitimate reason to consider taking it early.

 

[Chuckanut]

Another thing that some of us have to consider is if we are in that group that can claim SS at 66 based upon our ex-spouse's record. If one can, then the math for waiting until one is 70 and letting one's own SS run up gets rather good.