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

[mathjak107]

the real question boils down to do you want to take on more market and interest rate risk or longevity risk ?

if we delay , at age 70 our market dependency drops greatly compared to age 62 . withdrawals are much less and sequence risk drops if we delay.

for a couple the actual real return if even one lives to 90 (about a coin toss chance ) can be about 5% which rivals the real return from a balanced portfolio but you get it from what amounts to a gov't bond

 

[rayvt]

(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?

I did a full workup spreadsheet a few years ago, to compare taking at age 66/70 vs. 62 and investing the money with different earnings rates.
https://www.dropbox.com/s/gebanzrbr3g33qf/My SS breakeven calc.xls?dl=0

As about a zillion people have computed, the break-even age at 0% earnings is in your 80's.

People keep stumbling over the fact that it was specifically designed to be very close to actuarially neutral.
The fact that it is actuarially neutral is demonstrated by the fact that we always have these discussions. Because if it was clear that one way was better than the other, there would be no debate & no discussion. Note that we never have debates about the sum of 2 + 2.

If (on average) it doesn't matter when you take SS, then you might as well take it at 62. Or 70. Because it doesn't matter.

 

[RunningBum]

OP has been lucky the market has gone up, if it stayed flat he would not be so happy.

OP is a story teller, and we have no idea what his true story is. He's also been banned (gone travelling). See the other thread he started for the probable reason.

 

[braumeister]

Note that we never have debates about the sum of 2 + 2.

Actually, I have seen several posts here pointing out that 2+2=5 for sufficiently large values of 2.

 

[kitesurfer2]

i took ss at 62. i did not need the check to make ends meet. I did it to make myself comfortable, and VERY comfortable at that. My thinking is that I can use and enjoy that ss check now and at 80 i cannot see myself enjoying life like i do now.

 

[freetodream]

i took ss at 62. i did not need the check to make ends meet. I did it to make myself comfortable, and VERY comfortable at that. My thinking is that I can use and enjoy that ss check now and at 80 i cannot see myself enjoying life like i do now.

+1

I have been following threads on "the when to file" for several years. I see much reduced travel and activity by the time I am 80+ if I live that long.
62 it is for me.... its been a hard decision

 

[brucethebroker]

++1.

I would rather have it and lose it (die), than not have it (wait) and lose it.

Besides, every month I get the feeling that I am getting back some of what was taken (invested?) from me. (Fist pump) YES!

 

[Dawg52]

If (on average) it doesn't matter when you take SS, then you might as well take it at 62. Or 70. Because it doesn't matter.

i took ss at 62. i did not need the check to make ends meet. I did it to make myself comfortable, and VERY comfortable at that. My thinking is that I can use and enjoy that ss check now and at 80 i cannot see myself enjoying life like i do now.

It basically came down to this for me. Plus the unknowns of the SS system going forward. Yes.....I'm a bird in the hand kind of guy.(Single guy) I filed online over the weekend. I did delay 5 months btw so I guess I can be thrown into the defer camp.

 

[gerntz]

If single, like op R&R, don't think there's a large impact whenever you take SS. If married, it's a big deal that the larger earner waits till 70 if at all possible due to the survivor benefit. Particularly true if the high earner is older & older relative to spouse.

 

[Senator]

Prior to age 62, it's an easy decision, wait. You can say 62, 65 or 70, it doesn't matter; you have no choice.

When you determine when to take SS, you have insider knowledge of your health. Knowing when you are going to die is the main unknown factor that would make the decision easier.

When SS says actuarial neutral, they do not know a lot of individual items that make a large difference. SS knows noting about your personally.

You know if you have high-blood pressure, diabetes, prior heart attacks, smoking or drinking issues, previous cancer, etc. The SS administration doesn't.

You can go to a mortality calculator and guesstimate longevity based on life style factors.

You can hedge your bets with the insider knowledge. Of course, if it means eating dog food until you can collect a larger SS, that was the wrong choice.

If married, it's a big deal that the larger earner waits till 70 if at all possible due to the survivor benefit. Particularly true if the high earner is older & older relative to spouse.

Very true. The DGF is 12 years my junior. I plan on getting married at ~age 69 (or when health is diagnosed as bad) so we can get larger SS when the DGF starts collecting.

 

[misanman]

DW and I are the same age (70). She took SS at 62 and then I took a spousal benefit at FRA. This year we switched with me drawing directly and her taking a spousal benefit.

We are happy with this approach both because it will provide a larger benefit to the surviving spouse and because of the tax advantages of skewing the income source toward SS.

 

[jim584672]

It may be actuarially neutral in a broad sense. But women live longer then men yet it doesn't consider gender in the payout rate. So wouldn't it favor a woman to take it later and a man to take it sooner?

 

[Montecfo]

Hopefully, I will collect on my ex's SS for a few years while mine build up. That's another factor that some of us have to take into consideration.

Same here. DW has a smaller benefit which we will draw at 62 and let mine ride till later.

The 7% is meaningful. No one's "safe" type money is earning 7% guaranteed presently.

Having said that, you have to be alive to collect it, which could otherwise put a damper on returns.
When the "experts" tout waiting, they tend to not mention that.

So who knows? Individual decision to make at any time, based on each unique situation.

 

[NW-Bound]

OP is a story teller, and we have no idea what his true story is. He's also been banned (gone travelling). See the other thread he started for the probable reason.

He got figured out pretty quick this time.

Watch for him to come back with a pay-the-mortgage-early-or-not thread.

 

[rodi]

As mentioned there are a factors that make it less actuarial neutral. Like Katsmeow - we have/had minor children when DH retired - so it was a total no brainer for DH to take it at 62 to get the added benefit. Couples with a stay-at-home spouse with no SS under their own name also skew the neutrality since the spousal benefits are not actuarial neutral. And the divorced spouse scenario makes it better for a person to take on the divorced spouse's benefit and grow their own.

And as Senator suggested - you have more insight into your own health and family longevity than the statisticians... In my husband's case - his family lives till age 90. In my case - I have only 1 grandparent that made it to 90, the other 3 died in their 60's and 70's... as did my parents. So that would argue for me taking it earlier...

But I'll decide closer to the time... It's almost 7 years off till age 62... no reason to decide today.

 

[gerntz]

It may be actuarially neutral in a broad sense. But women live longer then men yet it doesn't consider gender in the payout rate. So wouldn't it favor a woman to take it later and a man to take it sooner?

What it actually says is that SS isn't actuarially neutral across the sexes, just ages.

 

[Cobra9777]

We're 55 and 56, so we still have 7 more years of reading threads on this topic before an actual decision has to be made. At the moment, our plan is to take it one year at a time and base the decision on evaluation of investment returns and our health. My benefit is higher than DW and she will likely live longer, possibly into her 90s. So we'll defer mine as long as possible and take hers at whatever point seems sensible from a cashflow standpoint. We have two pensions, rental income, and a taxable account that should enable deferral to 70 for both. But if, at some point, the taxable account gets below my comfort threshold, we'll decide whether to start tax-deferred WDs or start DW's SS, most likely the latter.

 

[LRDave]

People keep stumbling over the fact that it was specifically designed to be very close to actuarially neutral.
The fact that it is actuarially neutral is demonstrated by the fact that we always have these discussions. Because if it was clear that one way was better than the other, there would be no debate & no discussion. Note that we never have debates about the sum of 2 + 2.

If (on average) it doesn't matter when you take SS, then you might as well take it at 62. Or 70. Because it doesn't matter.

^^^ I agree. Let's stick to easy-to-resolve issues like whether to pay off a mortgage early or not....

 

[LRDave]

Sorry - didn't notice NW-Bound beat me to the punch line.


I'll take your downvote and see myself out the door... :^)

 

[NW-Bound]

Imagine if you could take out a mortgage on your house to plop it in the market in early 2009. Woulda, shoulda, coulda...

 

[2017ish]

...
Watch for him to come back with a pay-the-mortgage-early-or-not thread.

Should I pay off my mortgage early if it requires me to take Social at 62?

 

[Sue J]

I turn 62 in Feb, 2017. I'm planning on taking my very small SS at Medicare age of 65 or FRA of 66 and 2 months.

The main reason for not taking it at 62 is that 16% of any SS with go toward increased Obamacare costs. That's in addition to federal income taxes of 15% on the taxable portion (50-85%).

Now, if all that changes and my health insurance costs are not based on income, I'll reconsider!


Sent from my iPad using Early Retirement Forum

 

[sheehs1]

I have been going back and forth on when to claim SSN as well since I can apply in January, 3 months before turning 62. Do I need the money? No. Will I be taxed? Yes, because I bring in a little bit more "earned income" than the threshold allows. My other income is not "earned income" and I am able to still save a good portion of that.

Two thoughts I keep coming back to.

1) The yearly difference according to my statements between claiming at 62 versus 66 and 2 months will not make or break me. If it were to make or break me I'd already be in trouble...right? The difference is about $6,700 a year. I'm not waiting until 70 where the difference is closer to $$14,000 because I doubt I will live into my 80's. But again I say the $14,000 will not make or break me.

2) My children can not inherit my SSN payments but they can inherit the assets I have left.

It's tough. I don't know what I will do...but I am leaning towards claiming in Jan.
I agree that it can be viewed as longevity insurance but I do tend to value the present value of money and what it can be used for allowing me to continue to save and invest on the side of the fence I have more control over.

 

[mathjak107]

by the same thinking by taking ss early you will be pulling more out of your portfolio for a lifetime starting at age 70 then you would getting a 69% bigger check at 70 vs 62 .

so it can go both ways for heirs .

 

[rayvt]

If married, it's a big deal that the larger earner waits till 70 if at all possible due to the survivor benefit.

It's a "big deal" only if you are highly dependent on the SS income. Which kinda implies that you are not Financially Independent or Retiring Early -- so you probably aren't even reading this web site.