Taking Social Security at age 62

[Lancelot]

I posted on Bogleheads that I was waiting until age 70 to claim SS. I also stated that my Father wasn't comfortable waiting and claimed at 62.

Some a-hole insulted my Dad for taking SS early and I told him where he could stick his advice. The Bogleheads Mod gave me a warning...

The SS Police are a closed minded bunch as in 'My Way or the Highway'

The actuaries have saved us from ourselves in that, unless we beat the mortality odds, we roughly receive the same total benefit.

[prototype]

There was a thread with a poll (and associated posts/comments) on this topic about 9 months ago. 62 was at 38%, followed closely by FRA and 70+.

Hope I got the link right, first post I've made with a link in it.

http://www.early-retirement.org/foru...ssa-69230.html

[RunningBum]

Quote:

Originally Posted by PERSonalTime Well thought out and explained. I agree 100%. DW prefers to not be greedy and will take her SS at 62.

People patiently waiting until 70 to better handle the "worst case" of living long are greedy? ooookay.... Not my definition of "greedy", and certainly not when compared to the rationale some have for taking it early ("I'm going to get mine now in case it's not there later."). Most people have good reasons for choosing the way they do, so I don't think it's productive to put negative labels on their choices.

unno's last case, paying off his rental mortgage with SS money, looks like comparing apples to nothing. I suspect there is a breakeven point if he takes SS at 70 and quickly pays off the mortgage and is then receiving a higher amount. Maybe not if the mortgage interest rate is high enough. Taking SS early often comes out better if you have cash flow issues between 62 and 70. Paying off a high interest loan is like getting a high return on investments, both of which push the breakeven point to the right, and paying off that loan is risk-free compared to seeking a higher return on investments.

[marko]

Can someone help me with this?

I've been half-following this thread, but for kicks I opened up i_orp and ran some numbers.

I entered all my data including my current SS plans (age 62, first check arrived last month).

Then I kept everything the same except I changed my SS to my FRA (age 70) and my FRA amount.

The result is far from what I expected!! According to orp, if I take SS at FRA, I must spend about 30% LESS than if I take SS at 62.

Can this be right? A glitch? If true, my guess is that because I'd be waiting 8 more years, I'd be depleting my portfolio faster. Comments?

[ERD50]

Quote:

Originally Posted by marko Can someone help me with this? I've been half-following this thread, but for kicks I opened up i_orp and ran some numbers. I entered all my data including my current SS plans (age 62, first check arrived last month). Then I kept everything the same except I changed my SS to my FRA (age 70) and my FRA amount. The result is far from what I expected!! According to orp, if I take SS at FRA, I must spend about 30% LESS than if I take SS at 62. Can this be right? A glitch? If true, my guess is that because I'd be waiting 8 more years, I'd be depleting my portfolio faster. Comments?

What life expectancy is assumed?

Many of us are not looking at delayed SS as a straight financial gain/loss break-even thing. It is looked at as longevity insurance - it may pay off in the case that we outlive our average LE. It provides some protection if our portfolio dwindles in our old age.

And like most insurance, you don't expect it to provide a gain - you expect to pay on average to cover a risk. But if that risk happens, you get some benefit. And SS is unique in that it appears to be 'cheap' insurance, and can have have spousal benefits, if they apply.

-ERD50

[43WorkYears]

I'm confused by your thread. I assume your FRA is 66. How is that 8 more years after 62. It may be my misunderstanding.


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[razztazz]

Quote:

Can someone help me with this?

I get similar results. Taking SS at 62 always wins as far as spending amounts and preservation of personal assets

[W2R]

Quote:

Originally Posted by razztazz I get similar results. Taking SS at 62 always wins as far as spending amounts and preservation of personal assets

(emphaiss mine) When I was a kid I was told that, "You should never say "always" or "never" in writing, because somebody will come up with an exception.

Taking SS at 62 NEVER wins as far as spending amounts and preservation of personal assets (with the assumptions I prefer to use). So there.

When to take SS is a subject that has been argued back and forth in numerous threads since the beginning of the ER Forum. Check the FAQs for more information; it's even been made a "stickie" there. http://www.early-retirement.org/foru...-ss-69366.html

If it ALWAYS worked out one way or another, there wouldn't be anything for people to have discussed in all those threads.

[Major Tom]

Quote:

Originally Posted by W2R If it ALWAYS worked out one way or another, there wouldn't be anything for people to have discussed in all those threads.

Hear, hear.

Another factor that we are reminded about from time to time, but which many posters don't always seem to be too aware of is that there are 2 broad and distinctly different approaches to the taking of SS. Some regard it as longevity insurance, while others take the approach of attempting to withdraw as much from it as possible over their lifetimes. The 2 approaches have (obviously) very different objectives.

It is very possible for 2 people with different outlooks to both be right. It's one of the things that makes the world of E-R.org go round

[razztazz]

Quote:

(emphaiss mine) When I was a kid I was told that, "You should never say "always" or "never" in writing, because somebody will come up with an exception.

Ok mr smarty pants. Not "always" as in Always for all time and in every context. I meant every time ***I*** personally use FireCalc et al and do the "When should I take SS" What-if scenarios, the output always tells me I can spend more and end up with more personal assets (which probably don't matter since I'm dead at that point) if I take it at age 62 than if I wait till later.

I cannot argue with the numbers. Maybe the calculator is 'ucked-up and it's giving me bad data but that's a different thread.

[Options]

Quote:

Originally Posted by growing_older Thank you for your very frank post on reasons you favor taking SS at 62. While I agree with many of your concerns, here are my reasons for delaying as long as possible. 1) I have enough savings to get me to at least 70, but my calculations show that if I live unexpectedly long and markets are unexpectedly unfavorable, then I may eventually run out of money unless I get a higher payout from SS. 2) I have longevity in my family, so while I do not know how long I may live, I must plan at least for the possibility I last into the high 90's (or more if medical advances keep extending lifespans). In that case I also want to be sure I have enough to pay for quality care and not end up in some less desirable institution. 3) The COLA aspect of SS and the taxing aspects of SS can be tampered with by a Government that wishes to do so to save money, but so can aspects of my various retirement accounts. I want to be diversified between SS, IRA/401k, Roth/Trad, taxable/sheltered, investments/home equity and so on, so whatever happens I can still muddle through and not have the majority of my eggs in any one basket that political action could reduce in value enough to hurt me. I am also hopeful that a large senior lobby can at least somewhat contain any of these political take aways. 4) I need the years between age 62 and 70 to do as much Roth conversion as possible and with lower income in these years hope to get maximum benefits from my various tax advantaged savings programs. 5) I have no spouse or dependents and no opportunity to file/suspend or manage higher payout with spousal benefits games. I have adult children as heirs, but unless something catastrophic happens they stand to inherit enough to put them in good shape for their own retirements no matter when I expire. They will get enough in any case so I see no need to take risk to maximize their gain if I die unexpectedly early. I see no need to try to maximize their gain in any scenario. I already do not buy life insurance as it is superfluous. 6) I do not think of SS as a way to maximize my take from the government. I view it as a way to insure myself against the risk of living unexpectedly long. That is the ONLY scenario in which SS is significant in my planning. I have enough assets to live as I am accustomed and still leave assets to heirs for any other scenario. In those cases, I will have lived a lifestyle I wanted and will not care about my remaining portfolio as I will be expired. I already have enough assets to live the lifestyle I want and have the experiences I desire, without SS. Taking SS early or late will not result in my reducing or expanding my lifestyle. The only scenario in which I am at risk of running out of assets is if I live to a ripe old age, and using SS to generate maximum payout for life, plus the assets I will still have, covers that risk. 7) If I have to accept a bet on whether I live long or short, the only side of that bet I care about is the side where I live long.

This. Every word.

[W2R]

Quote:

Originally Posted by razztazz Ok mr smarty pants.

That's Ms smarty pants, BTW. Or you can call me Dr. smarty pants if you prefer.

Quote:

Originally Posted by razztazz Not "always" as in Always for all time and in every context.

Right, exactly. And for each person who gets your particular results with a retirement calculator using his own set of assumptions, another person will get the opposite with a different set of assumptions. That's all I'm talking about.

[Major Tom]

Quote:

Originally Posted by razztazz Ok mr smarty pants.

[razztazz]

Quote:

That's Ms smarty pants, BTW. Or you can call me Dr. smarty pants if you prefer.

I thought of that but but W2R sounded like a part number or something and I inferred "probably a guy". ( Altho thinking about it now, razztazz is sort of a unisex name too)

Quote:

Right, exactly. And for each person who gets your particular results with a retirement calculator using his own set of assumptions, another person will get the opposite with a different set of assumptions. That's all I'm talking about.

I am going to file this under that Pet Peeve thread. People responding, sincerely and earnestly but in an irrelevant way to something that was never said.

Buena Suerta

[marko]

Quote:

Originally Posted by 43WorkYears I'm confused by your thread. I assume your FRA is 66. How is that 8 more years after 62. It may be my misunderstanding. Sent from my iPhone using Early Retirement Forum

Yeah...mind cramp. I meant age 70...FRA is 66

[marko]

Quote:

Originally Posted by ERD50 What life expectancy is assumed? Many of us are not looking at delayed SS as a straight financial gain/loss break-even thing. It is looked at as longevity insurance - it may pay off in the case that we outlive our average LE. It provides some protection if our portfolio dwindles in our old age. And like most insurance, you don't expect it to provide a gain - you expect to pay on average to cover a risk. But if that risk happens, you get some benefit. And SS is unique in that it appears to be 'cheap' insurance, and can have have spousal benefits, if they apply. -ERD50

I agree, but if I can spend 30% more per year through the rest of my lifetime, (set calculator to age 92), it sure makes a big difference!

[43WorkYears]

As I am early 61 and retired after a 40+ career with two mega corps and married, I read so many opinions on this to figure out what is best to do.

My opinion at this point is to take SS no later than FRA, if not a little earlier.

I see that many thread calculate living well into the late 80's, many well into the 90's. Many of us want to, of course, but won't make it. If I make it and take SS before FRA, then I will be an old man on a limited income. What will I be able to do at that age anyway if I'm still around.

We should all think about that in my opinion.


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[Chuckanut]

Quote:

Originally Posted by Major Tom Some regard it as longevity insurance, while others take the approach of attempting to withdraw as much from it as possible over their lifetimes. The 2 approaches have (obviously) very different objectives.

+1

What Tom said.

[ERD50]

Quote:

Originally Posted by marko I agree, but if I can spend 30% more per year through the rest of my lifetime, (set calculator to age 92), it sure makes a big difference!

OK, that still seems like a big delta to me, but w/o knowing your specific inputs there's not much for me to say.

Be aware though, that a reporter like FIRECalc is dealing with the worst case scenarios. So that big delta is likely for the case where you retire just as the market drops, so taking SS early helps protect drawing down your portfolio. This would be a larger effect if your SS covers a large % of your spending, and your portfolio is relatively small.

But, you can sort of have have it both ways. You could postpone SS, and if the market does well, just keep postponing for as long as you like (even 70). If the market drops, you can choose to start SS, to avoid further draw down of a damaged portfolio. Several forum members did this in the last downturn. FIRECalc can't really model those choices.

Not trying to change your mind, just throwing out options to consider.

-ERD50

[RunningBum]

Quote:

Originally Posted by 43WorkYears As I am early 61 and retired after a 40+ career with two mega corps and married, I read so many opinions on this to figure out what is best to do. My opinion at this point is to take SS no later than FRA, if not a little earlier. I see that many thread calculate living well into the late 80's, many well into the 90's. Many of us want to, of course, but won't make it. If I make it and take SS before FRA, then I will be an old man on a limited income. What will I be able to do at that age anyway if I'm still around. We should all think about that in my opinion.

If you read through more of the "when to take SS" threads you will see that most of those of us who are considering waiting have thought about all that. If you do land on the long side of the actuarial tables, you may find that having a little extra money may help you live more comfortably. Even though you may not be traveling or very active, you may spend more on in-home assistance, for example, or want to live in a nicer senior living center.