Taking Social Security early vs. not

[homestead]

Here: SSA Handbook § 723

And Here:
SSA Handbook § 320 Specifically §320.1 C


Both your and spouse's benefits are based on your Primary Insurance amount. If you take SS before your FRA your benefit amount is reduced based on how long before your FRA you start taking benefits. Your spouse's benefit at her FRA is 1/2 your PIA. That half is reduced based on how long before her FRA she starts taking the spousal benefits.

I agree with your statement above.
But the real question is , Is my wife spousal benefit reduced if I take my SS prior to full retirement age? The way I read it, her spousal benefit is only reduced if SHE claims ss prior to her full retirement age. Therefore she can take ss at full retirement age and get 50% of my benefit even if I take ss at 62. I wish SSA had a spousal calculator on their website, but this calculator (http://www.sscalc.net/) does agree with what I am saying.

 

[Bestwifeever]

I agree with your statement above.
But the real question is , Is my wife spousal benefit reduced if I take my SS prior to full retirement age? The way I read it, her spousal benefit is only reduced if SHE claims ss prior to her full retirement age. Therefore she can take ss at full retirement age and get 50% of my benefit even if I take ss at 62. I wish SSA had a spousal calculator on their website, but this calculator (Social Security calculator: when to collect for you and spouse.) does agree with what I am saying.

I believe that if you take SS at 62, the spousal benefit your wife will receive is 50 percent of the amount you receive at 62 (NOT 50 percent of the amount you would have received at your full retirement age).

This is the main reason DH and I are both waiting til FRA to claim SS, if not later.

I would (and will) discuss this with someone at SS before we claim.

 

[RetireBy90]

Spousal security is based upon the spouse's age. Search spousal benefits at ssa.gov

 

[Lakedog]

I agree with your statement above.
But the real question is , Is my wife spousal benefit reduced if I take my SS prior to full retirement age? The way I read it, her spousal benefit is only reduced if SHE claims ss prior to her full retirement age. Therefore she can take ss at full retirement age and get 50% of my benefit even if I take ss at 62. I wish SSA had a spousal calculator on their website, but this calculator (Social Security calculator: when to collect for you and spouse.) does agree with what I am saying.

I think this shows the reduction for the spousal benefit when you take ss early:

Retirement Planner: Benefits By Year Of Birth

 

[homestead]

I think this shows the reduction for the spousal benefit when you take ss early:

Retirement Planner: Benefits By Year Of Birth

Yes , but remember there are two spousal benefits in a marriage, yours and your wife's.
I think these reductions are referring to your personal spousal reduction
rather than your wife's. I think the wife's spousal reduction is only based on
when the wife takes ss prior to her FRA.

 

[Lakedog]

Yes , but remember there are two spousal benefits in a marriage, yours and your wife's.
I think these reductions are referring to your personal spousal reduction
rather than your wife's. I think the wife's spousal reduction is only based on
when the wife takes ss prior to her FRA.

Not the way I read it - look at footnote #5 in the table. But the only way you will feel like you "know for sure" is to contact SSA and ask the specific question.

 

[homestead]

Here is spousal reduction calculator on the SSA site.
Benefits for Spouses

Note there is no entry for retirement date of the mate only for you.

I will contact SSA and report back.

 

[Brett_Cameron]

Here is spousal reduction calculator on the SSA site.
Benefits for Spouses

Note there is no entry for retirement date of the mate only for you.

I will contact SSA and report back.

Thanks. The Handbook does not document this well. As a matter of fact, the Handbook does not document many things well.

 

[Richard8655]

I'm just turning 61. Both my spouse (60) and I definitely plan on taking SS at 62. I ran the numbers and it makes no sense to wait. The break even point (where SS at 66 catches up) is 81. From a common sense perspective, it doesn't make sense to wait either.

It amazes me how people think they're immortal, are exceptions to genetics and the laws of nature, and will somehow live to 90-100 or beyond. You even see this silly talk from "financial planners" that by taking SS late, you'll get maximum benefits past 100. Who lives past 100? Ridiculously impractical and unrealistic advice and thinking. The average American life expectancy is 78.2.

Another aspect is who is going to be physically active enough and can use that extra delayed money starting at age 81? Guess what, despite that we think we're gods on Mt. Olympus, most of us will either be dead, or in an assisted living facility counting the holes on the ceiling tiles. And you know who gets that extra SS benefit?... the nursing home. I'd rather use that money during my active years for travel, hiking, playing golf, etc.

Finally, I'm not a conspiracy theorist, but the government would very much like to see everyone delay the start of their benefits. Like a casino, the odds are in their favor that most of these people will die early and never use their full benefits had they started at 62. If everyone started at 62, the system would go broke.

As Valerie Harper just said, while you're living, live.

 

[haha]

It's very odd to me that at any time we generally have at least one thread running suggesting taking early SS, and at leaast one other thread espousing purchase of immediate annuities. Some posters don't just say that they want early SS, but that it is the only thing that makes sense, or that anyone who plans to wait must delusionally expect to be Methusalah

Other posters say that annuities are better than bonds and stocks, or at least that you need one, regardless of their high price and non-zero risk. Since there is no cheaper or less risky annuity than the one bought by delaying SS, this is hard to understand.

Can someone explain it?

Ha

 

[Brett_Cameron]

It's very odd to me that at any time we generally have at least one thread running suggesting taking early SS, and at leaast one other thread espousing purchase of immediate annuities. Some posters don't just say that they want early SS, but that it is the only thing that makes sense, or that anyone who plans to wait must delusionally expect to be Methusalah

Other posters say that annuities are better than bonds and stocks, or at least that you need one, regardless of their high price and non-zero risk. Since there is no cheaper or less risky annuity than the one bought by delaying SS, this is hard to understand.

Can someone explain it?

Ha

Each of is hampered by our own particular set of blinders and the path before us. I think I know the best path for me and and my family, but as always, I might be wrong. I am not smart enough to figure out what might be best for someone else.

 

[gerrym51]

It's very odd to me that at any time we generally have at least one thread running suggesting taking early SS, and at leaast one other thread espousing purchase of immediate annuities. Some posters don't just say that they want early SS, but that it is the only thing that makes sense, or that anyone who plans to wait must delusionally expect to be Methusalah

Other posters say that annuities are better than bonds and stocks, or at least that you need one, regardless of their high price and non-zero risk. Since there is no cheaper or less risky annuity than the one bought by delaying SS, this is hard to understand.

Can someone explain it?

Ha

were human beings and as such irrational


i took ss at 62 and have no plans to buy annuity

 

[RetiringAt55]

The average American life expectancy is 78.2.

But once you make it to age 65, your life expectancy is higher. For a 65 year old woman, the life expectancy is 85 and for a 65 year old man, it is 83. Those are just averages. What about the case where you die at age 75 and your wife lives to age 95? By taking the larger SS late, you maximize the survivor's benefit. I believe the mistake many people make is assuming both spouses die at the same time and not looking at what the numbers would be if one died early and one late.

 

[ERD50]

I'm just turning 61. Both my spouse (60) and I definitely plan on taking SS at 62. I ran the numbers and it makes no sense to wait. The break even point (where SS at 66 catches up) is 81. From a common sense perspective, it doesn't make sense to wait either.

Careful there. Please realize that you are saying that people who are planning to take it late have no common sense. If you study the posts of some of those people, I think you will find they have plenty of sense, common and other-wise.

It amazes me how people think they're immortal, are exceptions to genetics and the laws of nature, and will somehow live to 90-100 or beyond. You even see this silly talk from "financial planners" that by taking SS late, you'll get maximum benefits past 100. Who lives past 100? Ridiculously impractical and unrealistic advice and thinking. The average American life expectancy is 78.2.

I suggest that you study a bit. You are mis-applying 'life expectancy'. First, that is an average number, so by definition, half live longer. Second, you need to look at LE at a specific age.

https://personal.vanguard.com/us/insights/retirement/plan-for-a-long-retirement-tool

Male. A 65-year-old man has a 41% chance of living to age 85 and a 20% chance of living to age 90.
Female. A 65-year-old woman has a 53% chance of living to age 85 and a 32% chance of living to age 90.
Couple. If the man and woman are married, the chance that at least one of them will live to any given age is increased. There's a 72% chance that one of them will live to age 85 and a 45% chance that one will live to age 90. There's even an 18% chance that one of them will live to age 95, as shown below.

Your 78.2 number does not apply. Careful what you call 'common sense'.

Another aspect is who is going to be physically active enough and can use that extra delayed money starting at age 81?

And when I'm less active, I might need more money, to have people do things for me I can no longer do for myself.

Finally, I'm not a conspiracy theorist, but the government would very much like to see everyone delay the start of their benefits. Like a casino, the odds are in their favor that most of these people will die early and never use their full benefits had they started at 62. If everyone started at 62, the system would go broke.

OK, don't take it personally, but I'm going to be more blunt here. That is an ignorant statement (not stupid, but 'ignorant', as in 'unaware of the facts'). If you do some research, you will find that the SS payouts are pure actuarial calculations. There is no intentional bias there. There are some biases in that they don't use different numbers by gender, but the early/late decision is not 'gamed' by the govt.

Common sense is great, but one needs to be informed to use it.

It's very odd to me that at any time we generally have at least one thread running suggesting taking early SS, and at leaast one other thread espousing purchase of immediate annuities. Some posters don't just say that they want early SS, but that it is the only thing that makes sense, or that anyone who plans to wait must delusionally expect to be Methusalah

Other posters say that annuities are better than bonds and stocks, or at least that you need one, regardless of their high price and non-zero risk. Since there is no cheaper or less risky annuity than the one bought by delaying SS, this is hard to understand.

Can someone explain it?

Ha

Yes, but I would probably put it in a way that would cause the mods to (rightly, to keep the peace), delete my post. So I shall refrain.

-ERD50

 

[gerrym51]

It's very odd to me that at any time we generally have at least one thread running suggesting taking early SS, and at leaast one other thread espousing purchase of immediate annuities. Some posters don't just say that they want early SS, but that it is the only thing that makes sense, or that anyone who plans to wait must delusionally expect to be Methusalah

Other posters say that annuities are better than bonds and stocks, or at least that you need one, regardless of their high price and non-zero risk. Since there is no cheaper or less risky annuity than the one bought by delaying SS, this is hard to understand.

Can someone explain it?

Ha

do you own long term care insurance. this is just as big an issue as taking ss late


ss late as longgevity insurance yet no LTC insurance to protect it?

 

[ERD50]

I ran the numbers and it makes no sense to wait. The break even point (where SS at 66 catches up) is 81.

One more point.

Most of those looking to delay realize that they are effectively buying 'longevity insurance'. Like any true insurance product, a knowledgeable buyer does not expect to 'break-even' - it's not a concern, it's not an 'investment'. It's insurance. It's meant to cover the 'what if' cases.

What if I get in a car accident?

What if my house burns down?

What if I get sued?

What if I'm in the 20% that live to X years?

To put a finer point on your 'break-even' at 81 statement, look what this says about the odds of a 62 YO couple surviving past 81 years. Hmmm, 57% odds for the man to reach 81 YO, 66% for the woman, and 85% combined. I think you need to re-visit your 'common sense' break-even calculus, no?


-ERD50

 

[gerrym51]

One more point.

Most of those looking to delay realize that they are effectively buying 'longevity insurance'. Like any true insurance product, a knowledgeable buyer does not expect to 'break-even' - it's not a concern, it's not an 'investment'. It's insurance. It's meant to cover the 'what if' cases.

What if I get in a car accident?

What if my house burns down?

What if I get sued?

What if I'm in the 20% that live to X years?

-ERD50

do you have LTC insurance?

what are probabilities of needed LTC

 

[ERD50]

do you have LTC insurance?

Not yet. The difference is (and I think haha could probably put this better than me), is that the SS early/late decision is very likely the cheapest and most secure longevity insurance that one could 'purchase'.

LTC is a lot more questionable. Will the ins co be there when you need them? Will you fall through some fine print and be denied? Will the inflation adjustment (if any) be enough? There is a lot of fine print in those contracts and a lot of gray area. I should probably educate myself more and make a more informed decision, but, IMO, it is a much tougher call than early/late SS for someone like me, with a spouse that is eligible for my larger benefit.

Some posters here have spouses who do not qualify for their benefit, their calculation is different.

For reference: I am not yet 62, and I will re-evaluate each year once I've reached that point. If I'm lucky, I hope to be able to hold off and delay to 70 (edit/correction : 70, not 72 as originally written), if it doesn't mean drawing down my portfolio too far in those years.

-ERD50

 

[Stanley]

One more point.

Most of those looking to delay realize that they are effectively buying 'longevity insurance'. Like any true insurance product, a knowledgeable buyer does not expect to 'break-even' - it's not a concern, it's not an 'investment'. It's insurance. It's meant to cover the 'what if' cases.

What if I get in a car accident?

What if my house burns down?

What if I get sued?

What if I'm in the 20% that live to X years?

+1

One of the most sensible things I have read in this thread.

 

[Stanley]

do you have LTC insurance?

what are probabilities of needed LTC

Social Security is about as certain a sure thing as one can imagine. Granted it may be cut somewhat, but I believe it will still be there.

LTC insurance is a different animal, IMHO. As pointed out by others it is a contract with lots of fine print. And, it seems that many insurers are raising rates so high that many people must either reduce their coverage or drop it altogether. If this happens after years of payments, and as the probability of needing to use it rises..... well, I would feel cheated. The ability of insurance companies to purge people through rate increases makes me highly suspicious of this product.

 

[REWahoo]

For reference: I am not yet 62, and I will re-evaluate each year once I've reached that point. If I'm lucky, I hope to be able to hold off and delay to 72, if it doesn't mean drawing down my portfolio too far in those years.

If this is in reference to delaying SS benefits, your "delay to 72" is probably a typo - SS benefits don't increase beyond age 70, so delaying two more years will be of no benefit.

 

[gerrym51]

Not yet. The difference is (and I think haha could probably put this better than me), is that the SS early/late decision is very likely the cheapest and most secure longevity insurance that one could 'purchase'.

LTC is a lot more questionable. Will the ins co be there when you need them? Will you fall through some fine print and be denied? Will the inflation adjustment (if any) be enough? There is a lot of fine print in those contracts and a lot of gray area. I should probably educate myself more and make a more informed decision, but, IMO, it is a much tougher call than early/late SS for someone like me, with a spouse that is eligible for my larger benefit.

Some posters here have spouses who do not qualify for their benefit, their calculation is different.

For reference: I am not yet 62, and I will re-evaluate each year once I've reached that point. If I'm lucky, I hope to be able to hold off and delay to 72, if it doesn't mean drawing down my portfolio too far in those years.

-ERD50

i bought at 52/57 now 62/66-price constantly going higher-researching and
my wife and i pay 2700 total 4 year policies 5 percent inlation etc was 150/per day now worth 225 per day-if you wait to buy it will be astronomical and much tougher to qualify for. if you get it it will cost alot of your extra money-worrying about longevity and NOT insuring against the most devestatingly expensive part of longevity seems ludicrous. my point is you have reasons for not taking social security early yet come up with reasons not to buy LTC insurance. sounds just as questionable as our reasons to tale ss at 62.

 

[gerrym51]

Social Security is about as certain a sure thing as one can imagine. Granted it may be cut somewhat, but I believe it will still be there.

LTC insurance is a different animal, IMHO. As pointed out by others it is a contract with lots of fine print. And, it seems that many insurers are raising rates so high that many people must either reduce their coverage or drop it altogether. If this happens after years of payments, and as the probability of needing to use it rises..... well, I would feel cheated. The ability of insurance companies to purge people through rate increases makes me highly suspicious of this product.

i researched it carefully and bought from a quality provider. do some of these things you say are possible. my point is that just as many good/bad reasons to buy not buy ltc as take/not take ss early. taking ss late as longevity insurance also means being old enough to possibly need ltc.

 

[rayvt]

Re: delaying SS and thinking of it an an annuity.
That's a very restricted annuity. You don't have any freedom to choose the monthly amount (and hence the initial deposit). You have exactly one specific monthly amount, which is determined by the SSA and you cannot pick a different amount.
And the entire deal can be changed at the stroke of a pen, by Congress changing the law.

With a normal annuity you can pick whatever benefit you want.
The company cannot change the deal unilaterally -- although they can go bankrupt and leave you with nothing.

 

[ERD50]

. my point is you have reasons for not taking social security early yet come up with reasons not to buy LTC insurance. sounds just as questionable as our reasons to tale ss at 62.

I think you are misinterpreting my post.

Yes, I gave reasons to delay SS. And those are reasons that others can review and see if/how it applies to them.

I said I have not gathered enough info to decide on LTC, and that it is complicated - that is different than saying I have reasons not to buy it, or anything that others can review. I admit I need to educate myself. How does ObamaCare fit into this?

If this is in reference to delaying SS benefits, your "delay to 72" is probably a typo - SS benefits don't increase beyond age 70, so delaying two more years will be of no benefit.

You are being generous - it was a brain phart, not a typo Good catch, wouldn't want others to get the wrong idea, I'll see if I can still edit it (done).

-ERD50