Theory Behind taking Social Security Early?

[Fedup]

So tell me how your term life insurance could serve as Long Term Care Insurance? I don't see it.

If a spouse dies first, the insurance proceed is used to pay long term care for the surviving spouse. In my case I got the life insurance a long time ago, premium for my husband life insurance is the same or less than my LTCi, I’m guaranteed to get it vs LTCi where I might die without using it, proceed is higher than LTCi max for 3 years, it could cover up to 5-6 years. Premium stays reasonably constant until he is near 80, minimum dead benefit if one lives to the ripe old age of 100 is 25% of current life insurance proceed.

 

[HI Bill]

I have a ~two-option plan. It depends on sequence of returns and my health.

If my retirement assets are too depleted by time I reach FRA (67), or if my health is failing, then I'll take SS then (or earlier, if the markets tank for a long period).

If my retirement assets have increased, and I don't need the $, I'll delay SS until age 70, if it makes sense at the time.

No need to decide at 52, as a lot can happen between now and age 70. It's not just about maximizing SS benefits, it's about having the $ when you need them and can spend them on worthwhile stuff like dive travel!

 

[HI Bill]

If a spouse dies first, the insurance proceed is used to pay long term care for the surviving spouse. In my case I got the life insurance a long time ago, premium for my husband life insurance is the same or less than my LTCi, I’m guaranteed to get it vs LTCi where I might die without using it, proceed is higher than LTCi max for 3 years, it could cover up to 5-6 years. Premium stays reasonably constant until he is near 80, minimum dead benefit if one lives to the ripe old age of 100 is 25% of current life insurance proceed.

That's a great plan unless you both live independently until one needs LTC, and the other's still alive. Dementia can hit early, as can a fractured hip or pelvis. My mom had dementia for about 7 years, at then, at age 81.5, she fell and broke her pelvis, necessitating a memory care unit. My dad was still alive, and still travelling. You never know.

 

[Fedup]

That's a great plan unless you both live independently until one needs LTC, and the other's still alive. Dementia can hit early, as can a fractured hip or pelvis. My mom had dementia for about 7 years, at then, at age 81.5, she fell and broke her pelvis, necessitating a memory care unit. My dad was still alive, and still travelling. You never know.

True, all plans have problem. This is just better than what I had. I only had LTCi for myself for 3 years, upto $500k, I’m the younger spouse. My husband is older spouse and male, so I have better chance of surviving him. His family has slight dementia, mine doesn’t. Most likely, I will take care of him, and when I’m old, the insurance money will help my kids hire help to take care of me.
Of course we have other assets and such, this is not the only money for LTC.

 

[joeea]

If a spouse dies first, the insurance proceed is used to pay long term care for the surviving spouse. In my case I got the life insurance a long time ago, premium for my husband life insurance is the same or less than my LTCi, I’m guaranteed to get it vs LTCi where I might die without using it, proceed is higher than LTCi max for 3 years, it could cover up to 5-6 years. Premium stays reasonably constant until he is near 80, minimum dead benefit if one lives to the ripe old age of 100 is 25% of current life insurance proceed.

So as long as your spouse is dead you'll have money for your long term care.

But if your spouse is alive when you need it, or if your spouse is the one that needs long term care, you are out of luck.

That doesn't sound like a good plan to me. Maybe I'm missing something.

 

[Fedup]

So as long as your spouse is dead you'll have money for your long term care.

But if your spouse is alive when you need it, or if your spouse is the one that needs long term care, you are out of luck.

That doesn't sound like a good plan to me. Maybe I'm missing something.

If my spouse needs long term care, I will use our savings for that. The savings will be reduced obvious, the money from the life insurance will help cover the depletion. If I need Long term care before he does, then we also will use our savings. My life insurance proceeds will cover some of the depletion when I’m gone. My plan is better than what I had. That’s how I decided to get rid of LTCi, LTCi was never indefinite, it was only for 3 years, I believe that’s the average stay from some statistics.

But like I said, I have other savings, self insured like what most people who don’t have LTCi. I think I have better chance of recouping my life insurance premiums vs LTCi premiums. We all will be dead, we may not all will be needing LTC. People who died of heartache didn’t get to use LTC at all, like one of my brothers. YMMV

 

[NW-Bound]

... We all will be dead, we may not all will be needing LTC... YMMV

I have seen people who lingered for a long time with old age disabilities and sicknesses. Then, I have seen people who lasted only a few months. I think a lot depends on the person's will to live.

I think if I got bedridden or incapacitated, I would be so sad that I would not last long. YMMV indeed.

 

[Fedup]

I have seen people who lingered for a long time with old age disabilities and sicknesses. Then, I have seen people who lasted only a few months. I think a lot depends on the person's will to live.

I think if I got bedridden or incapacitated, I would be so sad that I would not last long. YMMV indeed.

Yeah, will to live is important. My mother was diagnosed with lung cancer stage 2, most doctors gave her 6 months at best. She lasted 2 years.

 

[sengsational]

No need to decide at 52, as a lot can happen between now and age 70.

When I saw this, I thought "At last, something everyone here can agree on". Then I went on to sort of disagree

When you run your calculators, you typically will put in your PIA and when you plan to take SS. So you need to make kind of a "soft decision" early, or at least fiddle with the inputs and see if one way or the other makes much difference.

 

[joeea]

If my spouse needs long term care, I will use our savings for that. The savings will be reduced obvious, the money from the life insurance will help cover the depletion.

after someone dies.

If I need Long term care before he does, then we also will use our savings. My life insurance proceeds will cover some of the depletion when I’m gone.

Okay.

But like I said, I have other savings, self insured like what most people who don’t have LTCi. I think I have better chance of recouping my life insurance premiums vs LTCi premiums. We all will be dead, we may not all will be needing LTC.

That's true. Once you are dead you won't need long term care. Otherwise, you might.

People who died of heartache didn’t get to use LTC at all, like one of my brothers. YMMV

Dying of heartache isn't a plan.

None of this makes any sense to me, but I wish you luck with your plans anyway.

 

[Fedup]

after someone dies.


Okay.


That's true. Once you are dead you won't need long term care. Otherwise, you might.


Dying of heartache isn't a plan.

None of this makes any sense to me, but I wish you luck with your plans anyway.

No, I didn’t say it’s a plan to die of a heart attack, I merely said if you die of a heart attack, even with LTCi, you get nothing. It’s true, one you’re dead you don’t need LTC, but what about surviving spouse. Same as SS.

But think about it, why do you get LTCi, because you might not have the money to self insure, if you have money for self insurance, you might leave a hole in your savings, it could be big hole, it could be small hole. So life insurance proceeds replenish that hole provides the premiums are equal to LTCi premiums. In fact, I think it’s better than LTCi premiums. You don’t have to deal with paperwork’s, you don’t have to prove that you can’t do 2-3 functions before getting reimbursement, much simpler.

I think I’m lucky that my husband is a spouse on my life insurance plan, he gets his insurance pretty cheaply as a spouse, even though he is older, otherwise this plan might not work. Plus the age difference(8.5 years) and sex(female) makes it very small likelihood that both spouses will need LTC at the same time.

I did call them last week to confirm about premiums going forward. That’s why I decided this maybe better replacement to LTC.

 

[joeea]

I merely said if you die of a heart attack, even with LTCi, you get nothing.

That's true. If you die before needing Long Term Care, then you get nothing. It's like homeowner's insurance that way - if you die before your home burns down you get nothing. That's often how insurance works.

But think about it, why do you get LTCi, because you might not have the money to self insure, if you have money for self insurance, you might leave a hole in your savings, it could be big hole, it could be small hole.

If you can actually afford to "self insure", then the hole shouldn't matter.

In fact, I think it’s better than LTCi premiums. You don’t have to deal with paperwork’s, you don’t have to prove that you can’t do 2-3 functions before getting reimbursement, much simpler.

Yup. It is far simpler to do without insurance and not get any reimbursement.

I did call them last week to confirm about premiums going forward. That’s why I decided this maybe better replacement to LTC.

Good luck. As I wrote I don't think this makes any sense, and I'd never advise others to do the same.

But hopefully neither of you will need long term care at all, you'll both live to a ripe old age and your heirs will inherit lots.

 

[Fedup]

But hopefully neither of you will need long term care at all, you'll both live to a ripe old age and your heirs will inherit lots.

Hey, that’s the plan.

But seriously, what do self insured people do for LTC, drain the savings.

 

[Running_Man]

That's true. If you die before needing Long Term Care, then you get nothing. It's like homeowner's insurance that way - if you die before your home burns down you get nothing. That's often how insurance works.


If you can actually afford to "self insure", then the hole shouldn't matter.


Yup. It is far simpler to do without insurance and not get any reimbursement.


Good luck. As I wrote I don't think this makes any sense, and I'd never advise others to do the same.

But hopefully neither of you will need long term care at all, you'll both live to a ripe old age and your heirs will inherit lots.

I do not understand why heirs inheriting lots is frequently mentioned here, second probably only to the contradictory don't help any of your relatives with your retirement money which you need for yourself.

 

[Floridatennisplayer]

I could not disagree more. I can assume that I will live longer... I have longevity in my family (88 yo mother, grandmother lived to 98), I am upper income and have regular checkups, I am retired so I have less stress than if I was working, I get a fair amount of exercise, I am happily married, have never smoked, and a host of other factors. Will I live longer? Who knows... but the odds are good.



While SS may be actuarially neutral for a single life, joint mortality is very different so for married couples where one was a much higher earner the math is very different from a single person. Finally, the discount and premium factors for taking early or late were set a long time ago and there have been mortality improvements since then.

Can’t tell you how many coworkers and friends I knew that talked just like this and are no longer with us.

Two of them ran 4-5 marathons a year. Great family genes, ate perfectly....one guy just keeled over at at breakfast with his family right there. He was 38!

To assume longevity I find scary. I’ll stick with the averages to be safe.

 

[marko]

Hey, that’s the plan.

But seriously, what do self insured people do for LTC, drain the savings.

But the drain may not be as bad as thought for some. Our annual spending (>$150K) right now--both healthy--is more than LTC would cost.

If one of us were to need LTC, the other spouse would be spending a lot less: no expensive travel, big dinners out, entertaining, new cars, boat expenses etc and instead would be sort of hanging around visiting the other in the nursing home each day. The healthy spouse would certainly change his/her lifestyle. I've seen this first-hand.

Not that the expenses would go to zero, but a $130K nursing home cost might only dent savings by about $50K additional from what we spend now.

My point is that a $130K nursing home cost isn't $130K over and above what you're already spending; one's entire life changes on both sides of the bed as do the expenses.

 

[DaveInMi]

Early SS

Hello, just joined and this is 1st post.


I built a spreadsheet retirement model. After running a few simulations on the subject, I have found that the difference (in my case) between taking it at 62 vs 67: Over age 100 and at 62, I will outlive my money by about 3 years.



So, like some of the posts above, if you think your life expectancy is 70-85, then take it at 62.



The bigger factor is that SS is paying out more money than it is taking in. So, if you think it will go into default or will reduce the payments sometime in the future, then 62 is the best bet; get what you can out of it as soon as you can.

 

[Chuckanut]

Can’t tell you how many coworkers and friends I knew that talked just like this and are no longer with us.

Two of them ran 4-5 marathons a year. Great family genes, ate perfectly....one guy just keeled over at at breakfast with his family right there. He was 38!

To assume longevity I find scary. I’ll stick with the averages to be safe.

An interesting anecdote but it really doesn't matter much to others. I know a guy who retired in his late 50's and now has been retired longer than he worked!! As far as sticking to the averages, one must be aware that 1/2 the people live less than average and 1/2 live longer than average. How does that help?

 

[Running_Man]

An interesting anecdote but it really doesn't matter much to others. I know a guy who retired in his late 50's and now has been retired longer than he worked!! As far as sticking to the averages, one must be aware that 1/2 the people live less than average and 1/2 live longer than average. How does that help?

Actually, since life span has been increasing a majority outlive the average expected life span when they are 55.

 

[Cut-Throat]

Can’t tell you how many coworkers and friends I knew that talked just like this and are no longer with us.

Two of them ran 4-5 marathons a year. Great family genes, ate perfectly....one guy just keeled over at at breakfast with his family right there. He was 38!

To assume longevity I find scary. I’ll stick with the averages to be safe.

So your Retirement Plan ends at age 78? (Average Life expectancy of a Male in the U.S.)


A lot of Folks here use age 100 to be 'On the Safe Side'.... I can't see how the 'Safe Side' is Age 78. If you're wrong your spending will be pretty lean after age 78.

 

[joeea]

But seriously, what do self insured people do for LTC, drain the savings.

Of course.

To self-insure means you are willing to accept the risk and willing to use your savings to pay for the long term care (or whatever it is you are self-insuring).

And it presumably means you already have sufficient funds to pay for the care as soon as the need starts to occur.

 

[Fedup]

Of course.

To self-insure means you are willing to accept the risk and willing to use your savings to pay for the long term care (or whatever it is you are self-insuring).

And it presumably means you already have sufficient funds to pay for the care as soon as the need starts to occur.

That’s the category I’m in. Life insurance jus eases the pain and possibly provide a bit more to my heirs.

 

[joeea]

I do not understand why heirs inheriting lots is frequently mentioned here, second probably only to the contradictory don't help any of your relatives with your retirement money which you need for yourself.

I only mentioned it in response to the plan which involves buying life insurance instead of buying long term care insurance. If everyone stays healthy then the heirs benefit.

I didn't say I thought it was a good plan.

 

[joeea]

So, like some of the posts above, if you think your life expectancy is 70-85, then take it at 62.

Only if you use your spreadsheet with your unique attributes encoded. For all others, they should use their own calculations - particularly if they have a spouse.

So, if you think it will go into default or will reduce the payments sometime in the future, then 62 is the best bet; get what you can out of it as soon as you can.

Social Security as currently implemented simply cannot go into default.

So scratch that from your list of worries (unless your spreadsheet anticipates some sort of wacky and exceedingly unlikely change in the rules or the collapse of the US government).

 

[joeea]

Two of them ran 4-5 marathons a year. Great family genes, ate perfectly....one guy just keeled over at at breakfast with his family right there. He was 38!

So his social security claiming strategy was irrelevant.

To assume longevity I find scary. I’ll stick with the averages to be safe.

I suspect we have different definitions of "safe".