When to start taking Social Security

[davemcmullen]

Dear ER friends: Is there any standard advice related to when to start taking social security. I created an excel sheet to help me try and figure it out, but I need a way to double check my work. Here are my assumptions. I could take it as early as 62 without working if that was in my best interest. I plan on living til 90. I am taking my SS estimated numbers directly off a sheet from SS. My spread sheet calulation seems to to indicate that starting at 66 is best. I'm surprised, why not 62, or 70.5? I thank you in advance for your help.

 

[chinaco]

Do some searches. There have been multiple posts on the subject. They have links to articles.

This is a hotly debated subject from a number of angles.

My current plan is that DW will take hers at 62. I will take mine at full-retirement. This way the survivor has a higher COLA'd pension (component) for the income stream for life.

I have thought about waiting till 70... But at this time, I do not think it is worth waiting to do that.

 

[megacorp-firee]

I believe that with a life expectancy @ 90 you should be waiting until 70 to take your SS. Break even is before that.

 

[OAG]

The numbers are what they are and IMO can be very different for each situation. I would keep an eye on the politics for the unknown factors.

 

[clifp]

The system is designed so that for most people it is pretty much a wash if you take SS at 62, 66 or 70. If you are married a lot depends on the ages of the husband and wife. If the husband is primary earner and the wife is younger, she should take it as early as possible and he as late as possible, because of her survivor benefits.

However, for me I would almost always advise taking SSas soon as possible, for one reason. The system allows you take your money and then change your mind repay the social security, and refile for a higher benefit. So if at age 68 you walk into the doctors office and he say "Dave my god you've got the body of a 40 year old, you'll probably live to 100. You can refile and get a higher payment.

You can't do the reverse; put off taking Social Security find out at age 68 you've got life threatening condition a few years, and ask Uncle Sam to send you the checks from ages 62 to 68.

 

[Zipper]

Take life one day at a time.

Most males do not live anywhere near 90.

 

[REWahoo]

dave, here's a thread you might find helpful: http://www.early-retirement.org/forums/f28/when-take-social-security-27924.html

 

[Spanky]

I'm surprised, why not 62, or 70.5?

It depends on longevity, health, size of portfolio, amount of money to leave behind, reliability of SS, etc.

If you think that you will live healthy for a very long time (e.g., 90+), taking SS at 70 is optimal if SS still exists.

 

[rayvt]

Here is a very comprehensive spreadsheet: http://web.bryant.edu/~rmuksian/textbook/Breakeven62vsNormal.xlsFor me, assuming 2% annual COLA, the breakeven point was age 82.4!!! Twenty years. To me this is a no-brainer. Take the early SS.

 

[Orchidflower]

I have a breakout spreadsheet also that proves that if I live to 90 (which both parents did), 70 would profit me much more than taking it at 62. I, myself, am waiting until 70.
But I see we have differing opinions here.

 

[W2R]

After reading various opinions on this topic over the past few years, I have concluded:

1. Taking Social Security at 62, 66, or 70 is pretty much a wash for most people since the amounts are actuarily based
2. If you live to be very old, it would probably help to wait until 70 before taking SS; if you die young, it would probably help to take SS at 62. Most people do not fit into these categories.
3. You can only make a rough estimate of probability that you would live to be very old, or die very young
4. You cannot really know whether the total money you receive over your lifetime will be greater by taking SS at 62, 66, or 70.
5. You also cannot really know whether or not SS will follow through with payments at the levels you expect.

Therefore, my conclusion is that we have insufficient information to determine when to take SS, and it probably doesn't matter much anyway. Consequently each of us should just do whatever we doggone please and not worry about it so much or critique others' decisions so much. I will probably take mine at 66, a nice middle-of-the-road age.

 

[Coach]

I was firmly in the early SS camp, because I don't expect to live especially long and that seemed likely the best way to maximize my return. When I start SS won't affect my spending either way. On reconsideration I now think I'll delay to maximize the monthly benefit, and treat it as longevity insurance. The maximum for me represents a substantial portion of my retirement budget, COLA protected.

FIRECalc upped my success rate a few points when I did this and assumed a long retirement.

Coach

 

[Rustic23]

Ravyt,
Your link is wrong. Should be: http://web.bryant.edu/~rmuksian/text...sNormal.xls Seems like the work For got attachd.

 

[ziggy29]

Whether someone says 62 or 70 probably depends on the presence and/or quality of their pensions.

 

[hankster]

Check out the thread REWahoo posted. I read the whole thing (head hurts, please pass the aspirin) It's pretty interesting and a lot of it goes like this: TASTES GREAT! LESS FILLING! TASTES GREAT! LESS FILLING! I'll make the call when age 62 comes but I'm leaning toward taking it at 62 because a) I can change my mind later and b) I like the looks of the exponential growth of our nest egg in that period if taking SS early enables me to let the nest egg grow untouched.

Hank

 

[aenlighten]

Longevity says delay

Life expectancy at 66 is 20 years, or about 86, so 90 would suggest delaying. The other factor is your personal discount rate. If you would enjoy it more earlier, whether due to declining interests, declining capabilities, declining health, this may outweigh waiting. It may also be in your interest taxwise to delay and allow conversion of Traditional to Roth retirement accounts.

 

[rayvt]

Life expectancy at 66 is 20 years, or about 86, so 90 would suggest delaying.

That's crazy! A twenty year break-even period is way too long to be acceptable.

 

[Rustic23]

We are waiting till 70. At least that's the plan at 65. Living on taxable accounts now means little income. Therefore, I can move money from IRA to Roth at a lower tax rate. Wife's M&D lived to 94 & 97 (he's still going). Don't need the money now, larger check would be nice in 5 years.

Now that means nothing to you, because your plans, options, and conditions surely very from ours.

 

[fmhealth]

I "retired" at 48. Just took my SS in Dec of '07 at age 62. The $1,444.00 I receive by D/D every month is truly tantamount to "Found money." I spend it on my grandchildren, my children, wife or simply invest any amount that remains. I personally can't imagine allowing the gov't to keep my funds any longer than absolutely necessary.

Being in the healthcare arena my entire life I've seen the vagaries of a panoply of health disasters. Most of which were never foreseen or certainly anticipated. Since none of us are getting out of here alive. Couple that with the avg. life expectantancy in the late 70s. I'll take the cash, use it, invest it, but most of all enjoy it!

Best of luck with whichever road you may travel.

 

[Bikerdude]

100% of my income at age 62, other than my pension will come from tax deferred investments (IRA’s). If I do not take SS then I will pay taxes on 100% of my withdrawals. Worst case with SS is taxation on 85% while my IRA continues to grow. I believe that by making strategic withdrawals from my Roth IRA I can reduce the tax bite on SS considerably below 85% for several years. The State of CT does not tax SS if your income (single) is below 50K so that's an additional reason to take SS early for me.

Each person’s case is different and one must run the numbers. Good luck.

 

[davemcmullen]

Thanks...I will search for more info. At least I know that it is not a simple answer.

 

[aenlighten]

That's crazy! A twenty year break-even period is way too long to be acceptable.

It can be, but some can expect to live 40 years and profit nicely by delaying. I just hope they are up to spending it when they do.

 

[Buckeye]

I just read an interesting paper from the Center for Retirement Research at Boston College talking about the negative financial effect on wives caused by married men taking social security benefits early. The assumptions are that wives typically outlive their husbands and his benefit is greater than hers.

The break-even calculation for the husband was one number to look at but so also was the additional amount collected by the wife over her lifetime after the husband had died. They discussed the possibility of having the wife sign-off on the husband taking benefits at 62 - kind of like with a pension where the wife has to sign-off if the husband wants to take 100% during his life and leave nothing for his wife after his death. If she has been a stay-at-home wife all her life and has no earnings of her own, she may need her husband to wait until FRA in order for her to survive financially after he dies.

They also talked about reducing his SS by even more than normal at 62 so that the wife would get a full benefit when he died.

Of course, waiting is not always a decision one gets to make if employment or health issues arise.

 

[TromboneAl]

I'm not going decide until I have to (in about 8 years), but current strategy is:

1. Start taking at 62.

2. At some age between 65 and 70 evaluate my situation, my life expectancy, and SS's situation, and if I'm going to live a lot longer, pay it back and start anew.

 

[haha]

They discussed the possibility of having the wife sign-off on the husband taking benefits at 62 - kind of like with a pension where the wife has to sign-off if the husband wants to take 100% during his life and leave nothing for his wife after his death. If she has been a stay-at-home wife all her life and has no earnings of her own, she may need her husband to wait until FRA in order for her to survive financially after he dies.

They also talked about reducing his SS by even more than normal at 62 so that the wife would get a full benefit when he died.

As if any more arguments were needed, one more reason for men to be single.

Ha