why you should ALWAYS take SS as soon as you can
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W2R
Moderator Emeritus
To me, SS functions as (partial) old age insurance. If I die young, I didn't need it anyway because I had plenty in my portfolio upon which to live.
rescueme
Thinks s/he gets paid by the post
See the below reference. Detail under the heading "Team Play":Just curious.... but are you SURE that if you start taking spousal benefits that you will continue to accrue on your account
Two Ways To Optimize Social Security Benefits - Columns/Features - IndexUniverse.com - ETFs, Index Funds, Indexes
growing_older
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While the minimum age to apply for SS and the maximum age beyond which benefits no longer increase are fixed, the amount of those benefits are dependent partly on your normal retirement age. That means that for those with normal retirement ages of 65, the increased benefit at 70 will be about 5 steps higher than the "full" benefit. For those with normal retirement age of 66, the increased benefit at 70 would only be 4 steps higher. I've seen tables that showed these amounts, but I cannot find such a table on the SS site.
rescueme
Thinks s/he gets paid by the post
Between the ages of 66-70 (SS taken at 70), the increase is 8% per year for those who's FRA is age 66. That's a total of 32% increase for the delay.
Between the ages of 65-70 (SS taken at 70), the increase is 7.5% per year for those who's FRA is age 64. That's a total of 37.5% increase.
There are adjustments made for each two year age period for prior years, per the table below.
Of course, you have no control over when you were born, and your FRA. The only thing you can control is when you file for SS.
From the SS site:
Delayed retirement credits
shotgunner
Full time employment: Posting here.
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I am single and have a daughter who is 18. I would like to leave something behind for her, more rather than less. I thought I would take SS at 62 as it would begin offsetting what I am drawing down from my portfolio. When I die she is the beneficiary of my estate, she would get nothing frm my SS benefits. However I realize it's a gamble either way depending on how long I live.
Rich_by_the_Bay
Moderator Emeritus
My understanding is that the buy-back is allowed strictly at the discretion of the SSA who, so far, have routinely granted those requests. However, since this is a known loophole (at least to the extent that no interest or penalty applies on the payback amount) and times are tough, I can easily see it being eliminated.
In that case you will be locked into the lower, younger payment schedule. Not a big problem I guess, but you should at least have a Plan B for when you look to pay back 3 - 10 years of payments and reset your benefit amount, and they tell you that option was discontinued.
In that case you will be locked into the lower, younger payment schedule. Not a big problem I guess, but you should at least have a Plan B for when you look to pay back 3 - 10 years of payments and reset your benefit amount, and they tell you that option was discontinued.
I agree with W2R. Refiling to get a larger check is a PITA.
Not only that, but when you sit down and dispassionately figure it out, you realize that it's much ado about nothing. It's kinda like getting all excited when you realize that you can swap a one-dollar bill for ten dimes. WOW!!! I give up one thing and get 10 things back----YIPEE!!!
The SSA says it right on their web site (parphrased): "You get the (early) reduced amount for more years. The *total* SS sums collected over the average lifetime are approximately the same, regardless of whether you start collecting at age 62, FRA, or 70."
If you truly want a bigger check later, there's a better way to do it.
Start at age 62 and save/invest the checks instead of spending them. Then when you hit FRA or 70 or whatever, stop the saving and start spending. Take withdrawals from your savings account to suppliment the SS checks----enough so that the total (SS + withdrawal) comes to what the SS amount would be if you hadn't taken it early. EVentually you'll deplete the savings account--that's the break-even point. Question is, how long does it take to break even?
Create this spreadsheet and the results are astounding.
For me, assuming 2% SS COLA and 0% (zero percent) earrnings on the saving account, the BEP was at age 81. 19 years.
At 4% earnings, the BEP was age 89. 27 years.
Plus, when you refile you are starting clean. If you die the next day all the money is gone and you wll have collected nothing. OTOH, if you start early with the side savings account, whenever you die the savings account is still there, for your spouse/heirs to keep.
Texas Proud
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Very interesting.... it answer one question... but does not go all the way IMO...
So.. the husband takes spousal benefits between 66 and 70... and then applies for full benefits. Does the wife now get spousal benefits of his if it would be higher? Is it reduced because she started at 62? When he dies, is her survivor benefits get reduced because she started at 62?
It will not help me at all... but I am talking with my sister who will be deciding this in a couple of more years... but she is 5 years younger than him.. so it would be 62 and 67... and he does not want to wait...
Westernskies
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Take SS at the first opportunity and invest it all in gold?
I am planning on using the higher payout at age 70 as my insurance policy that I will live longer than I think and outlive my retirement nest egg. Plan is to retire at 50 and beging spending my retirement assets. If I happen to run out of money sooner than I think I will, at least I will have the maximum social security monthly check to live on. My current projection is $3,100 per month at age 70 and I am pretty sure I can get by on that (even with inflation factored in). Thus in reality, my retirement nest egg really only "needs" to last 20 years (from age 50 to 70).
rescueme
Thinks s/he gets paid by the post
No. Assuming that both spouses are already receiving Social Security benefits, if the spouse with the higher benefit passes away first, the lower benefit spouse will get an increase in her benefit. However if the spouse with the lower benefit passes first, the surviving spouse's benefit will not change.
As far as detail questions you/others may have on the different rules of SS benefits (especially for spousal and family situations) I would recommend you put the question to SSCritic over on the BH forum. He's the "resident expert" on all things related to SS, and can get quite detailed, depending on your specific personal situation.
I used the article to explain how I/DW are going to draw SS, due to our spectific situation (age, income, future income after passing, etc.)...
Interesting. My thinking goes exactly the opposite. I intend to take it at 62 (I'm currently 60) because I don't know what the future SS rules (means testing etc, or funding availability) will be by 2020.
So I have some hope (and that's all it is) that there maybe some grandfathering virtues. Additionally, my personal rate of return since ER in December 2002, including the current rough patch is a little above 7%. When I apply that 7% compounded to the early SS withdrawal amounts I get pretty close to the payout as currently scheduled for age 70.
Is 7% going forward a reasonable assumption? - who knows
Are the SS rules going to be the same 10 years in the future - who knows
I do hope we can compare notes 10 years hence and see what really happened
Interesting. My thinking goes exactly the opposite. I intend to take it at 62 (I'm currently 60) because I don't know what the future SS rules (means testing etc, or funding availability) will be by 2020.
So I have some hope (and that's all it is) that there maybe some grandfathering virtues. Additionally, my personal rate of return since ER in December 2002, including the current rough patch is a little above 7%. When I apply that 7% compounded to the early SS withdrawal amounts I get pretty close to the payout as currently scheduled for age 70.
Is 7% going forward a reasonable assumption? - who knows
Are the SS rules going to be the same 10 years in the future - who knows
I do hope we can compare notes 10 years hence and see what really happened
+1 for this post. i too fear that means testing is in our future.
hate to beat the same drum...but gold and some other some hard assets are off of the radar.
for most people (all paper and real estate) they can calculate your net worth without even putting down their doughnut.
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Gold is only off someone's radar if he resides in a cemetery.
Might be a fine investment, but off the radar
Independent
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My spreadsheet gave a slightly different answer. Did you remember to inflate the benefit at NRA? (For example, suppose that at 62 your "full" benefit is $10,000 per year and your early benefit is $7,500. If you take the $7,500 now, it will be $8,118 when you get to age 66. If you wait until 66 to start, your initial benefit is $10,824, not $10,000.)
MasterBlaster
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All this ink over nada. The rules are almost certain to change in the next few years. How can you game the system when you don't know the rules ?
Rich_by_the_Bay
Moderator Emeritus
How true. Then again, do you really trust a thread whose OP tells you what you should ALWAYS do
?
rescueme
Thinks s/he gets paid by the post
Sort of sounds like religion...do you really trust a thread whose OP tells you what you should ALWAYS do
...Ah, I see what you did. I did only part of it. And I made a simplifying assumption
You applied a 2% COLA to the early amount starting at age 62, in which case at age 66 it will be $677/mo. You did the same for the reported FRA benefit, so that when SSA says (today) it will be 833/mo, you assume that the FRA benefit will also grow by 2% COLA, so that when you actually get to 66 the FRA benefit will have ballooned to 902/mo. Clever--I didn't think about that. I applied the COLA only after the checks began--either age 62 or age 66.
Interestingly, the thing I checked by spreadsheet against (
http://web.bryant.edu/~rmuksian/textbook/Breakeven62vsNormal.xls
) _also_ applies COLA only after the checks begin. So maybe both him and me made this mistake.
If it is a mistake.
When I compare what SSA sent to me on Feb 2008 vs. Feb 2009, my 2009 age early (62) payment was 3.1% higher that the 2008 number, but FRA (66) payment was only 1.2% higher. How can this be? Shouldn't these have gone up by the same percentage? Indeed, shouldn't the 66 amount have gone up even more due to compounding? To further confuse me, the 2008 COLA was 5.8% and the 2009 COLA was 0.0%. So where did the 3.1% come from? Certainly nothing else has changed---I'll still have turned 62 on the same date, and have turned 66 on the same date, and I've hit the caps.
Arrrggghhh! They also said that if I deferred to age 70, the difference between the 2008 amount and the 2009 amount was $3/mo or 0.1%.
BTW, my simplifying assumption was that the COLA gets applied monthly rather than annually. At low rates, this does not introduce much of an error.
Gold is only off someone's radar if he resides in a cemetery.
Might be a fine investment, but off the radar
it is off the radar. nobody knows what's in that shoebox....or buried in your backyard
compare this to the "total information awareness" the feds have on paper and real estate.
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Oh, I see what you mean. I misunderstood your meaning.it is off the radar. nobody knows what's in that shoebox....or buried in your backyard
compare this to the "total information awareness" the feds have on paper and real estate.
Independent
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I'm having trouble opening the spreadsheet (macros vs. my security settings I think) but I did look at Chapter 10 of Muksian's textbook here: http://web.bryant.edu/~rmuksian/textbook/Social_Security.pdf
Notice the example on page 12 where the worker is starting benefits in 2010 at age 66. The calculation uses the bend points for 2006, calculates a PIA of $2,099 then inflates it for four years to get $2,347 as the initial benefit at age 66.
This agrees with the process that the SSA explains on their website here: Social Security Retirement Benefit Calculation In fact, the numbers are identical. See worker B on the second page.
I think the 3.1% and the 1.6% makes an interesting puzzle. You didn't mention if you've quit working, or what the SS benefit estimate might be assuming for future wages. Generally, even if you've quit working, if you are still under 62 the Wage Index will increase the dollar amount of your initial benefit. So some increase isn't surprising, but I would expect to see the same increase in the age 62 and age 66 benefits.
I'll agree that the monthly COLA application shouldn't make a material difference on this analysis.
thanks to ron boyd for posting this on another thread. it will answer a lot of questions here. seems to ease the fears about spousal implications of taking it early. it's a long detailed article - so i just pasted some short clips -
Social Security Reset: When Does It Make Sense?
For married beneficiaries, there are additional considerations. Married couples in which the younger and/or healthier spouse has the lower PIA may see an increase to lifetime household benefits if the older spouse resets his or her retirement benefit.
As stated above, this is because the reset benefit amount continues as a survivor benefit after the death of the older spouse. The greater the age difference between the older spouse with the higher PIA and the younger spouse with the lower PIA, the greater the potential increase to lifetime household benefits.
If a reset is considered appropriate, the transaction itself is fairly straightforward: the retiree files form SSA-521 Request for Withdrawal of Application and simultaneously files a new application.8
All past benefits paid on the withdrawn application, including spousal, children's, and Medicare deductions, must be repaid before the new application can be processed. Interest is not charged on the repaid amount and disenrollment from Medicare is not required.9
The SSA will issue an SSA-1099 showing a negative net benefit amount. The taxes paid on past benefits can be deducted (not subject to the 2 percent floor for miscellaneous deductions) if over $3,000, or taxes paid on past benefits can be recaptured as a credit.10
The retiree will have to recalculate but not amend past tax returns to determine the amount of tax attributed to past benefits. Notably, there is no limit to the number of times benefits can be reset.
Social Security Reset: When Does It Make Sense?
For married beneficiaries, there are additional considerations. Married couples in which the younger and/or healthier spouse has the lower PIA may see an increase to lifetime household benefits if the older spouse resets his or her retirement benefit.
As stated above, this is because the reset benefit amount continues as a survivor benefit after the death of the older spouse. The greater the age difference between the older spouse with the higher PIA and the younger spouse with the lower PIA, the greater the potential increase to lifetime household benefits.
If a reset is considered appropriate, the transaction itself is fairly straightforward: the retiree files form SSA-521 Request for Withdrawal of Application and simultaneously files a new application.8
All past benefits paid on the withdrawn application, including spousal, children's, and Medicare deductions, must be repaid before the new application can be processed. Interest is not charged on the repaid amount and disenrollment from Medicare is not required.9
The SSA will issue an SSA-1099 showing a negative net benefit amount. The taxes paid on past benefits can be deducted (not subject to the 2 percent floor for miscellaneous deductions) if over $3,000, or taxes paid on past benefits can be recaptured as a credit.10
The retiree will have to recalculate but not amend past tax returns to determine the amount of tax attributed to past benefits. Notably, there is no limit to the number of times benefits can be reset.
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