You should take SS at 62

[marko]

There is no single right answer.

That should be the subtitle to this forum! Seems to be the answer to just about everything here.

 

[pb4uski]

Keep in mind that according bro social security statistics, the percentage of people that apply for ss at 70 is in the single digits. Less than 1 in 10. Very few do.....

but as someone has already pointed out to you, there is a reason that those who wait until they are 70 are so few. It is because many people cannot afford to wait until they are 70... they need the cash flow for daily living expenses.

What we are talking about here are people who have sufficient means to have a choice to take it at 62 or FRA or 70.

 

[Bikerdude]

That should be the subtitle to this forum! Seems to be the answer to just about everything here.

+1. I think you're onto something.

 

[BUM]

DW and I both opted in as soon as possible. No regrets. Loving those monthly gummint deposits..

 

[dallas27]

I will probably never the the math on SS, it seems very straight forward to me that the best time to take it is whenever the market drops and you other wise would be taking a suboptimal withdraw amount. SS is the perfect tool to avoid a market bottom.


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[pb4uski]

Check this out.

The black horizontal line represents the 50th percentile for survival (or what we commonly call "life expectancy"), which is approximately age 89 for the starting-age-65 couple (based on the Social Security Administration's 2007 Period Life Table). Notably, though, it's only age 85 for a 65-year-old female, and age 82 for a 65-year-old single male.

Since I had the higher earnings and DW was a SAHM, she or I would likely collect my SS from when I start claiming it (current plan is age 70) until 89, well past the break even point unless we use an unrealistically high interest rate. Additionally, DW will collect 1/2 of what I get from my FRA to when I die.

Since we can afford to wait, are in good health and have good longevity in our families, I plan to wait. DW will claim at her FRA, I'll file and suspend 8 months later and she'll then get bumped up to 50% of my FRA and then I'll start collecting benefits when I turn 70.

If our investments underperform, our contingency plan is to start collecting before FRA only if our investment balance get uncomfortably low (which is unlikely).

 

[MikeWillRetire]

it seems very straight forward to me that the best time to take it is whenever the market drops and you other wise would be taking a suboptimal withdraw amount. SS is the perfect tool to avoid a market bottom.

I like that approach.

 

[REWahoo]

I like that approach.

That's what I did in late 2008.

 

[Walt34]

Since I am married, I need to take into account the greater future payments which spouse will receive.

That's where I am too, and why I'm waiting until 66 or perhaps a bit later. The difference for DW is significant.

I've made it clear though that I fully expect her to wear black and behave for a year before she starts fooling around with the pool boy on the life insurance. That gets me an eye roll.

 

[Spanky]

Keep in mind that according bro social security statistics, the percentage of people that apply for ss at 70 is in the single digits. Less than 1 in 10. Very few do.


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Not surprising since Social Security may not be able to meet its full obligations two decades from now and longevity is very uncertain (despite good health or family longevity history). Many people die from unexpected diseases or accidents. We could keep a positive attitude of life, stay healthy, and plan to live for a long, long time. However, most events in our lives are beyond our control and hardly turn out as planned. Anyway, I plan to take the middle-of-the-road approach - taking SS at FRA.

 

[athena53]

I will probably never the the math on SS, it seems very straight forward to me that the best time to take it is whenever the market drops and you other wise would be taking a suboptimal withdraw amount. SS is the perfect tool to avoid a market bottom.

That's my plan. I turned 62 in February. If we get into another market like the 2006-2008 one I may reconsider my plan to wait to age 66 to get Spousal benefits and delay my own till age 70.

I read recently that something like 75% of people are claiming SS at age 62 now. For some it's strategic, but I think for most it's because they're tired of working (or can't find another decent job) and they need the money.

 

[Which Roger]

To elaborate on the "it depends" theme, here are several big factors that can influence one's decision:

- If married, will both partners receive a similar benefit? (DW and I will, but many others in this thread have mentioned that one partner having a much larger benefit will influence their decision)

- How important is it for you to leave a big chunk of money to your heirs? (Which depends on a large part on whether you have children or grandchildren)

- Is your goal to maximize your benefit, or minimize your chances of dying broke?

- And myriad factors regarding portfolio composition, taxes, etc.

 

[Sunset]

For singles, in theory it doesn't matter. If it were me and I was single and had enough for 100% success, I would still wait as it is cheap longevity insurance to protect me if I did live long or if the financial markets were unkind.

However, if you add in unfavorable genetic history or existing health issues that impact long term mortality then taking early is a better option.

The markets are something many early takers of SS neglect to consider while they consider they may perish early so collect it and spend as might die in a few years.

What they forget when thinking about not spending down their savings to allow the SS to grow is the markets could go to 5% of current value like in 1929.

Imagine taking SS early, then 3 yrs later the market crashes.
Then all their savings goes from $500,000 -> $25,000 and they have a smaller SS payment.
vs
Spent $100K of savings over the 3 yrs delaying SS, and the market crashes. Savings are $400,000 -> $20,000 and the SS pays 21%-24% more than the first case.

I agree if you are certain, and not just fear you will die early, then take it early.

 

[grasshopper]

A 75%er here, everything told me wait until 70, but a Dx of cancer 2 months before 62 changed my mind.

 

[Sunset]

That's where I am too, and why I'm waiting until 66 or perhaps a bit later. The difference for DW is significant.

I've made it clear though that I fully expect her to wear black and behave for a year before she starts fooling around with the pool boy on the life insurance. That gets me an eye roll.

Are you saying she will have to start behaving

 

[Walt34]

Are you saying she will have to start behaving

 

[RobLJ]

I plan to take it early if there is a market crash that takes the investment funds down precipitiously, to give time for the portfolio to recover and to allow the DW to wait longer.
Otherwise take it a full retirement age or even at 70 if the portfolio is doing well. The beautiful thing about SS is its flexibility--true insurance. (I see athena and dallas posted essentially the same strategy.)

 

[heeyy_joe]

I'll wait until Medicare age (65) before claiming mine. Taking it early would eliminate my PPACA subsidy, so I'd be giving over $5k of my ss to some insurance company -no thanks.

I am surprised there are not early retirement articles on financial planning to minimize taxes and maximize PPACA subsidies, lots of boomers leaving the workforce early!

 

[mathjak107]

I'll wait until Medicare age (65) before claiming mine. Taking it early would eliminate my PPACA subsidy, so I'd be giving over $5k of my ss to some insurance company -no thanks.

I am surprised there are not early retirement articles on financial planning to minimize taxes and maximize PPACA subsidies, lots of boomers leaving the workforce early!

i think the reality is that most who can afford to retire early and delay ss are going to be over the limit income wise for a subsidy.

i was hoping to see a subsidy this year , my first year going in to retirement at 62 but even living on mostly cash will not bring us down to a level where i can get a subsidy on health insurance.

i think most who do have a choice to retire and delay will have the incomes to go with that choice.

 

[Fishingmn]

Most of the analysis I see shows the difference in benefits at taking them early vs. at FRA as if they were fully spent. Usually I see it suggested that the break even point for when you would collect more money is around 78-80.

But these seem to assume it's all about how much money is received in benefits for the analysis.

What if the person who claimed at 62 didn't spend the money but instead put the money into their asset allocation to save? Wouldn't that make the break even point much later? Of course this assumes positive market returns but it just seems like this would argue for taking it earlier in many cases. Spending the social security money and allowing you to take less out of your portfolio is the same as saving the social security right?

Maybe that analysis has already been done but I don't recall seeing it.

And obviously, there are things like subsidies, income limits and taxes that make each decision different.

 

[donheff]

Most of the analysis I see shows the difference in benefits at taking them early vs. at FRA as if they were fully spent. Usually I see it suggested that the break even point for when you would collect more money is around 78-80.

But these seem to assume it's all about how much money is received in benefits for the analysis.

What if the person who claimed at 62 didn't spend the money but instead put the money into their asset allocation to save? Wouldn't that make the break even point much later? Of course this assumes positive market returns but it just seems like this would argue for taking it earlier in many cases. Spending the social security money and allowing you to take less out of your portfolio is the same as saving the social security right?

Maybe that analysis has already been done but I don't recall seeing it.

And obviously, there are things like subsidies, income limits and taxes that make each decision different.

Interesting point. I don't recall any of the analyses of break even discussing the savings effect of early SS. If you hold spending the same, take it or leave it, then taking is saving for the early years. When you reach the actuarial break even point you still have the saved funds that otherwise would have come out of your portfolio between 62 and 66 or 70. A useful factor if you want to leave an inheritance. Still seems like the primary benefit is the longevity insurance effect of increased COLA protected cash flow in old age if the markets go south and eat up your portfolio.

 

[mathjak107]

it is the same as the not spending down assets to delay I spoke about earlier in the thread . A 50/50 BALANCED FUND pushes break even out 22 years including the checks you gave up.

add in the fact until I file at fra my wife does not get a 3k adder to her benefit and the fact medicare has no cap on increases while you delay and that can push you out 23-24 years.

that is well in to your 80's.

 

[Golden sunsets]

DH and I visited a fee only FP at the point that DH retired in 2008. The visit was to have a set of eyes other than our own review our plan once to validate our numbers/assumptions. One of his suggestions was to defer taking SS until 70 and intentionally take RMD's in the amount that SS would have been between retirement(62) and 70. Doing so would keep our income taxes the same during that period but reduce the amount of future RMD's that would need to be taken once reaching 70.5. Furthermore, Converting those 8 years of annual withdrawals into a Roth IRA and investing them also avoided the concern of liquidating during a down market and in fact the Roth grew handsomely as the market since 2009 has outperformed historical returns. And now that Roth is worth a considerable amount and can never be taxed. Not to mention that the SS to be claimed at 70 will be 164 percent of its original amount, not including COLA's. I am well aware that many could not afford to take this path but would need to spend the WD's to live but as a pure math play I think this advise was flawless. Our FP earned his fee for that suggestion alone.

 

[mathjak107]

so what you are doing is 8 years of roth conversions pre 70-1/2 .


of course you have to see what the conversions cost you . as an example for someone getting a medical subsidy from 62-65 they might lose that.


or they may end up in the 25% marginal bracket and have the same tax rate with the rmd's down the road.


I can see it working but there may be only a narrow income band it would pay to do conversions.


you also need other sources of income as well . I know without ss I will need to live on those withdrawals .

 

[Golden sunsets]

so what you are doing is 8 years of roth conversions pre 70-1/2 .

Yes, at no greater expense than if we had taken SS early.