Social Security at 70

explanade said:

But with the uncertain situation of SS long term, there could be a benefit to taking it earlier to get grandfathered into existing payouts.

Vs. what the politicians may decide are future payouts.

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As recent as 6 months ago I would have said "there is nothing to worry about --they will never cut social security", but now I'm not so sure.

Politicians and courts are capable of anything.



I really hope I'm wrong because my plan is to wait till 70 to start taking SS and am really banking on it to make my final years really financially worry-free.

Our plan was to wait for SS at FRA for DW (younger lower earnings) and 70 for me but Opensocialsecurity.com calculates 0.3% higher payout for starting DW immediately so we are doing that. She is 63.5

aaronc879 said:

Sounds like you retired way too late. Your kids will be rich unless you figure out a way to BTD.

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I have one kid that is a great saver and the other has a high income, yet to be seen if she is a saver, but yes, I expect they will get a large inheritance, but that is yet to be seen. I retired in 2016 at close to $1.7M. Our small business was destroyed by hurricane Michael in Oct. 2018 this forced my wife to retire, finally! She was 59. By the end of 2021 we added another $1M to what we had, even though we had paid $220,000 in tuition between 2018 and 2021. The market bloomed at the right time for us.

Not to bad for a couple of hi skool gradates earning a middle, middle class income!

pb4uski said:

Breakeven age is 82-1/2 for someone whose FRA is 67.

Say that their PIA (benefit at age 67) is 100... therefore their benefit at 70 would be 124 (100 +100*8%*3). So if they wait to 70 they forgo collecting 3,600 of benefits (100*12*(70-67)) but get 24 more each month (124-100). 3,600/24 = 150 months or 12.5 years, which when added to age 70 results in a breakeve point of 82-1/2 (ignoring interest).

If you change it to 62 your age 62 benefit would be 70. So you would forgo 6,720 from age 62 to 70 (70*12*(70-62)). But your benefit would be 54 higher (124-70). 6,720/54 = 124 months = 10.4 years so the breakeven point would then be 80.4 (ignoring interest).

In either case, a lot lower than 86. Just curious, where did you get the 86 from?

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I think you are taking break even for just the individual. When you add in spousal benefits at 67 the payback is longer. Not everyone's situation is the same

Romer said:

I think you are taking break even for just the individual. When you add in spousal benefits at 67 the payback is longer. Not everyone's situation is the same

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On the first part, please show your calculations. On the second part...not everyone's situation is the same... no kidding Sherlock, but if you follow the thread backwards you'll see that we were responding to a situation for an individual and not for a couple.

sherlock eh . . . I did follow the thread. I was responding to your comment on how it could be 86 years. I am not trying to start something so I will back out of this discussion. My calculations for my situation won't address the persons question and situation as you said.

Romer said:

I think you are taking break even for just the individual. When you add in spousal benefits at 67 the payback is longer. Not everyone's situation is the same

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It looks like the breakeven for spousal is actually shorter, not longer, assuming that they are the exact same age and the spouse is not entitled to any benefits based on their own work record so the non-working spouse receives 1/2 of the working spouses PIA.

Using the same example above except that the spouse would be entitled to 50 monthly (50% of the working spouses PIA of 100) at their FRA of 67. If the spouse takes at 62 then the benefit would be reduced by 32.5% to 33.75. So from 62 to 67 the nonworkign spouse would forgo 2,025 (33.75*(67-62)) and the working spouse would forgo the same 6,720 from the prior example from 62 to 70... for a total of 8,745.

Using goal seek, I derived a breakeven of 79.7:

((50-33.75)*12*(79.7-67))+((124-70)*12*(79.7-70)) = 8,762

Obviously, if the sopuses are of different ages or the non-working spouse has some benefit that they are entitled to based on their own work record it changes.

pb4uski said:

It looks like the breakeven for spousal is actually shorter, not longer, assuming that they are the exact same age and the spouse is not entitled to any benefits based on their own work record so the non-working spouse receives 1/2 of the working spouses PIA.

Using the same example above except that the spouse would be entitled to 50 monthly (50% of the working spouses PIA of 100) at their FRA of 67. If the spouse takes at 62 then the benefit would be reduced by 32.5% to 33.75. So from 62 to 67 the nonworkign spouse would forgo 2,025 (33.75*(67-62)) and the working spouse would forgo the same 6,720 from the prior example from 62 to 70... for a total of 8,745.

Using goal seek, I derived a breakeven of 79.7:

((50-33.75)*12*(79.7-67))+((124-70)*12*(79.7-70)) = 8,762

Obviously, if the sopuses are of different ages or the non-working spouse has some benefit that they are entitled to based on their own work record it changes.

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I'll just assume your theory and math are correct, but most of our DWs (or, I suppose, DHs) DO receive SS on their own record. YMMV

Not sure if this has been mentioned, but have heard some financial advisors are telling folks to take it at 62, even if still working. To hedge against future cuts. I was surprised.

almost there said:

Not sure if this has been mentioned, but have heard some financial advisors are telling folks to take it at 62, even if still working. To hedge against future cuts. I was surprised.

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Not surprising at all. On another board, someone reported that their Edward Jones rep was telling them to take it early because the dollar difference in waiting was "negligible". For that person, it was $900/month, which I don't consider negligible especially with COLA- but it also means money left longer in their EJ accounts since they have other income.

Coincidence? I think not.

almost there said:

Not sure if this has been mentioned, but have heard some financial advisors are telling folks to take it at 62, even if still working. To hedge against future cuts. I was surprised.

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A couple things... taking it early is unlikely to hedge against future cuts in SS... from everything that I have read, future cuts will be pro rata... IOW if Congress does nothing and a haircut is required and tax revenues will provide for 75% of scheduled benefits then everyone receiving benefits will get 75% of their scheduled benefits. That is why I think it is also likely that Congress will do something before haircuts begin.

I suspect that the future cuts that these financial advisors are referring to are future cuts in their AUM fees if you delay SS and are using some of your retirement savings as a result!

I think the best way to frame delaying SS is as buying a COLA adjusted annuity for life. Let's say that your FRA is 67 and your PIA is 100. If you take at 62 your benefit is 70 and if you take at 70 your benefit is 124... so if you delay to 70 you will receive 54 more a month for life.. 648 a year, plus COLAs. If you delay then you will have forgone 6,720 that you would have collected from 62 to 70 [6,720 = 70*12*(70-62)]. 648/6,720 is a 9.6% payout rate.

The payout rate for a fixed SPIA for a 70 yo male in FL is 8.1% and a 70 you female is 7.8% according to immediateannuities.com so not only do you get a favorable payout rate but you also get the COLAs. Since you're using retirement money it is effectively making 70 per month premium payments from age 62 to 70 in exchange for a 54 per month life annuity with COLAs beginning at age 70... IMO a screaming deal.

Some will say... but pb4uski, you need to consider interest... ok, fair point, so let's do that.. at 4%. The accumulated value of 70/month from 62 to 70 accreted at 4%/annum is 7,904. 648/7,904 is an 8.1% payout rate which is still equal to the fixed annuity payout rate for males and better than the fixed annuity payout rate for females... PLUS you get the COLA as the cherry-on-top!

Ask the advisor where you can buy a COLA adjusted life annuity starting at 70 with a payout rate of 8.1% of more and watch their eyes glaze over.

athena53 said:

For that person, it was $900/month, which I don't consider negligible especially with COLA- but it also means money left longer in their EJ accounts since they have other income.

Coincidence? I think not.

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$900 a month may be chicken-feed so those who can't be bothered to buy a 10K I-bond every year, but for most of us, $900 a month has already added up to real money.

pb4uski said:

Some will say... but pb4uski, you need to consider interest... ok, fair point, so let's do that.. at 4%. The accumulated value of 70/month from 62 to 70 accreted at 4%/annum is 7,904. 648/7,904 is an 8.1% payout rate which is still equal to the fixed annuity payout rate for males and better than the fixed annuity payout rate for females... PLUS you get the COLA as the cherry-on-top!

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^Plus, 13% of males alive at 62 are not alive at age 70. I don't know what that is worth, but I factor it into my mental calculations

Bigdawg said:

^Plus, 13% of males alive at 62 are not alive at age 70. I don't know what that is worth, but I factor it into my mental calculations

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That is the actuarially neutral part. You only get to collect if you are alive. If you are using probability tree analysis, you would have to multiply the expected amount at different ages times the probability of still being alive to collect, plus take into account the probability of any reduced future benefits. Some might have an edge knowing they will live longer or shorter lives due to current health, genes or income, or they may have some married couples' benefit considerations, but many articles on SS do not factor in mortality or future benefits cuts, which are a nonzero possibility because of the trust fund issues.

How does this work, say I'm waiting until 70, but I die at 68, does my surviving spouse get to collect on my SS in the amount I would have earned at the time of my death. Just asking for a friend

Bigdawg said:

^Plus, 13% of males alive at 62 are not alive at age 70. I don't know what that is worth, but I factor it into my mental calculations

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There's an insurance company that expects to make money with its bet that this 62 year old male has a less than 0.85% chance of dying in the next 12 months.

Time2 said:

How does this work, say I'm waiting until 70, but I die at 68, does my surviving spouse get to collect on my SS in the amount I would have earned at the time of my death. Just asking for a friend

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In the scenario that you describe, my understanding is that your spouse would be entitled to the benefit that you were collecting or were entitled to collect at your death... so your age 68 benefit... and that that benefit might be further discounted if the spouse is collecting early.

... A surviving spouse can collect 100 percent of the late spouse’s benefit if the survivor has reached full retirement age, but the amount will be lower if the deceased spouse claimed benefits before he or she reached full retirement age. (Full retirement age for survivor benefits differs from that for retirement and spousal benefits; it is currently 66 but will gradually increase to 67 over the next several years.)...

If you claim survivor benefits between age 60 and your full retirement age, you will receive between 71.5 percent and 99 percent of the deceased’s benefit. The percentage gets higher the older you are when you claim. ...

The survivor benefit is generally calculated on the benefit your late spouse was receiving from Social Security at the time of death (or was entitled to receive, based on age and earnings history, if he or she had not yet claimed benefits). The actual amount of your payment will differ according to your age and family circumstance

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pb4uski said:

In the scenario that you describe, my understanding is that your spouse would be entitled to the benefit that you were collecting or were entitled to collect at your death... so your age 68 benefit... and that that benefit might be further discounted if the spouse is collecting early.

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Where does the survivor benefit for widows come into play? Isn’t it the survivor benefit is around 81% of the deceased spouses SS amount at FRA even if they collected early on their own record? I believe this is called the widow’s benefit or something to that affect. Helps females whose spouse takes early SS. Any input on this is appreciated.

^^^ Where are you getting the 81%... never heard of anything like that.

If your spouse is collecting and dies, you will get the larger of their benefit or the benefit based on your own work record. Similiar if the spouse isn't collecting, you get their benefit or your benefit, which ever is higher.

Also see https://www.ssa.gov/benefits/surviv...widower, full retirement,50 through 59 — 71½% and https://www.aarp.org/retirement/soc...NMpXBATfyiFESf5K3ShoCrEoQAvD_BwE&gclsrc=aw.ds

almost there said:

Not sure if this has been mentioned, but have heard some financial advisors are telling folks to take it at 62, even if still working. To hedge against future cuts. I was surprised.

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I always assumed all financial advisors recommended taking it at 62, so that they have a larger portfolio to manage going forward ($$).

Mark1 said:

I always assumed all financial advisors recommended taking it at 62, so that they have a larger portfolio to manage going forward ($$).

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Our fee only FA is pretty adamant about us both waiting until age 70. I thought why shouldn’t at least I- the younger of the two of us- take it at my FRA? Our SS checks will be similar anyway, but hubby was technically the higher earner overall. Especially now with inflation and our investments being slaughtered.

But he said to wait.

We'll be doing what openss suggests, and it fits our other reasons well. DW is 4 years younger, our PIA's are remarkably the same. Mine will be at 70 and she will file for hers variable from 62.5 on. It depends on where we are when she gets there. We might be fat city due to the RE, and she'd like to wait a bit longer.
For us it is part of a tax arbitrage plan that allows for some variable RE income post-retirement, and roth conversions. Adding the SS income in early throws a wrench in those things, as far as tax brackets are concerned.

meleana said:

Our fee only FA is pretty adamant about us both waiting until age 70. I thought why shouldn’t at least I- the younger of the two of us- take it at my FRA? Our SS checks will be similar anyway, but hubby was technically the higher earner overall. Especially now with inflation and our investments being slaughtered.

But he said to wait.

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IMO, down 12% is not a slaughter. Market corrections often go past 10% into the low teens. For slaughters look at 2000, 2008, and for real fun 1974. Or the 20% drop in one day in October of 1987.

A Roth conversion can be tempting. You can convert the same number of shares and pay less taxes. But, if it will negatively impact your quality of life, then perhaps it's not a great idea. You don't have to convert all of it. Just convert up to the point that the taxes won't impact you quality of life.

volfan said:

Where does the survivor benefit for widows come into play? Isn’t it the survivor benefit is around 81% of the deceased spouses SS amount at FRA even if they collected early on their own record? I believe this is called the widow’s benefit or something to that affect. Helps females whose spouse takes early SS. Any input on this is appreciated.

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Nope.
SS is very agnostic about sex, the rules apply equally to both sexes. There is no special rule for female spouses, even if their male spouse is impatient or uncaring.
Never read about any 81% rule.

Please provide citation of where you think this rule is on the SS.gov site.

meleana said:

Our fee only FA is pretty adamant about us both waiting until age 70. I thought why shouldn’t at least I- the younger of the two of us- take it at my FRA? Our SS checks will be similar anyway, but hubby was technically the higher earner overall. Especially now with inflation and our investments being slaughtered.

But he said to wait.

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Seems like having one take early and the other take late would be the equivalent of dollar cost averaging, both waiting more like market timing.

As with many things, only time will tell which works to your ultimate advantage.