SS facts WOW...

[pb4uski]

Wouldn't it make the most sense for the person most likely to live the longest to delay, which I think would normally be the female spouse if both are healthy or the healthiest of the two otherwise?

No because the lower earning spouse received the SS that was received by the higher earning spouse if the higher earning spouse dies. So if as the higher earnings spouse I wait until 70 then we collect my benefit until both of us die.... based on joint mortality there is a 50% chance that one or the other of us will live to be 94 so that is well past the breakeven point which is usually in the low to mid 80s.

 

[Katsmeow]

Ouch, I erroneously thought this elimination only applied to the scenario of claiming a spousal from a spouse who had filed and suspended their SS. Looks like my DW will also end up having to take half mine or her own since she will turn 62 in July.

If her own will be more than half of yours she will have to take her own. That is the point I was making. I had been thinking about taking spousal at 66 (FRA) for me and letting mine grow to 70. But, I was 61 at the end of 2015 and that option is not open to me. Actually my full FRA SS is slightly higher than DH's would have been (he took his early as we had 2 minor children who received benefits by him doing that).

So I will probably take it in early 2017.

Money is money. If you want more money early, taking SS early is not the only way. You can take more out of your retirement account, knowing that you have a larger SS check coming.

But...that is the point. You don't know you have a larger SS check coming. Sure, you likely have a larger SS check coming but it may not grow as much as you thought it would grow because there could be legal changes to the program that reduce future benefits. I am not fond of the idea of taking more money out of my retirement account because I assume that there will be no future reductions to benefits.

 

[Looking4Ward]

This subject has come up every so often.

When I ran FIRECalc with my savings and SS, I found that what I can spend varies less than 1%, whether I take SS at 62, FRA, or 70. This is for a 30-year run. YMMV.

I noticed this exact same thing. And when I ran it, the difference in how much was left (on average) at the end of 30 years varied a bit - roughly 4% less if I wait until 70 instead of 62 for SS.

 

[eytonxav]

If her own will be more than half of yours she will have to take her own. That is the point I was making. I had been thinking about taking spousal at 66 (FRA) for me and letting mine grow to 70. But, I was 61 at the end of 2015 and that option is not open to me. Actually my full FRA SS is slightly higher than DH's would have been (he took his early as we had 2 minor children who received benefits by him doing that).

DW's may be close to 1/2 mine at her FRA of 66. I am 5 yrs older and am planning to wait until 70 depending on how the market performs. Sorry for my confusion, I thought you were referring to the file and suspend strategy, but honestly, I was unaware of the restricted application being eliminated.

 

[NW-Bound]

I noticed this exact same thing. And when I ran it, the difference in how much was left (on average) at the end of 30 years varied a bit - roughly 4% less if I wait until 70 instead of 62 for SS.

I still have not reached 62 yet, so still have some time to mull over it some. I had been thinking to have my wife claim it early (we are the same age), and for me to delay my higher SS till 70. That seems to be the conventional wisdom.

But in view of recent government changes, I am not so sure any more. If my spending power is the same whether I delay mine or not, then why not claim it early to have the money in hand? Same as another poster has noted, they may reduce your future benefit but are not going to make it retroactive and have you disgorge past benefit.

There are other issues to consider, such as taxes and RMD of IRA/401k at 70. Playing the shell game with the gummint is no fun!

 

[RunningBum]

But...that is the point. You don't know you have a larger SS check coming. Sure, you likely have a larger SS check coming but it may not grow as much as you thought it would grow because there could be legal changes to the program that reduce future benefits. I am not fond of the idea of taking more money out of my retirement account because I assume that there will be no future reductions to benefits.

If you think it's at least somewhat likely that benefit changes will short those who defer, by all means you should take SS immediately. My feeling/hope is that any changes won't affect those 62 or older whether or not you've started collecting. The longer the problem stays unaddressed, the less likely that is, so check back with me in 2023 when I'm first eligible.

 

[cyber888]

No, it's not fair for me or some people. My wife is much older than I am and she cannot get SS, because she's been a housewife all her life. So, she has to wait for me to get SS, and when I get SS she'll be 75, and I will have to get SS at 62 for her to get medicare at 75. So, it's not gaming the system. Nobody should be taking SS at 75 yrs old. You are just generalizing, which is really not appropriate for everyone.

I'm glad they got rid of "file and suspend". I don't think people should be gaming the system. Make no mistake, if it was still legal, I'd do it too but I'm glad they got rid of it.

 

[nate2953]

Social Security has age requirements. Nothing "not fair" about that.

People who make the choice to not work make the choice to not be able to collect Retirement benefits. Nothing unfair about knowing the rules and making grown up choices.


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[pb4uski]

No, it's not fair for me or some people. My wife is much older than I am and she cannot get SS, because she's been a housewife all her life. So, she has to wait for me to get SS, and when I get SS she'll be 75, and I will have to get SS at 62 for her to get medicare at 75. So, it's not gaming the system. Nobody should be taking SS at 75 yrs old. You are just generalizing, which is really not appropriate for everyone.

If you have been divorced for two years then she doesn't have to wait for you to file to collect on your benefit. Just sayin...

If you are divorced, your ex-spouse can receive benefits based on your record (even if you have remarried) if:

• Your marriage lasted 10 years or longer;
  
• Your ex-spouse is unmarried;
  
• Your ex-spouse is age 62 or older;
  
• The benefit that your ex-spouse is entitled to receive based on his or her own work is less than the benefit he or she would receive based on your work; and
  
• You are entitled to Social Security retirement or disability benefits.

If you have not applied for retirement benefits, but can qualify for them, your ex-spouse can receive benefits on your record if you have been divorced for at least two years.

 

[Music Lover]

Social Security has age requirements. Nothing "not fair" about that.

People who make the choice to not work make the choice to not be able to collect Retirement benefits. Nothing unfair about knowing the rules and making grown up choices.

I'm not a US citizen so I may be wrong, but it seems to me that the only part that is truly unfair is that single people can't designate a beneficiary, even though they contribute at the same rate as married person with a non-working spouse.

 

[NgineER]

X.


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[old woman]

I did restricted application at 66 so waiting for 70 collecting half of my ex so only cost me half as much to wait.
Waiting is emotional at 66 I would have gotten about 1,300 I think but I can't really live on that well. At 70 I will get enough to live on so I can spend my life savings on anything I want even if I live to 115. Nice to get that fixed lifetime amount to over the cost of living. My house cost me about 1,000 a month plus utilities so maybe 1,500 a month plus food and stuff so I can live on 2K, can't live on 1,300. Currently getting 892 so drawing some dividend income and selling a few thousand of investments a year at 68. This year so far I drew out 5K for property taxes and have a few thousand in banks and money market so can live to 69 without selling any more investments. I don't have big wants like travel just getting by day to day, repairing things that need repaired not worried about the money. 986K left I could spend so I could take out 40K a year but not comfortable drawing down investments more than 10-15K right now. After 70 enough income for life and a million left in spending money, don't want to spend more but knowing I can blow it all if I want and be ok is good too.

 

[NW-Bound]

... 986K left I could spend so I could take out 40K a year but not comfortable drawing down investments more than 10-15K right now. After 70 enough income for life and a million left in spending money, don't want to spend more but knowing I can blow it all if I want and be ok is good too.

I think many of us here are in the situation of having more than we need or want to spend, although it varies (my spending is not that low).

Do you have anybody to leave that money to? Do you have a will?

 

[shotgunner]

Perhaps I am the only one here who has a subsidized health insurance plan through the ACA and has to factor that into my situation. I am 59 and 6 years to go to hit Medicare (no rush to get there). Pre ACA I was quite sure I would take SS at age 62. Now I will have to look at the landscape as it is when I get closer to that age. 100% of my SS income will be factored into my Modified Gross Adjusted Income for the purposes of subsidy aka tax credit calculation. Not only do I have to calculate the decrease to my tax credit but I may need to be sure I don't earn so much to go over the cliff and have no tax credit. As someone said playing the shell game with the government is not much fun and with the ACA makes the game even more complex.

 

[mathjak107]

Yes this is our point..my own money upon my death can be given to our adult children but SS cannot..so why not spend that down and save your own until you have to take distribution?

depending how long you live, spending your own for just up to 8 years and then spending much less for potentially decades with the higher ss payments may be the better choice if legacy money is important .

by delaying until 70 withdrawals from savings are much less .

if spending the early ss instead there is no guarantee you will get better returns on your investments which can be left in place , they may even go down . .

in fact delaying until 70 with one person in a couple making it until 90 ( 47% chance ) the ss can work out to a 5% real return from what amounts to a gov't bond and is just about guaranteed . .

 

[mathjak107]

Works perfectly if you die early.... but is suboptimal (less to your kids) if you live long. Pick your poison.

if a couple not only are odds high that one will live well in to their 80's but the odds are almost a coin toss (47%) one of you will see 90 .

 

[pb4uski]

Totally agree.... I think a lot of people fail to consider the impact of joint mortality and survivorship benefits in deciding when to start SS.

 

[mathjak107]

when you are retired and spending down you have to beat two parameters to come out ahead , this is true even when deciding to take a mortgage or not .

when we are not spending down average returns work fine . as long as the average return you can get beats the mortgage or in this case ss you win . but sequence risk is now the deciding factor .

you need to get not only a good average return but it has to be in the right sequence in order to come out ahead .

not always easy to do compared to when we are not spending down . ss has zero sequence risk so that makes it harder to beat with your investing instead

 

[GTFan]

Perhaps I am the only one here who has a subsidized health insurance plan through the ACA and has to factor that into my situation. I am 59 and 6 years to go to hit Medicare (no rush to get there). Pre ACA I was quite sure I would take SS at age 62. Now I will have to look at the landscape as it is when I get closer to that age. 100% of my SS income will be factored into my Modified Gross Adjusted Income for the purposes of subsidy aka tax credit calculation. Not only do I have to calculate the decrease to my tax credit but I may need to be sure I don't earn so much to go over the cliff and have no tax credit. As someone said playing the shell game with the government is not much fun and with the ACA makes the game even more complex.

Pretty much my position, but I've got 13 years to go until Medicare. My plan is to take SS no earlier than 65 at this time because of this, but who knows how the ACA will evolve.

 

[Senator]

if spending the early ss instead there is no guarantee you will get better returns on your investments which can be left in place , they may even go down.

This is 100% true. Far too many people take SS at 62 thinking they will get a better return on their own. Maybe, maybe not. Then, many spend the money rather than invest it instead.

Delaying SS is like a forced savings account, with solid returns.

Even COLA increases will be more by waiting, as they are on a larger initial amount, for the rest of your life.

Of course, if the Dr. give you bad news, go and run to file. Or get married.

 

[Sue J]

No, it's not fair for me or some people. My wife is much older than I am and she cannot get SS, because she's been a housewife all her life. So, she has to wait for me to get SS, and when I get SS she'll be 75, and I will have to get SS at 62 for her to get medicare at 75. So, it's not gaming the system. Nobody should be taking SS at 75 yrs old. You are just generalizing, which is really not appropriate for everyone.

Is this correct? I didn't think you have to be taking SS to start Medicare. Isn't she Medicare eligible at 65 as a spouse of someone who has enough Medicare credits?

 

[nate2953]

It is incorrect. As soon as he is 62 she can get Medicare Part A for free and pay the regular premium for Part B. Prior to 62 she'll have to pay the reduced premium for part A and the regular premium for Part B. Just another example of unwillingness to do research into a problem that deserves a lot of thought and research.


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[Sue J]

Perhaps I am the only one here who has a subsidized health insurance plan through the ACA and has to factor that into my situation. I am 59 and 6 years to go to hit Medicare (no rush to get there). Pre ACA I was quite sure I would take SS at age 62. Now I will have to look at the landscape as it is when I get closer to that age. 100% of my SS income will be factored into my Modified Gross Adjusted Income for the purposes of subsidy aka tax credit calculation. Not only do I have to calculate the decrease to my tax credit but I may need to be sure I don't earn so much to go over the cliff and have no tax credit. As someone said playing the shell game with the government is not much fun and with the ACA makes the game even more complex.

We are also using subsidized ACA insurance (many here are) and so far that's the reason why I will wait until Medicare age of 65 (or just 14 months longer to FRA) to take SS. First, 85% of my SS will be taxed at 15% (no matter when I take it, can't get around that) but the impact on our ACA subsidy is larger than I expected. We are not near the cliff like you are but when I look at the change to the subsidy with additional MAGI income (100% of SS, not 85% like taxes) the difference in the subsidy was in the range of 15-16% of the total SS received. For that kind of impact I can hold off until age 65 in 2020.

 

[Gone4Good]

Here's what the internal rate of return looks like for the "Delay SS until 70 Decision".

You have to live until about 74.5 before you break even. If you die sooner than that, you lose tons of money. If you live longer, the returns turn very positive relatively quickly.

If you live until 76 you realize an annual real return of 4% by delaying. If you live until 81 those real returns grow to 10% annually. Live another decade and you'll see your average annual returns top out at about 13% real.

That's a pretty crazy return profile.

 

[mathjak107]

if we both die , who cares , so what . we don't have to tolerate markets or worry about giving up a few bucks .

the bigger deal is what if we live . what if we live is the real concern .