Theory Behind taking Social Security Early?

marko said:
Envelope number one pays $20,000 for life.
You can open it right now at age 62 and spend it any way you'd like.
....but if you die at 62, you get nothing.
....and if the people giving you that money decide, you might end up with less.
....and there's other rules they might change and you might get less
....and...even if nothing changes, it's all the same until you're about 83 years old at which point you'd be getting less for the rest of your life than if you had delayed

Envelope number two has as much as $36,000 for life.
But you can't open it for 8 more years.
....but if you die before that, you get nothing.
....and if the people giving you that money decide, you might end up with less.
....and there's other rules they might change and you might get less
....and...even if nothing changes, it's all the same until you're about 83 years old at which point you'd be getting more for the rest of your life than if you had started at 62
So! What are you going to do?"
Click to expand...
Fixed it for you.
 
MrLoco said:
The best way I have heard on this topic is as follows:

The real danger is NOT delay taking SS until FRA or later and dying early and never receiving a benefit.....BUT>>>>

Taking SS at age 62 and then find yourself broke at age 82.

If you delay taking benefits and then die early.....so what? You will not miss the money because you are dead!!!:D

If you take benefits at 62 and live a longer life than expected.....you could find yourself tapped out in your 80's.....and still alive!:(

Makes sense to me.
Click to expand...


This brings out my point, which is that most of the discussion on the various "when to take social security?" threads has the underlying assumption that the recipient's primary goal is to maximize expected amount received, rather than minimize the likelihood of dying broke. But I'm in the latter camp.
 
Which Roger said:
This brings out my point, which is that most of the discussion on the various "when to take social security?" threads has the underlying assumption that the recipient's primary goal is to maximize expected amount received, rather than minimize the likelihood of dying broke. But I'm in the latter camp.
Click to expand...
I'm with you. As I've agonized over the last few years about when to start taking SS, the one mantra that has stuck with me is "The worst thing you can do is to outlive your money."
 
True on all points. Anyway, I am bushed this morning from a couple hours of sex last night and my old brain can hardly process posts this morning. :)

Bring on the Geritol!

Ha
 
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Which Roger said:
This brings out my point, which is that most of the discussion on the various "when to take social security?" threads has the underlying assumption that the recipient's primary goal is to maximize expected amount received, rather than minimize the likelihood of dying broke. But I'm in the latter camp.
Click to expand...

+1 if you are dead, you are dead.
 
joeea said:
So put in whatever number will prevent you from crying.

But before you do, read the article under the link for why that number is chosen as the default: https://obliviousinvestor.com/claim...ate-of-return-discount-rate-should-we-assume/
Click to expand...

Agh. Another book seller? I only spent a couple of seconds on that page, so probably missed something there too, but here's a "how often do you beat your wife" kind of thing when it comes to most people on this board:
Alternatively, you can think of the analysis as, “what part of my portfolio would I spend down in order to delay Social Security? And what would be the rate of return that I’d be giving up by no longer having those assets in my portfolio?”
Click to expand...
It's my feeling that most people who I read posts from on this board will be maintaining the same asset allocation through time. So presuming you'll just be spending the bonds and so need to use that rate of return is not modeling reality.

haha said:
True on all points. Anyway, I am bushed this morning from a couple hours of sex last night and my old brain can hardly process posts this morning. :)
Click to expand...
I guess life is still worth living if you can manage that!
 
Originally Posted by marko

Envelope number one pays $20,000 for life.
You can open it right now at age 62 and spend it any way you'd like.
....but if you die at 62, you get nothing.
....and if the people giving you that money decide, you might end up with less.
....and there's other rules they might change and you might get less
....and...even if nothing changes, it's all the same until you're about 83 years old at which point you'd be getting less for the rest of your life than if you had delayed

Envelope number two has as much as $36,000 for life.
But you can't open it for 8 more years.
....but if you die before that, you get nothing.
....and if the people giving you that money decide, you might end up with less.
....and there's other rules they might change and you might get less
....and...even if nothing changes, it's all the same until you're about 83 years old at which point you'd be "getting more" for the rest of your life than if you had started at 62
So! What are you going to do?"


The last part is true and says your investments will not perform the way you hoped. And if you are not concerned about leaving any sort of inheritance, take it at the latest possible age in case you live to ? The logic extends to decisions like I should have been 90/10 in the market instead of 40/40/20 or 50/40/10 in the last 20 years. Should have would have at 82 yrs old is like "wish I bought Amazon when it was a book store."
 
Crabby Mike said:
I'm with you. As I've agonized over the last few years about when to start taking SS, the one mantra that has stuck with me is "The worst thing you can do is to outlive your money."
Click to expand...
And have no choice but to beg your kids or niece's or nephews to let you move in with them.
 
On advantage of taking SS later is that you can always change your mind and turn it on earlier. If you wake up each morning at age 65 feeling like a truck ran over you again, you can decide turn it on. If you leave the doc's office at 65 and he says "You have the body of a 40 year old" you can still wait to 70.
 
The biggest difference in whether to take SS at 62 or 70 if it is not for immediate financial need is you do not know what the future 8 years will bring in retirement gains.

Taking SS at age 62 of $1500 in March 2009, invest in the S&P500 and it would be worth $297,184 today. One who turned 62 in March of 2009 and started SS at age 70 in March of 2017 will be very unlikely to ever be able to financially catch up to the early SS investor.

Start in December 1999 and by March 2009 you would have less than the payments only $103,612 which is a loss of $47,000 on invested monies.

Anyone who is basing SS on a financial model of value is taking a fool's errand in exchanging group long term averages into an individual retirement plan. I don't know for any one individual what would be good to do and I do not think in most cases it is mathematically calculable. It is a fear mitigation tool to be utilized on an individual level. In general there are a lot of benefits attributable to taking at age 70 that make that the preferred method for myself, but I don't think that is at all transferable to any another situation.




https://dqydj.com/sp-500-dividend-reinvestment-and-periodic-investment-calculator/
 
Which Roger said:
This brings out my point, which is that most of the discussion on the various "when to take social security?" threads has the underlying assumption that the recipient's primary goal is to maximize expected amount received, rather than minimize the likelihood of dying broke. But I'm in the latter camp.
Click to expand...
+1

People have different goals. Therefore, they can rationally make different choices.

I happen to be in the "minimize the likelihood of dying broke" camp.
 
pb4uski said:
And have no choice but to beg your kids or niece's or nephews to let you move in with them.
Click to expand...

Amen. Unfortunately as of right now, we can't count on one of our combined children to be successful enough to be able to take us in if necessary.
 
Chuckanut said:
If you leave the doc's office at 65 and he says "You have the body of a 40 year old" you can still wait to 70.
Click to expand...

So the doctor says "You have the body of a 40 year old...

... but you should return it since you are getting it all wrinkled!"

:LOL:
 
kaneohe said:
not so sure about that; I know I haven't....
from response to your Bogleheads thread
https://www.pbs.org/newshour/econom...e-nothing-from-taking-survivor-benefits-early

got a headache trying to understand that w/ foggy brain. Maybe later...
but it sounds like survivor SS is more complicated than it looks, esp . w/
that factor that you discovered.
Click to expand...

The replies by friar1610 cleared things up for me. I had everything backwards in my spreadsheet.

You are right, though, in that SS survivor benefits can be complex. They are fairly simple if the deceased worker started benefits @ PIA or later. The issue of RIB-LIB only comes in if the deceased started SS before PIA.

What I finally determined is that if I take SS @ 62 and then die immediately, my wife should not delay taking survivor SS past her age of 62.5. Her benefits will not increase after that.

As I look through my myriad data, I will stick to my current plan to claim SS @ 70. We don't need it before that and it sure sets us up to do philanthropic type stuff if we are both living after 70 and sets the survivor up to not be broke, ever.
 
Rianne said:
The last part is true and says your investments will not perform the way you hoped. And if you are not concerned about leaving any sort of inheritance, take it at the latest possible age in case you live to ? The logic extends to decisions like I should have been 90/10 in the market instead of 40/40/20 or 50/40/10 in the last 20 years. Should have would have at 82 yrs old is like "wish I bought Amazon when it was a book store."
Click to expand...

Well, you're commenting on a post that someone changed from what I originally meant it to convey, so it's kinda hard to go anywhere from there.
 
I'm planning to take my widow benefits at 60, not so much because I anticipate needing them but because I want to get my name on the SS rolls as soon as possible in case changes come that don't affect anyone already receiving benefits.

I will have my own pension at 65, so presumably I could wait until 70 for to switch to my own benefit, but I'll see. At the very least I would stick with DH's benefit until it becomes lower than mine (around 64, I think).
 
None of my grandparents lived beyond 60 and yet I am going to claim SS at 70. To me, SS is a "free" longevity insurance. I am fine leaving money on the table because you ALWAYS leave money on the table when buying an insurance.

PS: My mom lived to be 65 despite have several chronic conditions (diabetes, heart disease, lever cirrhosis, etc.) and dad is doing great at 69 health wise.
 
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googily said:
I'm planning to take my widow benefits at 60, not so much because I anticipate needing them but because I want to get my name on the SS rolls as soon as possible in case changes come that don't affect anyone already receiving benefits.

I will have my own pension at 65, so presumably I could wait until 70 for to switch to my own benefit, but I'll see. At the very least I would stick with DH's benefit until it becomes lower than mine (around 64, I think).
Click to expand...

I think that any changes that come will be reported by the media with enough notice, even if only a couple of months, as happened with the elimination of file and suspend.
 
If your girlfriend is 40....... you better take the SS right now. You aren’t going to keep up with her too long before you are on oxygen!
 
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