timing SS start

[Jakob]

Good discussion.
Boston Bulldog, I will be 62 next month, DW is 66 with a full retirement of 45 years. I did a similar calculation an my conclusion was that taking my SS at 62, 66:10 (full retirement age), and 70, is that the break even point is somewhere around 79y.o. Since we don’t need the $ now I could invest the SS for 17 years.
Any feedback?
Thanks,

 

[levindb]

Jakob - one of the benefits of taking SSA later is that you are giving the surviving spouse more monthly money. This is very different from breakeven calculations. While you can invest your SSA benefits for 17 years, also remember those benefits will be taxed before they are invested, and the growth will also be taxed before you can spend it.

Put that in your calculator and smoke it...(trying to be humorous here)

 

[youbet]

Not necessarily. Many live a "comfortable" lifestyle but when they are able to have an additional $1,500 or 2,000 a month, they can then do the things on their bucket list. An age 62 may enable some to ha e the income for travels, for a gift to their kids or grandkids or to indulge in things the never had the time or money to experience.

Sorry, you need to learn how to read posts. The examples you give of spending the early SS income are generally considered "discretionary income." What the poster said that I commented on was needing to spend it on "living expenses." Two very different things. When you need to spend you SS dolllars on living expenses, needing to take SS early is no longer optional.

 

[youbet]

Jakob - one of the benefits of taking SSA later is that you are giving the surviving spouse more monthly money.

Not always true. You're painting with an excessively broad brush. If your wife cannot collect your SS, you're better off, for her sake, taking SS early so that the accumulated lump sum + earnings of monthly payments is there for her when you croak.

 

[Doc0]

My tactic:

My wife is 7 years younger and her age 62 SS is less that half of my age 70 SS

1 She retires at 62 and I claim spousal. So if she get $1000 at 62, I will get $500 for a monthly net of $1500

2 At age 70 I take full age 70 retirement and she continues at $1000. So if my SS is 3000/mo our monthly net is $4000.

3 At her FRA (age 66 10 mos) she will take spousal for a net of $4500/mo inflation adjusted.

4 At my demise she takes survivor benefits.

So we get the advantage of an age 62 income plus the advantage of an age 70 income. During the age 62 income the age 70 income continues to grow at 8% and it's all inflation adjusted. It especially works out if your SS is considerably larger than hers and there are some years of age disparity.

 

[Crabby Mike]

My tactic:

My wife is 7 years younger and her age 62 SS is less that half of my age 70 SS

1 She retires at 62 and I claim spousal. So if she get $1000 at 62, I will get $500 for a monthly net of $1500

2 At age 70 I take full age 70 retirement and she continues at $1000. So if my SS is 3000/mo our monthly net is $4000.

3 At her FRA (age 66 10 mos) she will take spousal for a net of $4500/mo inflation adjusted.

4 At my demise she takes survivor benefits.

So we get the advantage of an age 62 income plus the advantage of an age 70 income. During the age 62 income the age 70 income continues to grow at 8% and it's all inflation adjusted. It especially works out if your SS is considerably larger than hers and there are some years of age disparity.

What year were each of you born? If after 1953, no dice -- see "deemed filing" at ssa.gov.

 

[Jakob]

I appreciate all the comments.
My wife’s SS is better than mine. I ran this thru the “OpenSS” calc and it recommended she halt her SS (I didn’t know that was possible) and I take mine at 62 and she re-instates hers at 70.
All feedback is welcomed.

 

[imnontrad]

>Then I can take a late SS at 68+, DW can take her SS at 67 or later, it won't be a thing IMO.

The strategy should be the higher earner wait as long as possible (hopefully max at age 70) and the lower earner file early for income, even if that amount is reduced (as long as they are no longer working over ~18K/year). Chances are, your wife will outlive you and will then have the highest benefit possible going forward (either her own, if higher or the surviving spouse benefit equal to yours).

 

[skyking1]

>Then I can take a late SS at 68+, DW can take her SS at 67 or later, it won't be a thing IMO.

The strategy should be the higher earner wait as long as possible (hopefully max at age 70) and the lower earner file early for income, even if that amount is reduced (as long as they are no longer working over ~18K/year). Chances are, your wife will outlive you and will then have the highest benefit possible going forward (either her own, if higher or the surviving spouse benefit equal to yours).

Somewhere in the middle of the thread i was linked to the opensocialsecurity.org site and figured that out, thanks.

 

[jayanu]

1) If you do not need money from SS then do not take at 62. Forget the breakeven point - if your health is good and no genetic issue then you will longer. There are several websites that do your possible longevity based on your genetics and lifestyle.

https://www.google.com/search?q=lon.....69i57j0l9.6600j0j9&sourceid=chrome&ie=UTF-8

2) Look in the Spousal SS benefits. If your spouse's SS is less than half of yours then she can claim equal to your half. But if you take at 62 vs. at full retirement age then you can get that benefit. Check with SS office for the correct calculations and guidance.

 

[levindb]

Doc,
Since your wife's FRA is 66.10, she was born in 1959 and therefore you were born in 1952. Your wife will be 62 in 2021 and you will be 70 in 2022.

1. Your wife can file for her $1000/mo this year.
2. You can file for your $3000/mo next year
3. You wife will continue to get her $1000/mo after you file and not $1500 as you suggest.

Your $3000/mo at age 70 suggests you are at $2020 at your FRA (age 66). Your wife is entitled to 50% of your FRA amount...or $1010. Since she files at age 62, her spousal drops by 30%, making it less than her own $1000...therefore it does not change after you file.

4. She will get your $3000/mo after your demise.

 

[finnski1]

Doc,
Since your wife's FRA is 66.10, she was born in 1959 and therefore you were born in 1952. Your wife will be 62 in 2021 and you will be 70 in 2022.

1. Your wife can file for her $1000/mo this year.
2. You can file for your $3000/mo next year
3. You wife will continue to get her $1000/mo after you file and not $1500 as you suggest.

Your $3000/mo at age 70 suggests you are at $2020 at your FRA (age 66). Your wife is entitled to 50% of your FRA amount...or $1010. Since she files at age 62, her spousal drops by 30%, making it less than her own $1000...therefore it does not change after you file.

4. She will get your $3000/mo after your demise.

Not sure where you got the $2020 from at FRA but I get $2273/month at 66 if age 70 is $3000.
2273*.08=181.84/month. 181.84*4 years= 727/month.
Add that to the 2273 to get $3000/month at age 70.
I do believe your point #3 is correct. I think she could only receive the 50% spousal if she waits to her FRA at age 67 but maybe someone else can verify or refute this.

 

[levindb]

finnski1 - you are correct...I multiplied by 70% rather than dividing by 130%.

I must be losing my faculties earlier than I thought...but that is another thread on this site.

 

[piccolopat]

Everyone's individual situation is different. For me, I was the higher earner and also more than 4 years younger. While some people are more interested in a strategy that gives them the maximum amount of accumulated SS based on projected life expectancies, I'm looking at taking it earlier so I can reduce how much I withdraw from my retirement accounts. For us, I've put together detailed expense planning for now as well as later in life when I know we are likely to slow down, especially with travel, and have lower expenses. My SS strategy will reflect that as well as keeping the Medicare premiums and taxes down and future RMD's. There's lots of moving parts to consider but as long as we know that we'll be able to cover all of our expenses even in a significantly down market, we're good.

 

[finnski1]

finnski1 - you are correct...I multiplied by 70% rather than dividing by 130%.

I must be losing my faculties earlier than I thought...but that is another thread on this site.

Oh I'll probably participate in that thread as well.

 

[Blue_Bird]

Right now we are "Roth converting" to generate optimum ACA income levels. The earliest I will consider taking SS is around 65 when I finally qualify for Medicare. After that it depends on my general health prognosis.

 

[skyking1]

I finally got an online account going for my DW, and her SS is virtually identical to mine. Our ages and genders are the only factors for us.

 

[Broland]

Since we all agree everyone's situation is different, I'll throw out mine which, admittedly, is unique. I'm almost 65 and 90+% in equities and live 100% on investments. My strategy is to start SS when the market dips 15-20%. avoiding having to sell equities for living expenses.

 

[Whisper66]

Since we all agree everyone's situation is different, I'll throw out mine which, admittedly, is unique. I'm almost 65 and 90+% in equities and live 100% on investments. My strategy is to start SS when the market dips 15-20%. avoiding having to sell equities for living expenses.

Thanks for posting something totally different! After reading many, many discussions on when to take SS, I haven't seen this philosophy before. I'm interested in your thoughts during the 2020 March correction. Apparently you chose not to take SS then. Seems like your philosophy might have suggested you do so. Am I missing something? Maybe you just didn't need the income at this point?

 

[Broland]

Thanks for posting something totally different! After reading many, many discussions on when to take SS, I haven't seen this philosophy before. I'm interested in your thoughts during the 2020 March correction. Apparently you chose not to take SS then. Seems like your philosophy might have suggested you do so. Am I missing something? Maybe you just didn't need the income at this point?

GREAT question! I had enough "dry powder" to live on and I expected the downturn to be short and the recovery strong. I'm certainly not an expert on the market, but I did guess right this time! Also, I took the downturn "opportunity" to sell most of my index funds and bought good, solid companies that I felt would recover strongly (mostly in the tech area). Again, got (very) lucky!

I have kept enough funds to last a year or two without selling anything, but when the next downturn comes (and it will most assuredly) AND the "dry powder" is running low, I'm filing for SS. I'm hoping that won't be until a year or two!

 

[BubbaChris]

Then there is this calculation.

If you don't care about leaving an estate for your heirs, admittedly a big IF, taking SS at 70 gives you more money to spend every year. The example below is for one person. I am not sure how it works out for a couple.

https://www.early-retirement.org/forums/f28/laurence-kotlikoff-maximize-my-ss-com-77660.html#post1604411

My apologies for not going through the 10 pages that follow the 2015 quote - But I can't wrap my head around the logic in post #20 in this thread for where the money comes from while waiting until 70.

Unless I have another source of spending dollars from 62-70, I need to draw down the $1M by $59,476 each year, not the 4%. By the time I hit 70, the fund has dropped to $475,808.

So 4% of what remains is $19,032, plus SS of $34,092 = $53,124

I'm new on this site, so is there an assumption Cut-Throat made that isn't called out?

Best regards,
Chris

 

[levindb]

Bubba,

I am not sure you understood the two different pots of money that Cut-Throat was dealing with to get the total spending:

Pot #1. Eight years of $34,092 was put into a savings account. For a total of $272,736. From this pot, you withdraw 1/8th each year, not 4%.

Pot #2. This is the remaining portion of your portfolio, $727,264. From this pot, you do draw 4%, or $29,090 each year.

When you add these two withdrawals together, you get $63,182 which is larger than $59,476.

I hope this helps.

 

[Canoesmith]

Great. Just didn't want to take over the original intent. The more the merrier!

Great spreadsheet!

Do you have a link to that spreadsheet where one can input their own numbers?

 

[BubbaChris]

Bubba,

I am not sure you understood the two different pots of money that Cut-Throat was dealing with to get the total spending:

Pot #1. Eight years of $34,092 was put into a savings account. For a total of $272,736. From this pot, you withdraw 1/8th each year, not 4%.

Pot #2. This is the remaining portion of your portfolio, $727,264. From this pot, you do draw 4%, or $29,090 each year.

When you add these two withdrawals together, you get $63,182 which is larger than $59,476.

I hope this helps.

I appreciate what you're trying to do, but it still doesn't show me where the dollars are coming from to live off of from age 62 to age 80. It just feels like putting the $34K each of those years into a savings account is a distraction without a real purpose.

Since I made my original post I invested the time into reading through the entire 2015 thread. Between the two of them, I drew two important conclusions:
1) Since we're using ACA (and premium credits) to get us from current age to Medicare age, we absolutely cannot begin taking SS before age 65.
2) If you can wait until age 70 to take SS, it really maxes your ability to treat it as an Annuity with COLA - where the longer you live, the happier you'll be that it is there.

Best regards,
Chris

 

[Out-to-Lunch]

My apologies for not going through the 10 pages that follow the 2015 quote - But I can't wrap my head around the logic in post #20 in this thread for where the money comes from while waiting until 70.

Unless I have another source of spending dollars from 62-70, I need to draw down the $1M by $59,476 each year, not the 4%. By the time I hit 70, the fund has dropped to $475,808.

So 4% of what remains is $19,032, plus SS of $34,092 = $53,124

I appreciate what you're trying to do, but it still doesn't show me where the dollars are coming from to live off of from age 62 to age 80 [sic -- should have been 70, I think]. It just feels like putting the $34K each of those years into a savings account is a distraction without a real purpose.

Re: the bolding. 4% of what you have left at age 70 is not a relevant calcuation. You don't have an expected 30+ year lifetime at that point.

Basically, the point of the "two-pot" approach described is to (perhaps!) more readily account for varying withdrawal rates from your portfolio over time. Because SS will come on stream later, you can afford to take out more than 4% early on. Perhaps it is a distraction, but, for meany, mentally dividing it up into a bridge pot and what is left allows you to make that calculation simply.