Social Security at 70

[Chuckanut]

If you die before 70 you won't be around to be upset about it. If you take it at 62 and you live to 100 you will be around to live in poverty, so that sucks.

+1

Taking SS at 70 is a risk mitigation tool. In the event of a complete portfolio failure (ie. you run out of money) the bigger SS benefit becomes a big advantage for however many more years you live.

Should you take SS early and invest it? This video is one way to look at it.

Needless to say the examples make a lot of assumptions that affect the comparison. So, YMMV. One must do what one things is best for him or her.

 

[pb4uski]

It shouldn't be hard to include an investment return in your calculations. You might include inflation as well, which increases your SS benefit, even if you haven't yet started taking it. I used a 5% return with 2% inflation. At 82, my FRA at age 67 passed taking at 62. At 86, taking SS at 70 became better. ...

opensocialsecurity.com includes a way to include investment returns/time value of money in its calculations. If you click on the little checkbox at the top of the page and then on Discount Rate.

If you want to assume a 5% return and 2% inflation then enter 3% in the real discount rate box.

P.S. RB, I suspect that you may already know this, but is more for the benefit of others like Jakob

 

[pb4uski]

When I turn 62 in a few months Im taking it. My wife cannot collect a survivor benefit without giving up her teachers retirement pension ( which would not make numerical sense at all) I smoked cigs for 30 years and although I quit 11 years ago I still figure that habit will take a toll on my longevity.

Any constructive opposing ideas would be considered

What I would suggest is that you play around with some of the longevity calculators out there like https://www.longevityillustrator.org/Profile?m=1

Just use you not both you and your DW.

The use opensocialsecurity.com using an assumed age at death rather than any of the mortality tables and see what the optimal result looks like. I'm guessing that if you quit smokng 11 years ago that it might not matter much if you start SS at 62 or FRA or 70.

 

[Jakob]

It was surely dumb. The money has always been in gummint's pocket, and they can do as they wish.

At any time, the rule can be changed, such as requiring you to be 70 to be eligible. No, make it 80. That will teach the dumb people who think it's their money.

What do the people think SS money is? It's not like their 401k or IRA!

Agreed!

 

[Music Lover]

If you die before 70 you won't be around to be upset about it. If you take it at 62 and you live to 100 you will be around to live in poverty, so that sucks.

Well, it depends. If you take it at 62 and die at 70 that sucks but you were ahead of the game the entire time.

If you take it at 62 and live to 100 you may not live in poverty if you have investments and/or if you didn't overspend. Also, no one is as active at 80 as they were at 62. There are lots of 60-something travelers and snow birders but very few at 80.

 

[Jakob]

A gamble of sorts

+100.

You have analyzed this topic well. For those that have prepared, of course having a crystal ball-preparedness is unrealistic, I believe in hedging my bet to take SS early. I will say this again, if you don’t need it, fine. I can then invest these funds. Given the situation that many appear to be in from the posts I have received, they have prepared for their future. I will return to your comment that people are more active in their 60s and their activities diminish as they age. I will state this again, my calculation is the break even point for taking SS at 62, 66.10, and 70 y.o., is approximately 79 years old. To be blunt, if you die before 70 y.o., you get nothing. Some have questioned whether this increased amount of Social Security will secure their finances into their 90s. I hear the comments that the “ guaranteed“ return is somewhere around 6-8%. A great COLA investment. Many of the comments I read have more to do with an economic perspective than a quality of life perspective. That’s me speaking as an occupational therapist, I will admit that I look at things differently. I will also admit that I have not applied for my Social Security as of this writing and that I am 63 years old. I suspect that many of these increased funds for those waiting till 70 will be going to assisted living and skilled nursing facilities rather into their personal interests and family interests. I often wonder what the motivation is for the authors of publications encouraging people to delay their SS benefits. It seems like an irrelevant and disconnected topic for this group unless the economists are concerned with the long-term care for Boomers. Candid comments are appreciated.

 

[Sunset]

So it is almost like saying that if one believes the market will fall a bunch, then SS at 62, but also if one feels that the market returns will be fairly high, then also take it at 62 to invest.

No, it's saying if the market falls a bunch (50%) , then take SS as the market will go up (market returns will be high) and the more invested the better.

If one feels the market returns will be fairly high.. which is not now, but would be 8 years ago (market returns were good last 8 years). .

 

[Sunset]

You have analyzed this topic well. For those that have prepared, of course having a crystal ball-preparedness is unrealistic, I believe in hedging my bet to take SS early. I will say this again, if you don’t need it, fine. I can then invest these funds. Given the situation that many appear to be in from the posts I have received, they have prepared for their future. I will return to your comment that people are more active in their 60s and their activities diminish as they age. I will state this again, my calculation is the break even point for taking SS at 62, 66.10, and 70 y.o., is approximately 79 years old. To be blunt, if you die before 70 y.o., you get nothing. Some have questioned whether this increased amount of Social Security will secure their finances into their 90s. I hear the comments that the “ guaranteed“ return is somewhere around 6-8%. A great COLA investment. Many of the comments I read have more to do with an economic perspective than a quality of life perspective. That’s me speaking as an occupational therapist, I will admit that I look at things differently. I will also admit that I have not applied for my Social Security as of this writing and that I am 63 years old. I suspect that many of these increased funds for those waiting till 70 will be going to assisted living and skilled nursing facilities rather into their personal interests and family interests. I often wonder what the motivation is for the authors of publications encouraging people to delay their SS benefits. It seems like an irrelevant and disconnected topic for this group unless the economists are concerned with the long-term care for Boomers. Candid comments are appreciated.

If a person has enough savings, they can do both. Spend more and wait until age 70 for higher SS.
Proof is here:
https://www.early-retirement.org/forums/f28/social-security-at-70-a-113831-4.html#post2766189

 

[NW-Bound]

There are just too many moving parts to optimize.

I could take SS early even if I did not need it, in order to use the money to invest, like earlier posters said.

But I still have my own cash that's not invested. So, what if I looked at delayed SS as a secure fixed income, way more secure than bonds, and raise up the stock AA in my portfolio because I can now tolerate more risk?

Throw Roth conversion and taxes in there, and it makes your head hurt.

 

[bada bing]

IMHO, there really won't be much of a difference for most folks as to whether they started SS at 62 and prudently invested the money for 8 years or whether they waited until 70. Each case has different risks and rewards and the final result is not knowable in advance.

That is the correct answer, at least for my situation. I'm currently delaying SS because I have enough hobby income to trigger the pre-FRA clawback and also I have ongoing Roth conversion plans. As far as early or late claiming being superior, it's not likely to make much difference for my SS totals. The tax strategy is what makes the difference.

 

[daylatedollarshort]

With a probability tree analysis, you would need to multiply (your expected benefit) X (your odds of still being alive at different ages). Most articles on SS leave out the odds of still being alive part, which is pretty key since that is the actuarially neutral part of the program. If you also throw in the possibility of reduced benefits due to the future funding shortfall, then that would push the breakeven dates out further.

We took SS at 62 for income stream diversity and to increase the odds of our adult kids getting at least some money from our SS benefits if we passed early, especially when they were younger, getting started in their careers, and might need the money more than when they are older.

 

[TheWizard]

That is the correct answer, at least for my situation. I'm currently delaying SS because I have enough hobby income to trigger the pre-FRA clawback and also I have ongoing Roth conversion plans. As far as early or late claiming being superior, it's not likely to make much difference for my SS totals. The tax strategy is what makes the difference.

Tax strategy, correct.
Taking SS prior to age 70 reduces your headroom for Roth conversions by $20k to $30k per year, depending.

And going up one additional IRMAA tier really takes the glow off of investing that early SS money, if it comes to that.

So this strategy of delaying SS until age 70 is mostly applicable to folks with large tax-deferred accounts, typically well over $1M per person.
Folks with modest tax-deferred accounts can ignore this strategy rationale...j

 

[HarryHawk]

I waited until age 70 (actually starting this month) primarily as a potential benefit for my wife. My SS benefit is just about twice that of my wife's benefit. I figure if I go soon, my wife will benefit if she outlives me. If we both die soon, oh well, who cares?

 

[Time2]

Yup. If we had no SS at all, I would not have been able to retire early.

Same here but maybe for a different reason. My dad had a disabling heart attach at 43 yrs old, I was 18 yrs old. He got Disability from SS, and that meant I didn't need to support them for the rest of their lives.

 

[Jakob]

That is proof of having more $ at 70 y.o., but does not consider how that $ is being spent. It is interesting to me hearing many attitudes regarding “the numbers,” yet little to no consideration as to how those funds will be used. I have not read anyone post about Assisted living (AL) or Skilled Nursing Facility (SNF) costs and how delaying SS until 70 y.o. will be used to fund their personal care, rather than living a full life while active. Of course, this topic is not the most pleasant to discuss. I occurs to me that the authors of the pro-waiting articles , I would like to know who supports their efforts (follow the money), are securing funding for the boomers entering AL and SNF. This is a growing concern as the boomers represent a large faction. I wish everyone a long, prosperous, and healthy life.

 

[Time2]

IMHO, there really won't be much of a difference for most folks as to whether they started SS at 62 and prudently invested the money for 8 years or whether they waited until 70. Each case has different risks and rewards and the final result is not knowable in advance.

Often there are more inputs (complications). What are the taxes on the SS income? Is the SS income limiting (because of tax bracket) the amount you can do in Roth Conversions, raising the RMDs you have to take, that may put you in a higher tax bracket. Do you want to maximize your spouses income after you die?

"It's always something"

 

[Foghorn Leghorn]

Then theres my favorite all time chunk of wisdom

" If you wanna hear God laugh, tell Him your plan"

 

[harllee]

As my investments are currently tanking I am glad I waited to age 70 to take my SS--I am comforted to know that DH and I have $5500 per month in SS coming in to fund our CCRC (continuing care retirement community) no matter what happens to my stocks and bonds.

 

[pb4uski]

With a probability tree analysis, you would need to multiply (your expected benefit) X (your odds of still being alive at different ages). Most articles on SS leave out the odds of still being alive part, which is pretty key since that is the actuarially neutral part of the program. If you also throw in the possibility of reduced benefits due to the future funding shortfall, then that would push the breakeven dates out further.

We took SS at 62 for income stream diversity and to increase the odds of our adult kids getting at least some money from our SS benefits if we passed early, especially when they were younger, getting started in their careers, and might need the money more than when they are older.

opensocialsecurity.com does that and more. For every possible claiming strategy (each month between the later of now or when you are age 62 and age 70) it calculates your expected benefit based on birthdates and PIA that you provide. Then it multiplies those cash flows by your odds of still being alive to receive that benefit based on a mortality assumption that you provide. Then it discounts those probability weighted cash flows for the time value of money using a real discount rate that you provide. The claiming strategy that has the highest expected present value is the optimal claiming strategy, but you can look at expected present values for other claiming strategies like as soon as possible, FRA, as late as possible, etc.

It also allows you to haircut the expected benefits starting in the year that you provide and by the amount of a haircut that you provide.

There are default assumptions that you can override if you think differently.

Very powerful, FREE, tool.

 

[tenant13]

I rarely engage in detailed financial calculations and predictions. Spreadsheets are fun and I do use them but only to develop a very general sense of direction for the future. Whether I have 3-5k more a year to spend starting at 62 or 70 makes no difference for my lifestyle. And being single that's the only thing I need to take into consideration.

So I plan to delay SS for as long as I can and treat it as longevity + failed portfolio insurance. If I ever start pinching pennies and could use a monthly check, I'll revisit the issue. Or if I find myself in poor health and expecting to die sooner rather than later. In other words I don't look at my future as a block of time from now until (unpredictable) death but rather asses the current situation yearly.

 

[athena53]

If a person has enough savings, they can do both. Spend more and wait until age 70 for higher SS.

That's what I did. I'm likely to follow the U-shaped spending curve in retirement. Retired at 61, spent lots on travel and charity, still in that stage at age 69. I suppose there will be a time when I don't want to take transatlantic flights and tramp around foreign lands but I'm not there yet. I plan to fund my own LTC so if that happens spending will go up in that area but travel, housing, charity, car etc. will go to zero.

Like harllee, I'm glad I waited (to age 69) to file for SS given what the market is doing although what I'm taking out from investments is still sustainable.

An interesting side note: Dad died at age 90 last October and the $217 surprise deposit from SS to my bank account turned out to be my share (1/5) of his last SS payment. My brother tells me Dad was getting about $1,300 from SS net of insurance premiums. Dad ER'd in his late 50s and started taking SS at 62. He later regretted that, but he and Mom (who died in 2016) were savers and even after 18 months in LTC he left a decent estate.

I was surprised at how low that payment was- Dad was a metallurgical engineer and spent many years in management so I'm guessing he maxed out his SS contribution every year, but the low (as a % of his salary) SS ceiling meant that even the indexed value going into his formula calculation was modest. The indexing rates used probably also understated actual inflation. I'm glad they didn't depend on SS alone.

 

[CRLLS]

For us, when to take SS is a moot point. DW filed at 66, I will turn 70 in a few months and have only taken spousal benefits. The time to make a decision has all but passed. I have read many of the posts saying take SS early and reinvest that money. For those who do take SS at 62, if their plan is to reinvest 100% of the SS, what source of money are they using to live on during that time? Living off of other funds? On the "money is fungible" side, either way, it appears to me that like they are just taking the money out of one pocket only to put it in the other pocket. I simply don't understand the concept. Perhaps they are still working and earning an income?

In my personal evaluations, I have ignored any argument of breakeven ages. I think it is foolish since we do not know when we will cease breathing. I'd rather err on the safe side to support my lifestyle throughout my life regardless of how long that might be. I would not bet 1/3rd of my income an either black or red at the roulette table.

 

[jebmke]

I rarely engage in detailed financial calculations and predictions. Spreadsheets are fun and I do use them but only to develop a very general sense of direction for the future. Whether I have 3-5k more a year to spend starting at 62 or 70 makes no difference for my lifestyle. And being single that's the only thing I need to take into consideration.

So I plan to delay SS for as long as I can and treat it as longevity + failed portfolio insurance. If I ever start pinching pennies and could use a monthly check, I'll revisit the issue. Or if I find myself in poor health and expecting to die sooner rather than later. In other words I don't look at my future as a block of time from now until (unpredictable) death but rather asses the current situation yearly.

You bring up a good point; often this question gets incorrectly cast as a decision between 62 and 70 (or a variation on that false choice). Every moment after 62 is a new decision point and the inputs to that decision can change dramatically (e.g. health, wealth change).

 

[HarryHawk]

As my investments are currently tanking I am glad I waited to age 70 to take my SS--I am comforted to know that DH and I have $5500 per month in SS coming in to fund our CCRC (continuing care retirement community) no matter what happens to my stocks and bonds.

I'm in the same boat. Will be moving into a CCRC next year. My wife's and my SS covers the cost of the all inclusive CCRC (less meals). Our particular CCRC is a faith based non-profit who "guarantees" care for life even if one runs out of funds to pay. Hope I won't find out if they honor the pledge, but nice to know it is there none the less.

 

[Bigdawg]

DW filed at 66, I will turn 70 in a few months and have only taken spousal benefits. I have read many of the posts saying take SS early and reinvest that money. For those who do take SS at 62, if their plan is to reinvest 100% of the SS, what source of money are they using to live on during that time? Living off of other funds? On the "money is fungible" side, either way, it appears to me that like they are just taking the money out of one pocket only to put it in the other pocket.

CRLLS, First of all I hope you live a very long time past the break even age (82 or so). Even if you don't, your DW can enjoy your higher age 70 SS. Bolded above-they lived on the same money that you lived on (because you didn't take SS at 62). You obviously had resources to fund yur 62-70 years. Now your stash is minus those funds. Their stash is less by the amount they needed to fund age 62-70 but they received SS and invested it. If they and you die at the same age (let's say 75), their stash will be bigger because you had to live on yours from 62-70. If you live a long life will you come out ahead financially? yes. I would rather have the bird in the hand (at age 62) than two in the bush (at 70 or 82). Five bucks at age 62 is worth so much more to me than 10 bucks at age 82. Currently 56 and slowing down (scheduled hip replacement). At 82 (if I'm still kicking) I could be broke for all I care. No one in my family at age 82 was spending money on much of anything except healthcare. I have that covered. DF died at 83, Uncle at 69, sister at 29 and 59. Mom just left me at age 90. The only one to spend any money on travel/fun/etc... after 82 was my DM. My plan is to blow the dough between now and 80. My ROTH conversions won't be complete until 65 so that is when I'll take SS. Good luck to all of you as you make your when to take SS decision.