Would it be better to take Social Security at 62?

[TheWizard]

I delayed claiming SS until age 70 so I could spend down and Roth convert a good sized portion of my tax-deferred accumulation, originally close to $2M, filing Single.

I've basically succeeded.
Now with age 70 SS on top of my pension/annuity income, I've had a negative withdrawal rate for the past four years.
This means I put more money into my taxable investment account than I withdraw for my RMD.

It's a good situation to be in...

 

[Wile E. Coyote]

of course i read it but you need to live long enough for ss to pan out and even collect if you delay as well as live long enough so the internal rate of return of ss equals that portfolio.

already at 71 had i delayed to 70 , our income would be less since the portfolio outpaced the increases in ss coupled with incoming ss checks

the spending down while delaying would have given us bigger ss checks but a smaller portfolio working for us.

if only we know how long we would live or what markets and inflation would be

That's funny because you always argue that one person of a couple has a high risk for living past 90. I'm not sure how many times I have heard you say that.

 

[Wile E. Coyote]

I delayed claiming SS until age 70 so I could spend down and Roth convert a good sized portion of my tax-deferred accumulation, originally close to $2M, filing Single.

I've basically succeeded.
Now with age 70 SS on top of my pension/annuity income, I've had a negative withdrawal rate for the past four years.
This means I put more money into my taxable investment account than I withdraw for my RMD.

It's a good situation to be in...

Yes, that's another part of the argument/calculation/equation. Where someone may have to draw down their 401k to delay SS (not likely you in this case) on they other side they do not need to draw as much out.

 

[LateToFIRE]

Sorry if repeating myself, but I view the when to take SS question as more of a "risk mitigation" issue rather than a "maximize proceeds" issue. Of course, circumstances and risk tolerances will vary greatly between individuals (i.e. YMMV). For me, the question is "how important is it to maximize the most secure form of retirement income I will have" since most of my expenses will be funded by an investment portfolio that I would like to lean heavily towards equity AA. And there is also a tax consideration as well, which is that I'd like to have a few years of Roth conversions. Additionally, I should be in good position to fund the early years of retirement from existing cash and taxable funds, as well as proceeds from r.e. sales. So, in my specific case, waiting until age 67 (FRA) or maybe later makes sense. Additionally, I'd like to maximize the spousal adjustment for DW. But, I can see that the answers for others will be unique to their specifics.

 

[mathjak107]

That's funny because you always argue that one person of a couple has a high risk for living past 90. I'm not sure how many times I have heard you say that.

nope . a couple has a high 73% chance of one living to 85 …it’s less then a coin toss one will see 90 .

but if one is single odds are very different and lower on both. only 54% for a female and 42% for a male and that’s just to 85

 

[kgtest]

Man, my Grandma is 93. Still with it but stopped living on her own last year. Grandpa passed at 92. Many of the men at least in my family tree lived to at least 85.

I can likely assume I will live AT LEAST to 85. But not sure how good that last little strip of runway will actually be. My MAIN argument that Time > $$$ and the reason I am prepping so darn hard for an earlier "retirement". Need to buy some time here!

 

[Wile E. Coyote]

nope . a couple has a high 73% chance of one living to 85 …it’s less then a coin toss one will see 90 .

but if one is single odds are very different and lower on both. only 54% for a female and 42% for a male and that’s just to 85

To me living beyond 90 would be unlucky. I can hardly imagine life between 80 and 90. I am not very lucky. Plan for the worst (old age) and hope for the best (die in your sleep at 80-85).

 

[Montecfo]

Just using my parents' ages is not comforting. Dad passed at 56 and mom at 71, with my mom having a health-altering stroke at 56. That history tells me I should have started at 62. I'm going to start at 65.

Even parents' longevity may not be a great indicator from what I have read. But it and personal health assessments are all we have that are unique.

 

[REWahoo]

To me living beyond 90 would be unlucky. I can hardly imagine life between 80 and 90. I am not very lucky. Plan for the worst (old age) and hope for the best (die in your sleep at 80-85).

Horsepucky. Last I checked, no one comes with a "use by" date.

While few want to live so long they become decrepit and a burden to others, that isn't necessarily tied to an age range. I know folks in their 80's and 90's who live independently and have a very good quality of life.

YMMV, of course.

 

[Gumby]

mathajak107 and Wile E Coyote:

Please learn to use the multi-quote function. PM me if you need instructions. Thank you.

 

[Wile E. Coyote]

mathajak107 and Wile E Coyote:

Please learn to use the multi-quote function. PM me if you need instructions. Thank you.

We know how. We get into squabbles once in a blue moon. Mostly misunderstandings.

 

[Koolau]

I delayed claiming SS until age 70 so I could spend down and Roth convert a good sized portion of my tax-deferred accumulation, originally close to $2M, filing Single.

I've basically succeeded.
Now with age 70 SS on top of my pension/annuity income, I've had a negative withdrawal rate for the past four years.
This means I put more money into my taxable investment account than I withdraw for my RMD.

It's a good situation to be in...

This is what I did but perhaps not enough as I'm still facing significant RMDs. BUT, all in all, it was a good move. The other point is that I have now set DW up to receive my (much) higher SS payment when I kick. Of course, no guarantees on that, but my thinking is sound, I think. YMMV

 

[rayvt]

it is fairly straight forward .

there are few if any 30 year periods a balanced portfolio didn’t produce at least 6%

The news is better than that. For all 30 year periods from 1950 and ending in 2016, for a 60/40 portfolio, the annual median return was 9.7%.
The minimum return was 8.1%.

60% S&P500
40% 10 Yr T-bill

 

[rayvt]

Yet it is much more meaningful to use your own particular situation/numbers and calculate it for yourself (using the actual numbers on your SS statement).

There is no justification to use any longevity number other than what the actuaries publish. This isn't Lake Woebegone.

Well, maybe if you know you are in permanent bad health. But in that case you would certainly file as early as you can.

 

[mathjak107]

The news is better than that. For all 30 year periods from 1950 and ending in 2016, for a 60/40 portfolio, the annual median return was 9.7%.
The minimum return was 8.1%.

60% S&P500
40% 10 Yr T-bill

these are the worst time frames to date .

30 year numbers are fine .

but it is the 15 year numbers that did every single time frame in causing a failure


1907--- stocks minus 1.47%---- bonds minus .39%-- rebalanced minus .70% ---inflation 1.64%
.

1929---stocks 1.07%---bonds 1.79%---rebalanced 2.29%--inflation 1.69%
.

1937---stocks -- 3.45%---bonds minus 3.07%-- rebalanced 1.23%--inflation 2.82%
.

1966-stocks minus .13%--bonds 1.08%--rebalanced .64%-- inflation 5.38%

it is those 15 year horrible time frames that the 4% safe withdrawal rate was born out of since you had to reduce from what could have been 6.50% as a swr down to just 4% to get through those worst of times.

 

[Wile E. Coyote]

There is no justification to use any longevity number other than what the actuaries publish. This isn't Lake Woebegone.

Well, maybe if you know you are in permanent bad health. But in that case you would certainly file as early as you can.

I disagree. If no one in your immediate (large) family has ever lived beyond 80 and you are 70 then planning for 30 years seems really stupid (regardless of the rest of the universe is planning for 95).

 

[MichaelB]

I disagree. If no one in your immediate (large) family has ever lived beyond 80 and you are 70 then planning for 30 years seems really stupid (regardless of the rest of the universe is planning for 95).

No one recommended planning for 30 more years at age 70. The SS actuarial tables (here) show a 70 year old is expected to live 13.59 more years. It seems pretty reasonable (and smart) to plan for that, as rayvt suggested.

 

[Wile E. Coyote]

No one recommended planning for 30 more years at age 70. The SS actuarial tables (here) show a 70 year old is expected to live 13.59 more years. It seems pretty reasonable (and smart) to plan for that, as rayvt suggested.

Yeah, okay. That makes sense.

So, all these 30 year rolling periods seem meaningless when you get well past the 30 year mark and you are down to 15-20 years. 30 years is too general.

 

[braumeister]

Yeah, okay. That makes sense.

So, all these 30 year rolling periods seem meaningless when you get well past the 30 year mark and you are down to 15-20 years. 30 years is too general.

Let me remind you once again that you're not understanding FIRECalc. Try actually reading the instructions.

You put the time frame in (on the first page); you don't default to "these 30 year rolling periods".

 

[Gumby]

To add to that: If you put a 20 year horizon in FIRECalc, it will use 20 year rolling periods. If your horizon is input as 15 years, it will use 15 year rolling periods. Etc., etc. There will be correspondingly more runs in your analysis.

 

[CRLLS]

No one recommended planning for 30 more years at age 70. The SS actuarial tables (here) show a 70 year old is expected to live 13.59 more years. It seems pretty reasonable (and smart) to plan for that, as rayvt suggested.

Okay. I'll just mention this. Aren't actuarial tables the average life expectancy? That is what the 1st paragraph of your link says. That says there is a 50% chance of living past that.

If one is using FireCalc, Fidelity or some other calculator for planning, these typically indicate if you will run out of $$ by the end date. Using 13.59 years as an end date would give a 50/50 chance of running our of money. Why would one plan for a 95% confidence level of a 50% chance?

According to Kitces for those couples still living at age 65, "For those who "conservatively" plan for a longer time horizon, again there is an 18% probability that at least one member of the couple is still alive at age 95.

FWIW, my original "plan" which I started when I was 60, went to age 95. I have since changed that to age 100. That plan requires neither myself or DW running out of money I might add. I cannot imagine vegetating in a state-run nursing home for several of my last years above ground.

 

[MichaelB]

Okay. I'll just mention this. Aren't actuarial tables the average life expectancy? That is what the 1st paragraph of your link says. That says there is a 50% chance of living past that.

If one is using FireCalc, Fidelity or some other calculator for planning, these typically indicate if you will run out of $$ by the end date. Using 13.59 years as an end date would give a 50/50 chance of running our of money. Why would one plan for a 95% confidence level of a 50% chance?

According to Kitces for those couples still living at age 65, "For those who "conservatively" plan for a longer time horizon, again there is an 18% probability that at least one member of the couple is still alive at age 95.

FWIW, my original "plan" which I started when I was 60, went to age 95. I have since changed that to age 100. That plan requires neither myself or DW running out of money I might add. I cannot imagine vegetating in a state-run nursing home for several of my last years above ground.

I wasn’t literally suggesting to plan for only another 13.59 years. I was challenging the comment that planning for another 30 years was “stupid” and agreeing that using actuarial tables makes sense. So, in effect, I think you and I are in agreement. I’m 70 and still use 30 more years for DW and I, even if I don’t believe it will happen.

 

[mathjak107]

here s a life expectancy table which includes couples.

this is probability of living to that age .

so there is a 73% one in a couple will see 85 if they are 65 now …that’s the whole deal

 

[CRLLS]

I wasn’t literally suggesting to plan for only another 13.59 years. I was challenging the comment that planning for another 30 years was “stupid” and agreeing that using actuarial tables makes sense. So, in effect, I think you and I are in agreement. I’m 70 and still use 30 more years for DW and I, even if I don’t believe it will happen.

My bad. We are in agreement then. Like you, I would likely bet the farm on not reaching that 30 more years for either my DW or myself, if it were not for the alternative of losing that bet and being broke.

 

[Wile E. Coyote]

Let me remind you once again that you're not understanding FIRECalc. Try actually reading the instructions.

You put the time frame in (on the first page); you don't default to "these 30 year rolling periods".

What I am talking about to all the posts that always seem to talk about market returns over 30 year periods.