Another reason to claim Social Security at 62

[shotgunner]

Standalone SNFs here have nearly every custodial resident on Medicaid.

So care biases downward to the lowest common denominator.

Semi-private rooms at best...in the past, several I visited still had wards.

The best SNFs here are the ones attached to CCRCs, which all have breathtaking entrance fees.

Which is why I plan on purchasing LTC insurance.

I want to die at home or in a private room at a ALF.

Not any of the standalone SNFs I saw when mom was sick.

In my experience once a person reaches the point of requiring Skilled Care their view of the facility and the world in general is not the same as when they were fully functioning. Often what they need and enjoy the most is people around them. Often times we don't get a choice and may not be involved in the decision.

 

[RunningBum]

So I can't spend more more money by taking SS early, despite having thousands more in the bank every month. I think it's your math that needs to be paid more attention to, to say nothing of painting everyone with the same ridiculously broad brushstroke.

The point is you don't have to spend less between ages 62-70 just because you deferred taking SS to age 70, because you'll make up for taking more money out of your investments by getting a larger SS check later.

I see you've already had an exchange with pb4 and have dug your heels in so I won't bother discussing any further with you.

 

[motley]

The point is you don't have to spend less between ages 62-70 just because you deferred taking SS to age 70

Never said I did. You said "If you think you can spend more money between 62 and 70 because you took SS at 62 then you haven't been paying attention..." Which is wrong as I most certainly can. I can use that SS money AND my IRAs etc, whereas delaying I can only use my IRAs. I have more money, so I can spend more money. That isn't "digging my heels in." It's basic math.

 

[shotgunner]

The point is you don't have to spend less between ages 62-70 just because you deferred taking SS to age 70, because you'll make up for taking more money out of your investments by getting a larger SS check later.

Depending on if and how long you live.

I took SS at 62 in June '19 and I have no regrets. Thus far I have collected $112K, that's $112k I did not have to take out of my investments during a period the S&P 500 increased by 92%. I also realize this was good luck, same as still being alive.

The choice of when to take it is a crap shoot because none of us can predict our death. Being single I can't leave my SS check to my daughter but the money I was able to keep invested can be.

 

[FREE866]

Depending on if and how long you live.

I took SS at 62 in June '19 and I have no regrets. Thus far I have collected $112K, that's $112k I did not have to take out of my investments during a period the S&P 500 increased by 92%. I also realize this was good luck, same as still being alive.

Yeah, longevity will dictate what age to take SS was the "right" move financially.
But, yeah if market has strong run , which historically is the "probability", it buffers the case for taking early. Especially if you're heavy equity, which I am.

I'm 58 now. My plan is to take at 67, but will see.

 

[Koolau]

Yeah, longevity will dictate what age to take SS was the "right" move financially.
But, yeah if market has strong run , which historically is the "probability", it buffers the case for taking early. Especially if you're heavy equity, which I am.

I'm 58 now. My plan is to take at 67, but will see.

In my case, I waited for SS because I WANTED to take from my investments (401(k)) to 1) Roth some funds through tIRAs and 2) Reduce 401(k) balance thinking ahead to RMDs.

No right or wrong, just a different point of view of the same issue so YMMV.

 

[FREE866]

In my case, I waited for SS because I WANTED to take from my investments (401(k)) to 1) Roth some funds through tIRAs and 2) Reduce 401(k) balance thinking ahead to RMDs.

No right or wrong, just a different point of view of the same issue so YMMV.

I hear you. I'm doing Roth conversions yearly as well to lower the tIRA balance as well, yet it keeps growing every year . RMDs for me won't start until I am 75, 17 years away at this point.

 

[Exchme]

Never said I did. You said "If you think you can spend more money between 62 and 70 because you took SS at 62 then you haven't been paying attention..." Which is wrong as I most certainly can. I can use that SS money AND my IRAs etc, whereas delaying I can only use my IRAs. I have more money, so I can spend more money. That isn't "digging my heels in." It's basic math.

You are entitled to your opinion and to living life your own way, but your "basic math" is only actuarially correct in limited circumstances, some situations that come to mind:
-Lower earner in a married couple
-Single with life-shortening health problems
-Can't afford to eat without it
-Parent with minor children or disabled children
In general, folks should start their analysis with opensocialsecurity.com. That gives the present value of the SS income stream, weighted by mortality statistics and using the real return of long TIPS. The analysis assumes you do the rational thing of spending down bonds to live while deferring claiming. Folks should scroll all the way to the bottom and click on various points on the graph to see the difference in SS value at different claim ages - often changing the claim age by a year or more makes very little lifetime difference. Then tailor the answer for other life and tax circumstances, such as needing ACA premium credits, avoiding IRMAA, needing time and low tax space for doing Roth Conversions, etc.

The opensocialsecurity.com site has an explanation for why the math is done this way, the bogleheads.org wiki is a useful reference, there are numerous academic papers you can read about it.

 

[motley]

You are entitled to your opinion and to living life your own way, but your "basic math" is only actuarially correct in limited circumstances

No decision on when to take SS is going to be best for everyone all the time. I would hope that's stating the obvious. And your examples are far from the only circumstances of being advantageous to take it earlier vs later. You're certainly entitled to your opinion as well, but please keep in mind it is that - opinion - and not fact.

No offense but I don't think there's any point in us going back and forth on it anymore, so I'm not. I hope whatever choice you make works best for you.

 

[levindb]

While you are doing your basic math, try to include the impact of income taxes on your decision. In most states (38 of them) SSA benefit is not taxed, and the IRS only taxes 0%, 50%, or 85% of your SSA benefit. There is some value in having more of your income coming from SSA vs tIRA. Some people have to take SSA benefit early just to meet their spending needs, but for those with more flexibility in sourcing their spending, the amount AFTER TAX is what you can spend, and most retirement calculators only calculate breakeven points based on gross income...so, try to be aware of the impact COLA adjusted , tax advantaged SSA benefits have over other sources of retirement income.

 

[kblagron]

I took it at 62-1/2, mainly because my wife who has Texas Teacher Retirement benefits, has essentially limited access to survivor benefits. My mom, was in the same situation - My dad died at 48 yo, and she got $98 per month on her survivor benefits, after he paid into it for 30 years. Quite the rip-off IMHO.

 

[DrRoy]

I read an article once that said one should look at SS as longevity insurance. I don't need the $ now so I am waiting until 70. At that point, my amount plus DW's spousal will add up to almost half of our spending.

 

[camfused]

My spreadsheet factors in Roth conversions, taxes, the SS haircut, IRMAA, a house sale, paying taxes via IRA withdrawals, etc. It is pretty complex. I am always maximizing for net worth at age 90 (I had to pick a number, and based on our parents' lifetimes, 90 seems reasonable), due to our desire to pass as much as possible on to our DD.

Anyway, it always says to take SS at 70, no mater whatever other what-ifs I tinker with. Just for fun, I changed the ages to 67 (FRA) for both of us (since we are 65 and 66, any earlier does not matter anymore). The difference at age 90 was $98K, or 1.18% less than both age 70 withdrawals. And, if I change it to me (the higher SS amount) at 70 and DW at 67, the difference is $58K, or .71% less than both age 70 withdrawals.

So, those are just not huge numbers, especially if you divide them by about 2.4, for projected inflation. I am sticking with 70 for both of us, for now, but I can see how some folks would say it does not matter that much, and want to have the comfort of that monthly check earlier.

 

[audreyh1]

The difference at age 90 was $98K, or 1.18% less than both age 70 withdrawals. And, if I change it to me (the higher SS amount) at 70 and DW at 67, the difference is $58K, or .71% less than both age 70 withdrawals.

So, those are just not huge numbers, especially if you divide them by about 2.4, for projected inflation. I am sticking with 70 for both of us, for now, but I can see how some folks would say it does not matter that much, and want to have the comfort of that monthly check earlier.

Yes, in making our final decision using OpenSS I noted that the differences were very slight between 68, the earliest suggested age for DH and 70. Same order of 1% or less lifetime difference. The delay has given us a couple more years to handle taxes from other sources while staying under a certain IRMAA threshold.

 

[Gumby]

.... the IRS only taxes 0%, 50%, or 85% of your SSA benefit. .....

It's actually a sliding scale, so you could end up with 37%, or 59% or 76% (just for example) of your benefit being taxed. You need to complete this form to know the exact percentage https://www.irs.gov/pub/irs-pdf/p915.pdf#page=16

 

[TheWizard]

In my case, I waited for SS because I WANTED to take from my investments (401(k)) to 1) Roth some funds through tIRAs and 2) Reduce 401(k) balance thinking ahead to RMDs.

No right or wrong, just a different point of view of the same issue so YMMV.

Right.
Folks with $2M in tax-deferred funds are going to have quite a different viewpoint compared to folks with $500k in tax-deferred.
It comes back to Basic Point #1: if your finances are such that you need to take SS at 62, then do so for sure...

 

[Koolau]

I hear you. I'm doing Roth conversions yearly as well to lower the tIRA balance as well, yet it keeps growing every year . RMDs for me won't start until I am 75, 17 years away at this point.

At least you have some time. I did Roth a bunch of assets, but still my RMDs are becoming problematic as I age out - not just for taxes but also for IRMAA. Good problems we in the First World must face!

 

[camfused]

^^^ In my spreadsheet, I go over the IRMAA limit anyway when I start pulling the RMDs, so I am going to continue to keep doing Roth conversions well into my 80s (when I finally deplete the IRAs).

 

[RunningBum]

Never said I did. You said "If you think you can spend more money between 62 and 70 because you took SS at 62 then you haven't been paying attention..." Which is wrong as I most certainly can. I can use that SS money AND my IRAs etc, whereas delaying I can only use my IRAs. I have more money, so I can spend more money. That isn't "digging my heels in." It's basic math.

Well. Yes. Of course if you take SS at 62 you will literally have more money available to you if you want to spend it all. It's already been agreed if you need to spend it all and can't delay SS, take it at 62.

I thought we were talking about people with enough money to do either, and wouldn't be spending all of their money. A real plan creating a withdrawal plan for your remaining years takes more than basic meaningless math.

But, I'll give it to you, if you *could* defer SS but it would mean your budget includes only necessary things and no extras because you don't have much other money, yes, you might want to take at 62 so you can enjoy some extras. I was assuming this audience has enough other money to use for those extras, knowing that they would be getting a larger SS check later to offset the savings they've spent. Maybe I'm wrong.

 

[motley]

Well. Yes. Of course if you take SS at 62 you will literally have more money available to you if you want to spend it all. It's already been agreed if you need to spend it all and can't delay SS, take it at 62.

You'd have more money available to you regardless of how much you do or don't spend of it. That's all I was saying.

I thought we were talking about people with enough money to do either, and wouldn't be spending all of their money. A real plan creating a withdrawal plan for your remaining years takes more than basic meaningless math.

It's not "meaningless math," but I've no interest in convincing you or anyone else otherwise.

I don't know why this keeps getting twisted around; again, all I said was if you take it at 62 vs 70, you will have more total net money throughout your 60s and 70s than someone who takes it at 70. At 80, the second person starts netting more grand total. If you want to call that meaningless, whatever, to each their own. I said nothing about you should or shouldn't do this or that with it or there aren't any other considerations; obviously it varies with each individual.

 

[RunningBum]

Look at the 25-30 year view to the end of life date you think it's reasonable you might reach and want to plan for, not the 8 year view between 62-70.

 

[Dalton]

I'm with you, Motley. My inputs, with my single status, low spending (not adjusted up because I could or down because I can't, just my budget number), conservative returns assumed (5%ish total, and if they're higher even better), taking SS at 62 (vs. 67) has me up by about $123k when I turn 67 and up by $155k at 90. Taking at 67 won't ever catch up with that set of inputs.

Of course, market variability and/or spending variability will affect the outcome, but this outcome is what it is. I have almost 7 years before 62, so I'm not looking at it in enough depth to decide yet, but it's easy enough to just tweak my spreadsheet to see the difference. Maybe I can learn to spend more money by then .

 

[Route246]

The utility of your $ as you get older is something not talked about enough in my opinion. Go-Go, Slow go and No Go years. If I asked Warren Buffett to be 20 years old but he would have a net worth of 10k or continue to be his current age with his current net worth, he would choose the latter all day long. I don't care if I somehow have more money coming in at age 82 because I waited to draw at 70. So, your wheelchair in the old folk's home will be a bit nicer than mine. Great. Less $ at 62 is of greater value to me than more $ at 82. Full disclosure: My current plan is to draw SS at age 65. Also disclosed is the fact that I'm fine if I never receive a penny of SS $. My first world problem will be too much income at that age.

On a similar vein IMO not enough attention gets paid to what happens if you or spouse expires prematurely. You need to ask yourself in the event of this grim reality would it be worth it to gamble that you won't expire before your perceived break even happens?

 

[Dtail]

And thus another 250+ posts on the favorite topic to debate on this site. Not a negative comment, just an observation.

 

[Koolau]

^^^ In my spreadsheet, I go over the IRMAA limit anyway when I start pulling the RMDs, so I am going to continue to keep doing Roth conversions well into my 80s (when I finally deplete the IRAs).

I have thought about that as well. So far, I haven't pulled the trigger on "gray Rothing" but it makes some sense.