Another reason to claim Social Security at 62

My grandparents, parents and all their immediate cousins lived past 80 years, but who knows.
 
Even if you live longer taking it at age 62 lets you use that money to travel, etc. before you physically can't.

Which is what my in-laws did.

Like all the other retired dudes I've known, by the time dad was 70 he was firmly in the slow-go phase
False premise since money is fungible.
 
It really reinforced that it’s a personal decision. Sure, delaying benefits means bigger checks, but if you don’t make it to that "break-even" age in your late 70s or 80s, it can end up being less advantageous. For him, taking it early was the right call—it gave him financial security and peace of mind during those earlier years when he was healthier.

Even if you live longer taking it at age 62 lets you use that money to travel, etc. before you physically can't.

You know, about 25 pages ago someone probably pointed out that if one has saved enough, they can use money from that pot to provide "financial security and peace of mind during those earlier years" until taking SS, and it doesn't really matter--except maybe psychologically--whether the money is taken out of that savings earlier or later. It may be different if a major goal is to leave a legacy, but if the goal is to spend all you can, and if you have saved enough to provide a bridge to SS, then consider using savings in earlier years and taking SS later than 62--perhaps as late as 70.

edit to add: While I was typing, pb4uski made the point.
 
AI Overview

Yes, there is a link between a person's parents' age at death and their own life expectancy:
  • Longer life
    People with parents who lived longer are more likely to live longer themselves. For example, in one study, the risk of death was 17% lower for each decade that at least one parent lived past the age of 70

  • Healthier aging
    People with parents who lived longer are more likely to delay the onset of age-related diseases, have fewer risk factors for cardiovascular disease, and have slower declines in physical and cognitive function.
    • Genetic factors
      A person's parents' age at death may be linked to their offspring's health through inherited genetic risk factors for blood pressure, cholesterol, and other factors.

    • Shared environment and lifestyle choices
      A person's shared environment and lifestyle choices, such as diet and smoking habits, also play a large role in their health.
 
While “money is fungible” is a great reminder, I think there are many here on this thread who don’t understand the concept at all. So spelling it out is worthwhile.
 
While “money is fungible” is a great reminder, I think there are many here on this thread who don’t understand the concept at all. So spelling it out is worthwhile.
True. But IME there are many here on this thread who don't understand the concept at all even after it is spelled out. The entire notion of spending money that you saved for your retirement to buy a COLA-adjusted life annuity from the US government is foreign to them.
 
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This feels timely, from post #31:
Delay Social Security to age 70 and Spend more money at 62 - Bogleheads.org

I'm over 10 years away, so no point in thinking about it now. Parents didn't make it past 67 and only one grand-parent to early 70s. Longevity is not in my family, especially the maternal side, even though I have a great uncle that made it past 100. He's my glimmer of hope.

I've looked at opensocialsecurity and it tells me to take at 62, unless I override the default mortality table. I'll see where SS is at when I'm 62, along with a self-check to see how I'm feeling. But unless I somehow really need the money to get by, I'll defer to 70 even with poor family longevity. Where else can you get a US government backed inflation adjusted annuity for life? That's an amazing product.
 
Yes, money is fungible. Life (and enjoying it) is not.

Flieger
 
Yes, money is fungible. Life (and enjoying it) is not.

Flieger
I think the dilemma for many people is getting your head around to spending some of your stash just to begin with. Many of us are programmed to save and not spend so it is very hard psychologically to shift to spending after so many years of saving.

That is why I like to frame the SS delay decision as just using some of your stash to buy a COLA-adjusted life annuity from the SSA. IME you can't really buy a COLA-adjusted life annuity commercially.

So if your PIA at 67 FRA is $36,000, then your age 62 benefit would be 70% or $25,200 and your age 70 benefit would be 124% or $44,640... a difference of $19,440/year. So delaying from 62 to 70 is effectively making 8 premium payments of $25,200/year for 8 years ($201,600 in total or 21% of your total stash) and after 8 years receiving a COLA-adjusted life annuity of $19,440/year. I happen to think that is a screaming deal.

So if you are 62, retired and have a $1m nestegg, you set aside $357,120 (8 years at $44,640/year) and have $642,800 left. $642,800 at a 4% WR would be $25,715/year. In addition, for the first 8 years you withdraw $44,640 from the side fund so you have $70,355 to spend.

OTOH, if you claim SS at 62, you'll receive $25,200/year in SS and can withdraw $40,000 from your retirement savings at a 4% WR and have $65,200 to spend.

You can have more fun in your go-go years on $70,355/year vs $65,200/year.

FIRECalc will produce similar results. Run the amount of safe spending at 95% success rate for a 62 yo early retiree using the Investigate tab for 2 scenarios:

1. Claim SS at 62: $1,000,000 portfolio, 30 years, $25,200 SS starting in 2024: result is $65,581/year
2. Claim SS at 70: $642,800 portfolio, 30 years, $44,640 SS starting in 2032, $44,600 inflation adjusted pension income starting in 2024, $44,600 inflation adjusted off-chart spending starting in 2032: result is $70,598/year.
 
I think the dilemma for many people is getting your head around to spending some of your stash just to begin with. Many of us are programmed to save and not spend so it is very hard psychologically to shift to spending after so many years of saving.

That is why I like to frame the SS delay decision as just using some of your stash to buy a COLA-adjusted life annuity from the SSA. IME you can't really buy a COLA-adjusted life annuity commercially.

So if your PIA at 67 FRA is $36,000, then your age 62 benefit would be 70% or $25,200 and your age 70 benefit would be 124% or $44,640... a difference of $19,440/year. So delaying from 62 to 70 is effectively making 8 premium payments of $25,200/year for 8 years ($201,600 in total or 21% of your total stash) and after 8 years receiving a COLA-adjusted life annuity of $19,440/year. I happen to think that is a screaming deal.

So if you are 62, retired and have a $1m nestegg, you set aside $357,120 (8 years at $44,640/year) and have $642,800 left. $642,800 at a 4% WR would be $25,715/year. In addition, for the first 8 years you withdraw $44,640 from the side fund so you have $70,355 to spend.

OTOH, if you claim SS at 62, you'll receive $25,200/year in SS and can withdraw $40,000 from your retirement savings at a 4% WR and have $65,200 to spend.

You can have more fun in your go-go years on $70,355/year vs $65,200/year.

FIRECalc will produce similar results. Run the amount of safe spending at 95% success rate for a 62 yo early retiree using the Investigate tab for 2 scenarios:

1. Claim SS at 62: $1,000,000 portfolio, 30 years, $25,200 SS starting in 2024: result is $65,581/year
2. Claim SS at 70: $642,800 portfolio, 30 years, $44,640 SS starting in 2032, $44,600 inflation adjusted pension income starting in 2024, $44,600 inflation adjusted off-chart spending starting in 2032: result is $70,598/year.
Great analysis and outline. What are your ending values with each one of those scenarios, assuming someone is looking at kids and leaving a "legacy"?

Flieger
 
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Great analysis and outline. What are your ending values with each one of those scenarios, assuming someone is looking at kids and leaving a "legacy"?

Flieger
See below. Keep in mind that Scenario 2 spends more. We call it SKIing... Spending the Kids Inheritance. If a legacy is an important factor then you could include that in FIRECalc under the "Leave some money in the portfolio for my estate" under the investigate tab. For us, we've told them that they get whatever is leftover.

Scenario 1:

FIRECalc Results​

Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.

FIRECalc looked at the 124 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 124 cycles. The lowest and highest portfolio balance at the end of your retirement was $-456,520 to $5,644,972, with an average at the end of $1,868,603. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 6 cycles failed, for a success rate of 95.2%.

Scenario 2:

FIRECalc Results​

Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.

FIRECalc looked at the 124 possible 30 year periods in the available data, starting with a portfolio of $642,800 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 124 cycles. The lowest and highest portfolio balance at the end of your retirement was $-293,610 to $3,628,489, with an average at the end of $1,201,049. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 6 cycles failed, for a success rate of 95.2%.
 
Thanks! You beat me to it! But I used $1MM starting for both scenarios and just changed the start date for SS? Assuming age 62 in 2025, and 70 8 years later in 2033.

It showed an 85.5% Success Rate for the starting at 70 with $1.33MM avg remaining ($70.36k spend)
It showed a 93.5% Success Rae for the starting at 62 with $1.77MM avg remaining ($65.2k spend)

Flieger
 
Your succinctness is admirable. And I'm sure your input elsewhere on the ever-popular "when to claim SS" question is a major source of my wisdom. So thanks.
pb4uski succinct? :ROFLMAO: Now that thought is a hoot!
 
Thanks! You beat me to it! But I used $1MM starting for both scenarios and just changed the start date for SS? Assuming age 62 in 2025, and 70 8 years later in 2033.

It showed an 85.5% Success Rate for the starting at 70 with $1.33MM avg remaining ($70.36k spend)
It showed a 93.5% Success Rae for the starting at 62 with $1.77MM avg remaining ($65.2k spend)

Flieger
No, it's much more complicated than that. See post #611.
 
Looks like the most recent AWI increase is now showing up on the SSA.gov website for me.
 
While “money is fungible” is a great reminder...
It's fungible only if your spouse wouldn't have a coronary from watching the effects of a 7% draw rate from retirement accounts (mostly hers) for the next five years.

I used to be the anxious one, but that flipped shortly before our retirement.
 
I look at it this way I didn't save as much as everyone else here but when I hit 62 I'll claim it and watch my AGI so I can get the max out my insurance subsidiary from the ACA and if I don't need the money at that time I'll just stick it back in the stock market like I have for the last 40+ years and I know I'll win one way or the other as I worked for that SS benefit and I won't take the chance I'll live till 85 to get the higher payout especially when dad was the only 1 to live till 72 out of 7 siblings. I watched way to many of my dad's friends die before they were 64 and never collected a penny and their wives didn't last much longer after their Hubbys were gone and the government made out like bandits not having to pay any of those benefits out.
 
False premise since money is fungible.
Fungible refers to an asset that can be exchanged for another asset of the same type and value.
Owning an asset outright like an IRA and having what is essentially an annuity like SS are not the same thing. A $3,000 monthly SS check is not the same as a $3M IRA @ 3% draw rate, despite both providing the same basic income. One I can cash out whenever I wish and inheritable, the other I cannot, and it's value is reduced to zero upon my passing.

I've heard the argument that at the end of one's life, the delay taking SS and drawing from the IRA results in a larger net worth, but in the meantime, net worth decreases, and SS becomes less of a guarantee.
 
My father died at 63, one of his 2 brothers died in his mid-60s, and the other reached about 70--all died of cardiac disease. My mother died in her early 70s, as did her parents--of cancers. I have discussed all this with my physician. I get an annual physical. I have had extra cardiac testing. I live a healthy lifestyle compared with my parents. I have voiced my concerns about family history to my physician, but he says he can find nothing that would suggest a lifespan shorter than statistically predicted. I plan to claim SS at 70.
I presume that you had cardiac calcium score and it was low? Have you been tested for LP(a)? If that's positive, dramatic interventions are easier to justify and 70 might be a less good idea for singles. There's no great predictor of cancer, beyond smoking, I suppose. Genetics don't seem to be on your side. I'm almost certain I'm going to be bringing down the average and not make the break even point, but the wife quit work when we had our first baby, and she's very health conscious. Genetics are not on her side either, but 67 and nothing wrong yet. Both of her parents had cancer pop-up and were gone after a relatively short time, but I'm treating it as longevity insurance for the wife. If she goes before break even, then it was a donation to people who need SS more than we do.
 
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