Best time for SS withdraw is age 67 not 70?

[pb4uski]

Makes sense. So duration of life has a dramatic impact on the "investment".

So if in the market for a life annuity, it could be considered.

Absolutely consider if interested in a life annuity. It is hard to find inflation adjusted life annuities. Even fixed COLA adjusted annuities are hard to find.

 

[pb4uski]

That is the part many financial articles on when to take SS forget to include. They don't always multiply the expected benefits times the probability you will still be alive to collect.

And that is exactly what opensocialsecurity.com does. It multiplies the benefits by the probability of your being alive to receive the benefit based on the mortality assumptions that you choose, and then present values the expected cash flows using the discount rate that you provide.

 

[pb4uski]

That is amazing news! So glad to hear that.

+1

 

[Bigdawg]

And that is exactly what opensocialsecurity.com does. It multiplies the benefits by the probability of your being alive to receive the benefit based on the mortality assumptions that you choose, and then present values the expected cash flows using the discount rate that you provide.

Opensocialsecurity.com assumes a dollar at your age 88 is just as usefull/important/whatever, as a dollar at age 63. I disagree. If a person has the $ to cover their essential budget and SS is just gravy, then whey would you wait to get the higher amount? If I handed a million dollars to a 95 year old, what are they going to do with it? Go on exstensive travel?, Buy an awesome sports car? My point is that after the break even point (79, 80, 81,82) what is the point of having that extra large SS check (assuming your essentials are already covered by an age 62 SS check)? I'll take my money at 62 (probably 65) and you take yours at 70. At 81/82 when your lifetime SS exceeds mine, you can start gloating all you want-as we sit in our rocking chairs at the long term care facility. Are their some 82+ year olds who are in great shape and traveling, etc...? Yes, of course. In my experience I won't be doing much (discrectionary spending/traveling) after 82. Your results may vary.

 

[Jerry1]

I thought survivor benefits (in this case for DW), is based on when you start claiming benefits. IE, survivor benefits are reduced if the deceased spouse began claiming before FRA.

Caveat, I could be completely wrong. Open SS is recommending my wife start on her own record at 62, but I wait until 70. And she would still get the full (maximum) survivor benefit when I pass.

My understanding is that the survivor gets the benefit based on when they start SS. So, because my DW waited until FRA, she’ll get my FRA amount even though I will claim early. I believe it she took SS early, they would reduce my FRA benefit accordingly. What I’m not clear on is what they would do if DW had waited until after her FRA - say 70. I don’t know if she’d get what I would have got at 70 or if it’s capped at my FRA amount.

 

[camfused]

@Bigdawg, you make some compelling points about what you will (actually will NOT) be doing with that extra money when you are too old to use it. Also keep in mind that you *may* need that money for things like log-term care or memory care.

I think it can boil down to whether you care about passing money on. In our case, I am always trying to tweak a plan that leaves the most to DD when we are gone. DW and I would have enough money, no matter when we take SS, so we don't need the extra cash flow if we take it earlier. Any plan that maximizes $ for DD to inherit, will also mean more money available to DW and I when we are in our 80s and 90s, should something happen and we need it.

My 2 cents.

 

[COcheesehead]

Opensocialsecurity.com assumes a dollar at your age 88 is just as usefull/important/whatever, as a dollar at age 63. I disagree. If a person has the $ to cover their essential budget and SS is just gravy, then whey would you wait to get the higher amount? If I handed a million dollars to a 95 year old, what are they going to do with it? Go on exstensive travel?, Buy an awesome sports car? My point is that after the break even point (79, 80, 81,82) what is the point of having that extra large SS check (assuming your essentials are already covered by an age 62 SS check)? I'll take my money at 62 (probably 65) and you take yours at 70. At 81/82 when your lifetime SS exceeds mine, you can start gloating all you want-as we sit in our rocking chairs at the long term care facility. Are their some 82+ year olds who are in great shape and traveling, etc...? Yes, of course. In my experience I won't be doing much (discrectionary spending/traveling) after 82. Your results may vary.

What are you going to use more money for as you age? Try LTC and late life expenses. There is a known spike in costs as we age. We experienced it with both my dad and my FIL. With my dad we had to sell assets to cover assisted living.

 

[old medic]

It's not something I ponder for myself - I'm just interested in the accuracy of that conclusion. Your thoughts?]

There are just way to many variables in life, the markets and possibly SS itself to ever have deadfast formula to give you the answer. Besides, If your in the position that you can invest ALL you SS moneys, why not start at 62 so it has more time to grow.
Starting at 62, My portfolio at 67 would be around $100K not counting growth or loses. Not $0 If I had waited till 67 to start. Then this portfolio would have built to only around $88K by 70, Not the $160K from 62 and 3X the time to grow.
Personally, I would prefer a wad of money to spend at 70 than to worry about investing it.

 

[RetiredAt55.5]

My understanding is that the survivor gets the benefit based on when they start SS. So, because my DW waited until FRA, she’ll get my FRA amount even though I will claim early. I believe it she took SS early, they would reduce my FRA benefit accordingly. What I’m not clear on is what they would do if DW had waited until after her FRA - say 70. I don’t know if she’d get what I would have got at 70 or if it’s capped at my FRA amount.

You might want to read this article on the topic as it says something different.

https://articles.opensocialsecurity.com/survivor-benefit-calculation/

"If your spouse had filed for his/her own retirement benefit by the time he/she died, then your benefit as a surviving spouse will be the greater of:

The amount your deceased spouse was receiving at the time of his/her death, or
82.5% of your deceased spouse’s PIA. (In other words, if your spouse filed so early that they were receiving less than 82.5% of their PIA, you would get 82.5% of their PIA.)"

It also states:

"If you file for a survivor benefit prior to your survivor full retirement age, your benefit as a survivor will be reduced.

Specifically, if you file as early as possible (age 60), then your benefit as a survivor will be 71.5% of what it would have been if you waited until your survivor FRA."

 

[pb4uski]

Opensocialsecurity.com assumes a dollar at your age 88 is just as usefull/important/whatever, as a dollar at age 63. I disagree. If a person has the $ to cover their essential budget and SS is just gravy, then whey would you wait to get the higher amount? If I handed a million dollars to a 95 year old, what are they going to do with it? Go on exstensive travel?, Buy an awesome sports car? My point is that after the break even point (79, 80, 81,82) what is the point of having that extra large SS check (assuming your essentials are already covered by an age 62 SS check)? I'll take my money at 62 (probably 65) and you take yours at 70. At 81/82 when your lifetime SS exceeds mine, you can start gloating all you want-as we sit in our rocking chairs at the long term care facility. Are their some 82+ year olds who are in great shape and traveling, etc...? Yes, of course. In my experience I won't be doing much (discrectionary spending/traveling) after 82. Your results may vary.

We can agree to disagree. I think the premise of your argument that you can or will spend more during your go-go years if you start SS earlier is flawed thinking, for me at least and I suspect for many forum members.

I can be very comfortable spending more now from my retirement savings knowing that I have a reinforcement of a 24% larger COLAed SS check coming in every month if I happen to live long.

You just need to be able to have some foresight.

Taking SS at 62 or FRA or at 70 doesn't impact our spending one iota, just like our income level didn't impact our spending while I was working. Our spending level is impacted by what we want and need, with an overlay of periodically making sure that we still "have enough" and are unlikely to run out of money.

Given our health and family longevity, it's more likely that we will live long. If that turns out to be the case then our kids were the benefit. If not, then they'll get a little less. C'est la vie.

 

[Healthy Lifestyle]

I do not need more income at the moment, so I plan on waiting until age 70 for the COLA based SSI.

 

[Healthy Lifestyle]

@Bigdawg, you make some compelling points about what you will (actually will NOT) be doing with that extra money when you are too old to use it. Also keep in mind that you *may* need that money for things like log-term care or memory care.

I think it can boil down to whether you care about passing money on. In our case, I am always trying to tweak a plan that leaves the most to DD when we are gone. DW and I would have enough money, no matter when we take SS, so we don't need the extra cash flow if we take it earlier. Any plan that maximizes $ for DD to inherit, will also mean more money available to DW and I when we are in our 80s and 90s, should something happen and we need it.
My 2 cents.

Agree 100% Bigdawg.

 

[pacergal]

Both of us have pensions with small cola and 100% survivor , the yearly amount covers our expenses.
We took SS at 62.
I ran all of the life expectancy calculator's and financial calculator's I could find to check the difference in age for SS income. It really didn't make much difference due to our pensions.

We have less saved than many here, but enough for us. I see our savings as LTC and legacy, or the random unexpected expense we can't cash flow.
I am comfortable with our choice.

Everyone makes the decision based on what's right for them and their circumstances.
Do your due diligence. If you don't need or want the money, don't file until you do!

 

[Exchme]

We don't talk about average withdrawal rates here, we talk about safe ones because we don't want to run out of money in retirement. The same principal should apply to longevity, we shouldn't plan for "average", the biggest stress on the portfolio happens in the case of high longevity, so that's the safe place to plan.

Maximizing Social Security not only helps in the high longevity case, it provides inflation protection and market protection too. No available product does that.

Though we've saved enough that I don't see any real chance of running out of money, we are intending to maximize our SS benefits. If we do, then once we claim, it will nearly cover our base spending. That means that throughout our retirement we can be more secure in taking higher risk with the portfolio, spending more or giving more away.

 

[daylatedollarshort]

Maximizing Social Security not only helps in the high longevity case, it provides inflation protection and market protection too. No available product does that.

TIPS can come close, if you have a low withdrawal rate. Like a 1.5% WR on 1.5%, 30 year TIPS would preserve your principal for 30 years, in CPI inflation adjusted dollars.

 

[Chuckanut]

My point is that after the break even point (79, 80, 81,82) what is the point of having that extra large SS check (assuming your essentials are already covered by an age 62 SS check)? .

For some of us the point is that the extra large SS check will help pay for LTC if we need it, or, perhaps, a better LTC situation. If we don't need it for LTC, we can spend the money on more enjoyable past times.

All of our situation's are different. We each make the decision about what is best of us. YMMV and probably does.

 

[Bigdawg]

For some of us the point is that the extra large SS check will help pay for LTC if we need it. If we don't need it for LTC, we can spend the money on more enjoyable past times.

Besides money is fungible. When I get out my cane and hobble to the store at 87 years of age to buy a loaf of bread the grocer doesn't give a hoot if my money came from this month's SS check, the Total Stock Market Index fund or my mattress.

Bolded by me. I totally agree. Everyone should look at their specific situation. The DW and I have mutiple COLA pensions even w/out SS. My estimates of our total COLA pensions when DW turns 62 are just shy of 200K/yr. Both retired military w/VA Disability plus she will get a large FERS pension. SS for us will not move the needle regarding LTC. Pus we currently have aprox 800K in pretax plus 350K equity in our 900K house. So, as you can see we are blessed to have survived mutiple combat tours and life in general up until this point. If something gets me soon, DW will ride away with 1M in life insurance. My worry if I tried to wait until 70 would be that I draw down my pretax until 69.5 and unfortunately find myself with stage 4 cancer. As stated earlier, I will probably take at 65. I will encourage DW to take at 70 so even without me her gross with all COLA pensions will be near 150k/yr. I do like reading to peoples reasoning behind their strategies. The vast majority of them make sense for their specific situations.

 

[youbet]

youbet,
Can you elaborate why she would not have rights to social security as a widow if you died prior to claiming social security on your own? Was that because of her age or is there a social security regulation that impede it?

It’s a provision called GPO, Government Pension Offset.

 

[Chuckanut]

Bolded by me. I totally agree. Everyone should look at their specific situation. The DW and I have mutiple COLA pensions even w/out SS. My estimates of our total COLA pensions when DW turns 62 are just shy of 200K/yr. Both retired military w/VA Disability plus she will get a large FERS pension. SS for us will not move the needle regarding LTC. Pus we currently have aprox 800K in pretax plus 350K equity in our 900K house. So, as you can see we are blessed to have survived mutiple combat tours and life in general up until this point. If something gets me soon, DW will ride away with 1M in life insurance. My worry if I tried to wait until 70 would be that I draw down my pretax until 69.5 and unfortunately find myself with stage 4 cancer. As stated earlier, I will probably take at 65. I will encourage DW to take at 70 so even without me her gross with all COLA pensions will be near 150k/yr. I do like reading to peoples reasoning behind their strategies. The vast majority of them make sense for their specific situations.

+1

 

[Oakster]

A friend told me she did a bunch of calculations on comparing her predicted life span and investment return on taking her social security funds early (at the midpoint of 67 instead of waiting until 70), and investing those 3 years in the stock market, and that she found she would have about the same ultimate return - and that there was no reason to wait until 70. I have not evaluated her calculations, and I've never heard of this viewpoint before.

It's not something I ponder for myself - I'm just interested in the accuracy of that conclusion.

Your thoughts?

[Forgive if this topic has already been addressed. I'm new here and did not find this specific question in a search.]

There isnt a right answer until all depending on the SS have passed.

 

[imnontrad]

It depends. If married, or divorced after 10 years or more, AND the other spouse has a higher benefit then, yes it may make sense.
But otherwise,no. Many studies have shown that if you made it to 60 and are in decent health, you will live a lot longer than the “break even point” between filing at 70 or filing earlier.
https://youtu.be/rUISKS8ZgQ0

 

[fishfactory]

SS article

I found this article interesting, and plan to take at 62.
Making Optimal Social Security Claiming Decisions - A Four Stage Analysis by Daniel Amerman

 

[JohnRM]

Also consider spouse

I am going on 63, was going to take it now, but I have liver problems and probably won't live past 70 or so.

My financial advisor says I should do 67 anyway, if my wife lives into her 80's, it will wash out to be a better deal.

If I live a lot longer that would be even better. Only God knows for each of us.

 

[Rick0]

I turned 67 in January, 2022.
Any investment I would have made would be down, significantly.


BOY, am I glad I waited!!

 

[Montclairbobbyb]

Why wait until age 70??

For me it simply comes down to "where is my money growing?".. The annual rate I'm getting now (with my portfolio) vs what (effective annual rate of return) my SS benefits grow each year. The annual rate on my investments (with the current economy) is NOT growing at the same rate as my SS benefits are growing (which includes a COLA)... I'm 64 1/2 and will continue to wait to take SS, letting it grow... unless my investments exceed what SS provides.

In other words, my investment advisor and I will keep an eye on it every year and decide if it's time to take it... Or to continue waiting... Your situation may vary, but that's how I'm looking at it.