Questions about Social Security and Longevity Risk.

[Squirrel]

Have been reading the forums, trying to figure out a good Social Security strategy:

I have seen threads on maximizing the amount of ss; threads about survivor benefits; and discussions about how the 2015 laws changed the 'file and suspend' option.

I find one thing the most confusing: It seems as if many threads conclude that the lower earning spouse should claim at 62. What are the reasons behind that thought? Is that still current after the 2015 changes?

If the greatest risk is that both members of a couple will need expensive old age care, does it make sense for both to hold off until they claim at 70 (assuming they can afford to wait)? If not, plz explain.

 

[Bir48die]

Have been reading the forums, trying to figure out a good Social Security strategy:

I have seen threads on maximizing the amount of ss; threads about survivor benefits; and discussions about how the 2015 laws changed the 'file and suspend' option.

I find one thing the most confusing: It seems as if many threads conclude that the lower earning spouse should claim at 62. What are the reasons behind that thought? Is that still current after the 2015 changes?

If the greatest risk is that both members of a couple will need expensive old age care, does it make sense for both to hold off until they claim at 70 (assuming they can afford to wait)? If not, plz explain.

Ok. I'll give it a go. Please go through every thread on SS and that should answer your questions. This topic repeats every 30 days.

Sorry but it is what it is.

 

[joeea]

I find one thing the most confusing: It seems as if many threads conclude that the lower earning spouse should claim at 62. What are the reasons behind that thought? Is that still current after the 2015 changes?

Anyone who makes that sweeping conclusion without considering all the factors either doesn't know what they are doing, or hasn't dug deep enough to justify the conclusion.

Sometimes that strategy makes sense for a specific couple. Sometimes it doesn't. And often, people jump to unjustified conclusions.

If the greatest risk is that both members of a couple will need expensive old age care, does it make sense for both to hold off until they claim at 70 (assuming they can afford to wait)?

Sometimes it makes sense. Sometimes not.

There are too many variables for that conclusion to work for everyone.

As you probably saw in your reading, there are several great books on the subject.
"Get What's Yours" - Larry Kotlikoff (the most thorough, in my opinion)
"Social Security Made Simple" - Mike Piper (also very good)

And there are some great websites that can help calculate an optimal claiming strategy:
https://maximizemysocialsecurity.com/ (the best in my opinion, but not free)
https://opensocialsecurity.com/ (also very good, and free)

 

[Sunset]

....

And there are some great websites that can help calculate an optimal claiming strategy:
https://maximizemysocialsecurity.com/ (the best in my opinion, but not free)
.....

Did you pay for this, and use it ?
I've wondered if it is better than open.... (the free one) , and what makes it better.

Thanks......

 

[joeea]

Did you pay for this, and use it ?
I've wondered if it is better than open.... (the free one) , and what makes it better.

Thanks......

Yes, I did. I used it before https://opensocialsecurity.com was built.

It covers more cases than any free site. Extremely robust. Very clear output.
If you have a complicated situation, it's better to use. If you have a simple situation, less so.

With any tools, you have to play with them, understand their models and assumptions, and make sure you understand their output.

Both good tools, IMHO.

 

[Squirrel]

When I see advice that 'the lower-earning spouse should claim at 62,' I suspect that it is for 2 reasons:

1. When one spouse dies, the higher-earning spouse's benefit is used to calculate the survivor's benefit. (vastly simplified...I realize that date-of-claiming is a big factor here.)

2. Maximizing payout? Because of break-even points in the mid-80's age range.

Is there another obvious reason that I have missed?

 

[Squirrel]

When I ran social security calculators (open social security was one), I got answers about maximizing payouts.

But I'm more concerned about the wild card of expensive late-in-life care.

It seems that the obvious answer the correct one? Both partners wait as long as possible (to claim) in case both live long enough to require a nursing home.

I'm trying to figure out any 'gotcha' with that plan.

The only one I've come up with is maybe taxes ... if additional social security income makes MAGI cross IRMAA thresholds.

(Of course, not collecting from 62-70 leaves cash on the table, but that's spelled out.)

Or if the crystal ball fails to predict how taxes/health/life will change the situation.

 

[Sunset]

If you change the open social security calculator life span choice, then you will get different answers.

If both live forever, then the choice is easy, it's 70 for both. But that is not likely unless you're a couple of vampires.

A big factor is are you both getting the same value of SS, or is one a much lower value, would make a big difference on claiming age. Then if the lower one takes it at 62, even survivor benefits are reduced, as compared to taking it at FRA.

Some people opt to take it at 62, as they believe they can invest the cash 62->70 at a super high rate of return and leave that bundle there to earn much more, same as spending the SS and leaving their "own" money invested to earn a high rate of return.

 

[sengsational]

Whatever calculator you use, pay close attention to the assumptions about what happens with the money you wouldn't spend between 62 and 70. Some presume just keeping up with inflation. That might be a "conservative assumption" but it's not always realistic. I'm saying "it's NOT different this time" and went with the historical return on equities and that made taking SS ASAP the best option.

 

[cbo111]

Whatever calculator you use, pay close attention to the assumptions about what happens with the money you wouldn't spend between 62 and 70. Some presume just keeping up with inflation. That might be a "conservative assumption" but it's not always realistic. I'm saying "it's NOT different this time" and went with the historical return on equities and that made taking SS ASAP the best option.

+1.
Thats the way I see it at the ripening age of 61. DW and I live comfortably on our cola pensions and have not touched our investments in the 4 years we have been retired. Adding another ~$24K SS next year when I turn 62 will be a sweet bonus to blow on really fun stuff! And our investments will continue to grow. Its a win/win for us.

 

[Squirrel]

If you change the open social security calculator life span choice, then you will get different answers. Hey. Thanks. I'll play with that.

If both live forever, then the choice is easy, it's 70 for both. But that is not likely unless you're a couple of vampires.

Not vampires. Decent longevity genetics.

Note: Just read the WELCOME message and found the Forum FAQs and links library that link to some relevant articles. Should find more answers there.