Social Security at 70

[Smitty700]

I'm 67, wife is 62, I plan on waiting until I'm 70. My reasoning, I'll have a larger check than my wife, I want to maximize my check that she will get after I die. I'm maximizing my Roth conversions and if I collected now, I would either have to pay tax in a higher tax bracket or reduce the amount I Roth convert.

I expect when I collect, she will also collect. We should be looking at an extra $53,000 a year, leaving us with a very low portfolio withdrawal rate. I hope that $53,000 doesn't get cut in 2032!

Note that your spousal benefit is based on your Primary Insurance Amount (PIA), which is the amount that you receive at your normal retirement age, not age 70, even if you take benefits at 70.

Since you've already passed your normal retirement age, her spousal benefits will not increase if you wait until 70.

See this SS site for details: https://www.ssa.gov/oact/quickcalc/spouse.html

 

[gayl]

I'm factoring in self insuring for any assistance needed to age in place so I expect my costs to spike when no longer able to travel. Don't care if I get all of it back, just want enough that I don't go into assisted living

 

[Turbo29]

What do the people think SS money is? It's not like their 401k or IRA!

Actually in a sense it is like them. The Government can change the rules for SS at any time; they can also change the rules, withdrawal age, and taxation of 401Ks and IRAs at any time including taxing Roths if they wish.

 

[daylatedollarshort]

opensocialsecurity.com does that and more. For every possible claiming strategy (each month between the later of now or when you are age 62 and age 70) it calculates your expected benefit based on birthdates and PIA that you provide. Then it multiplies those cash flows by your odds of still being alive to receive that benefit based on a mortality assumption that you provide. Then it discounts those probability weighted cash flows for the time value of money using a real discount rate that you provide. The claiming strategy that has the highest expected present value is the optimal claiming strategy, but you can look at expected present values for other claiming strategies like as soon as possible, FRA, as late as possible, etc.

It also allows you to haircut the expected benefits starting in the year that you provide and by the amount of a haircut that you provide.

There are default assumptions that you can override if you think differently.

Very powerful, FREE, tool.

I was telling one of our kids about the opensocialsecurity.com site vs. all the articles that ignored the mortality factor, which seems to actually be most of them, and they said the opensocialsecurity site was likely written by a software engineer, while anyone with a keyboard can churn out a when to take SS article, whether they know what they are talking about or not.

 

[Turbo29]

You bring up a good point; often this question gets incorrectly cast as a decision between 62 and 70 (or a variation on that false choice). Every moment after 62 is a new decision point and the inputs to that decision can change dramatically (e.g. health, wealth change).

I was going to wait about 3 more years and claim at 70. Changed my mind last November and filed to start in January. I got my first SS check three months ago in February.

When I decided to start I did it figuring that a bird in the hand was better, etc. given the scheduled haircut in about 12 years; I had no idea the market would be declining when I received my first check. So, as my SS plus my pension covers all my expenses and I no longer have to draw from my portfolio, I watch things like yesterday's big rout with a detached view. I am doubly glad I took it when I did.

 

[pb4uski]

I was telling one of our kids about the opensocialsecurity.com site vs. all the articles that ignored the mortality factor, which seems to actually be most of them, and they said the opensocialsecurity site was likely written by a software engineer, while anyone with a keyboard can churn out a when to take SS article, whether they know what they are talking about or not.

Mike is a CPA by background. I'm not sure if he programmed it himself or had someone program it for him.

In any event, I agree, it is the only SS site that I know of that factors in mortality, and for that matter, the time value of money.

 

[CRLLS]

CRLLS, First of all I hope you live a very long time past the break even age (82 or so). Even if you don't, your DW can enjoy your higher age 70 SS. Bolded above-they lived on the same money that you lived on (because you didn't take SS at 62). You obviously had resources to fund yur 62-70 years. Now your stash is minus those funds. Their stash is less by the amount they needed to fund age 62-70 but they received SS and invested it. If they and you die at the same age (let's say 75), their stash will be bigger because you had to live on yours from 62-70. If you live a long life will you come out ahead financially? yes. I would rather have the bird in the hand (at age 62) than two in the bush (at 70 or 82). Five bucks at age 62 is worth so much more to me than 10 bucks at age 82. Currently 56 and slowing down (scheduled hip replacement). At 82 (if I'm still kicking) I could be broke for all I care. No one in my family at age 82 was spending money on much of anything except healthcare. I have that covered. DF died at 83, Uncle at 69, sister at 29 and 59. Mom just left me at age 90. The only one to spend any money on travel/fun/etc... after 82 was my DM. My plan is to blow the dough between now and 80. My ROTH conversions won't be complete until 65 so that is when I'll take SS. Good luck to all of you as you make your when to take SS decision.

Of course, but their (my) investments decrease by that amount they need to live on. As long as the SS is smaller than the amount of their actual expenses, in short order, waiting until 70 is better. I just built a spreadsheet to test my position. Some assumptions had to be made to keep it simple of course but I varied them to test the idea. Those assumptions were ignoring COLA of SS and using expenses as flat, along with using a real rate of return. Starting with a 1,000,000 at age 62, expenses of 50,000 per year and a 5% real rate of return. Taking SS and investing it was exactly the same results as taking it early and using it to supplement the needed withdrawals. Further, waiting to claim at 70 and using investments to live on until then resulted in a higher investment after age 79. Maybe I'm missing something very basic.

As far as the value of $5 now vs $10 later, that is a personal feeling, not a mathematical analysis.

 

[Time2]

Note that your spousal benefit is based on your Primary Insurance Amount (PIA), which is the amount that you receive at your normal retirement age, not age 70, even if you take benefits at 70.

Since you've already passed your normal retirement age, her spousal benefits will not increase if you wait until 70.

See this SS site for details: https://www.ssa.gov/oact/quickcalc/spouse.html

I'm not seeing that as being correct.



"Example 1: John’s PIA is $2,000 and his wife Kathy is over FRA. John is waiting to file for benefits until age
70. On his 70 th birthday, before filing for his benefit, John dies. Kathy will receive a survivors benefit of $2,640 (John’s PIA plus 4 years of delayed retirement credits, or a 32% increase)"



From here, http://www.bairdfinancialadvisor.co...128044/Social Security Survivors Benefits.pdf


"A widow or widower whose spouse waited until 70 to file for Social Security is entitled to the full amount the deceased was getting — including the delayed retirement credits — so long as the surviving spouse has reached full retirement age."

From Google search, but link didn't show this quote.



"If your deceased spouse DID FILE for benefits ON OR AFTER FULL RETIREMENT AGE, you are entitled to receive what the deceased was receiving at the date of death."

From,

https://www.forbes.com/sites/tomhag...benefit-can-i-claim-and-when/?sh=5952912de7d0

 

[dtbach]

I'm 9 months away from 70 and think I might take it at 69 5/6. Will make a nice Christmas present. But at 78 3/4 (break even point) perhaps I'll regret leaving that $34/month on the table.

 

[braumeister]

I'm not seeing that as being correct.

Don't confuse spousal with survivor benefits.

 

[MissMolly]

I'm not seeing that as being correct.



"Example 1: John’s PIA is $2,000 and his wife Kathy is over FRA. John is waiting to file for benefits until age
70. On his 70 th birthday, before filing for his benefit, John dies. Kathy will receive a survivors benefit of $2,640 (John’s PIA plus 4 years of delayed retirement credits, or a 32% increase)"



From here, http://www.bairdfinancialadvisor.co...128044/Social Security Survivors Benefits.pdf


"A widow or widower whose spouse waited until 70 to file for Social Security is entitled to the full amount the deceased was getting — including the delayed retirement credits — so long as the surviving spouse has reached full retirement age."

From Google search, but link didn't show this quote.



"If your deceased spouse DID FILE for benefits ON OR AFTER FULL RETIREMENT AGE, you are entitled to receive what the deceased was receiving at the date of death."

From,

https://www.forbes.com/sites/tomhag...benefit-can-i-claim-and-when/?sh=5952912de7d0

Yeah, Spousal benefits and Survivor benefits are two different things.

 

[pb4uski]

I'm not seeing that as being correct....

No, it is correct. My PIA is many times DW's PIA based on her own work record. She started collecting at her FRA and her current benefits are based on her work record.

When I start collecting benefits in a few years at 70, her SS benefit will get a bump up to 1/2 of my PIA (plus COLA adjustments). This bump is the spousal benefit.

If I predecease her, then she'll get another bump to up to what I was collecting. This bump is the survivor benefit.

 

[harllee]

To me one of the important benefits of delaying my SS until age 70 is that it will substantially increase my husband's survivor benefit if I were to die first. I was the higher wage earner.

 

[rodi]

Our situation is a bit different than many because of the following:

DH is almost 10 years older than me.

We were older when we married and had kids - so DH started SS at age 62, and kids collected the child benefit until they graduated HS. (This alone made it a no brainer for him to take it earlier.)

My earnings were higher than DH and even though I've had $0/year earnings for almost 8 years, my PIA is higher than DH's.

My gut, and opensocialsecurity both agree that age 70 is optimal for when I should take it.

But - I plan to keep my options open and stay flexible... If we have an extended downturn or some other financial upset... I can always claim earlier. Claiming at Medicare age may make sense for the hold harmless factor of medicare price increases. At age 60, I have no reason to may a firm/permanent decision today.

 

[Sconie]

I took it at 69 & 1 month-----very little difference compared to waiting until 70....

 

[Imackenzie]

Protected myself from myself...

I knew when I decided I would retire early that I needed to protect myself from temptation so I bought an immediate fixed annuity for enough to pay the bills that lasted at least until at least FRA. It turns out I spent less than I thought and bumped the annuity start a year and half, so I will probably take SS at around 68-69 when the annuity runs out with no trouble. I thought I might make it to 70, but the current inflation is starting to really bite. On the other hand, I have no pensions and I like the inflation protection of SS and may draw down some IRAs to wait until 70 so DW gets a bigger check when I croak.

 

[Sunset]

No, it is correct. My PIA is many times DW's PIA based on her own work record. She started collecting at her FRA and her current benefits are based on her work record.

When I start collecting benefits in a few years at 70, her SS benefit will get a bump up to 1/2 of my PIA (plus COLA adjustments). This bump is the spousal benefit.

If I predecease her, then she'll get another bump to up to what I was collecting. This bump is the survivor benefit.

Nicely said.

People often confuse the spousal vs the survivor benefit.

 

[ShokWaveRider]

Honestly, I am not that smart. I just did what OpenSecurity told me to do. DW was lower so take at 62, I am higher so take at 70. No math, no time spent pontificating over all the variables, just did it.

 

[almost there]

No idea why not take at 62. Bank it for 8 years. Then pretend to take it at 70. Paying less in taxes on the lower ammount all through the years. If it keeps you in a lower bracket. Like it will me. Just what I plan to do. They are betting you will die, you betting you will live to 90 or 100. Not to mention the state of the SS fund. Why risk it by waiting? Aside from brokers/ money managers telling you to wait till the last minute?

 

[Dtail]

No idea why not take at 62. Bank it for 8 years. Then pretend to take it at 70. Paying less in taxes on the lower ammount all through the years. If it keeps you in a lower bracket. Like it will me. Just what I plan to do. They are betting you will die, you betting you will live to 90 or 100. Not to mention the state of the SS fund. Why risk it by waiting? Aside from brokers/ money managers telling you to wait till the last minute?

One might have the Roth conversion factor to consider.

 

[jebmke]

No idea why not take at 62. Bank it for 8 years. Then pretend to take it at 70. Paying less in taxes on the lower ammount all through the years. If it keeps you in a lower bracket. Like it will me. Just what I plan to do. They are betting you will die, you betting you will live to 90 or 100. Not to mention the state of the SS fund. Why risk it by waiting? Aside from brokers/ money managers telling you to wait till the last minute?

If I croak early I have bigger issues than not having collected my piece of SS.

 

[almost there]

If I croak early I have bigger issues than not having collected my piece of SS.

I just want my money back. Even if its a %.

 

[almost there]

Roth conv. if you are just now thinking about it at 62. You have been asleep at the switch. Probably a draw in the end at that point anyway. Converting late in life.

 

[rrs26ja]

I took Social Security at 62. The following were my reasons.


1. The break even was 79, I figured who cares after that
2. My dad died at 52 my mother died when she was 63


The issue is, I didn't think about my investments continuing to grow as I don't need to take money out to pay my expenses. The problem with that is RMD and the amount of taxes I will end up paying. I started last year to convert some money into a Roth IRA to help elevate this.



I should have waited to take Social Security until at least 66 1/2 and lowered my investments which would have helped with RMD.


Can't second guess now......

 

[almost there]

Or started to convert small amounts earlier.
You got lucky as your investments grew. Could have gone the other way.
There is no perfect plan. We just do what we think is best. At the time.