Taking Social Security early vs. not

[Animorph]

Re: delaying SS and thinking of it an an annuity.
That's a very restricted annuity. You don't have any freedom to choose the monthly amount (and hence the initial deposit). You have exactly one specific monthly amount, which is determined by the SSA and you cannot pick a different amount.
And the entire deal can be changed at the stroke of a pen, by Congress changing the law.

With a normal annuity you can pick whatever benefit you want.
The company cannot change the deal unilaterally -- although they can go bankrupt and leave you with nothing.

There's an upper limit to what you can buy, but not a lower limit.

To my mind, taking SS at 62 is the lowest risk (bird in the hand). By delaying after that, each month you are paying SS the amount you would have received and using it to buy a small annuity. You can do that until age 70, so there is plenty of flexibility.

As far as saving portfolio withdrawals, they will be lower early if you take SS at 62, but higher than they could have been when you reach 70. If you take SS at 70, portfolio withdrawals will be higher early but lower after 70. There is an implied return rate that makes the two choices equal for an average life expectancy (or your own custom scenario), and for SS it is usually a pretty substantial return. It can be higher than many here seem to assume for market returns, but lower than others assume, and is probably higher than any of us should be assuming for bond returns. If you think market returns will be low, take SS late. If your market assumptions are higher, take SS early. Either choice can result in higher spending throughout retirement (62 and beyond) depending on the assumptions you are making.

 

[Richard8655]

Careful there. Please realize that you are saying that people who are planning to take it late have no common sense. If you study the posts of some of those people, I think you will find they have plenty of sense, common and other-wise.



I suggest that you study a bit. You are mis-applying 'life expectancy'. First, that is an average number, so by definition, half live longer. Second, you need to look at LE at a specific age.

https://personal.vanguard.com/us/insights/retirement/plan-for-a-long-retirement-tool



Your 78.2 number does not apply. Careful what you call 'common sense'.



And when I'm less active, I might need more money, to have people do things for me I can no longer do for myself.



OK, don't take it personally, but I'm going to be more blunt here. That is an ignorant statement (not stupid, but 'ignorant', as in 'unaware of the facts'). If you do some research, you will find that the SS payouts are pure actuarial calculations. There is no intentional bias there. There are some biases in that they don't use different numbers by gender, but the early/late decision is not 'gamed' by the govt.

Common sense is great, but one needs to be informed to use it.




Yes, but I would probably put it in a way that would cause the mods to (rightly, to keep the peace), delete my post. So I shall refrain.

-ERD50

I think you're misinterpreting much of what I'm saying. First, I'm not saying that people who take SS later have no common sense. Of course we all have common sense and valid perspectives, otherwise we wouldn't be on this forum sharing information. From my point of view, the action of doing that is what doesn't make common sense.

I think it's you that may need to be more careful when you term my view as ignorant. We need to be respectful of all opinions on this forum and avoid labels like this.

Using averages like 78.2 is perfectly applicable. These are figures used in UN statistics to compare how well countries and societies are taking care of their people. Of course there are exceptions and differences to this average, but since we can't predict the future for each of us individually, it's a valid overall measure to use in planning. I think you would be well-served to become a little more informed with the numbers and run them for your situation yourself, such as using a system like SScalc. The age 81 break-even point is correct and almost all planners accept that fact. 78.2 is the statistical life expectancy for Americans. These are valid pieces of information quite relevant in making these decisions.

It's obvious you didn't like my post and strongly disagree. That's fine, as we all have a right to different views and interpretations. But please don't place other members' opinions in a light of somehow being ignorant. It doesn't contribute to a positive conversation.

 

[In-control]

We are going to go with 62. I have seen too many people pass or become sick in their late 60's and early 70's. They really never got to enjoy the extra income.

I would like to enjoy the $ so less earlier for me is better then more later. This way I will be motivated to use it on fun stuff.

 

[eytonxav]

I wonder if many on here have been swayed by the discussions to change there original thinking regarding when to take it?

 

[Dave J]

I wonder if many on here have been swayed by the discussions to change there original thinking regarding when to take it?

I have been swayed.

 

[REWahoo]

I was swayed to wait until FRA or later - until the 'market unpleasantness' of 2008/9 swayed me back to taking it at 62. That old survival instinct is pretty darned strong...

 

[gerrym51]

I have been swayed.

this is not necessarily a swaying thread-but a thinking thread- using all calculations not just the obvious total ss early/late amount received

 

[grasshopper]

My checks in the mail. Just to not confuse folks I really signed up up direct deposit.

 

[eytonxav]

I should have stated I originally was planning on 62, but will now wait until FRA, but who knows, if uncle sam changes the rules that might change again.

 

[jclarksnakes]

Richard8655, that 78.2 number is only valid for planning if you were just born today. If you are in your 50s or 60s now there is an extremely high probability that you will live past age 78.2. If you are married there is even a very high probability that you or your spouse will live past age 85. Look closely at ERD50s post number 216 for specifics.

 

[homestead]

Here is spousal reduction calculator on the SSA site.
Benefits for Spouses

Note there is no entry for retirement date of the mate only for you.

I will contact SSA and report back.

I called SSA today they confirmed if I retired at age 62 and my wife retired at FRA (66) there would be no reduction in her spousal benefit. At 66 she would have the choice of going with her own benefit or 50% of my FRA benefit.

 

[ERD50]

I wonder if many on here have been swayed by the discussions to change there original thinking regarding when to take it?

Yes. I leaned heavily to the "one in the hand" camp. But after understanding the longevity insurance aspect, COLA, and spousal benefits, I'm now leaning heavily towards a delay as long as feasible.

But I think the following post is more relevant, it isn't important if anyone changes their mind, maybe the information just affirms their stance, or helps one to decide? :

this is not necessarily a swaying thread-but a thinking thread- using all calculations not just the obvious total ss early/late amount received

I think you're misinterpreting much of what I'm saying. First, I'm not saying that people who take SS later have no common sense.

Logic tells me that if it is 'common sense' to take it early, then those delaying must not be sensible. Is there another way to look at that?

I think it's you that may need to be more careful when you term my view as ignorant. We need to be respectful of all opinions on this forum and avoid labels like this.

I tried to be clear, and I was serious - my use of the term 'ignorant' was not disrespectful, it was an observation. There are many things I am ignorant about, there is no shame in that, it is a fact.

Using averages like 78.2 is perfectly applicable.

Don't get mad at me, but it just isn't applicable to a discussion of early/delay SS. That number you reference is ~ LE at birth, it includes those who died at a young age, and never reached SS age. The relevant statistic is LE at your age, which that calculator I linked provides.

It's obvious you didn't like my post and strongly disagree.

That's not true. I'm only trying to clarify the facts.

That's fine, as we all have a right to different views and interpretations. But please don't place other members' opinions in a light of somehow being ignorant. It doesn't contribute to a positive conversation.

As they say, you are entitled to your own opinion, you are not entitled to your own facts. IMO, unclear/mistaken facts do not contribute to a positive conversation. I hope you will review your numbers in this light.

-ERD50

 

[Richard8655]

Richard8655, that 78.2 number is only valid for planning if you were just born today. If you are in your 50s or 60s now there is an extremely high probability that you will live past age 78.2. If you are married there is even a very high probability that you or your spouse will live past age 85. Look closely at ERD50s post number 216 for specifics.

Thanks jclarksnakes. The fact is that these statistics can be interpreted in many ways and lead to many different conclusions. Per the following webite:

How long will you live? Longevity and Life Expectancy Demystified (Part I) | LifeTwo

"For example, according to the CDC, the life expectancy of individuals born in 1950 is 68.2 years. However within this group white women have a life expectancy of 72.2 while African American males is 59.1--a significant difference."

"Another complicating factor is that life expectancy changes as one gets older. By the time a child reaches their first year, their chances of living longer increase (since they have made it past the child-killing maladies of the first 12 months). By the time an individual reaches late adulthood, the chances of living to a very old age end up being quite good. If you are a 65 year old living today, you have (on average) about 18 years left to live (83) even though the life expectancy of the population is under 78. Confused? You should be."

So, according to the article someone born in 1950 on average lives to 68.2 years. If you make it to 65 as of today, you have an average chance of continuing to 83. Since we're making these SS decisions at age 62 or younger, that 83 age would be even slightly less by a few years. Since the break-even point is 81, it still makes more sense statistically and financially to start at 62.

 

[Rustward]

It's very odd to me that at any time we generally have at least one thread running suggesting taking early SS, and at leaast one other thread espousing purchase of immediate annuities. Some posters don't just say that they want early SS, but that it is the only thing that makes sense, or that anyone who plans to wait must delusionally expect to be Methusalah

Other posters say that annuities are better than bonds and stocks, or at least that you need one, regardless of their high price and non-zero risk. Since there is no cheaper or less risky annuity than the one bought by delaying SS, this is hard to understand.

Can someone explain it?

Ha

You make a good point. It makes me think about all the comments we hear on this forum and others about about all the knowledge and wisdom expressed here. We have all that, but cannot seem to get a consensus on when to take SS, take the annuity or lump sum, pay off the mortgage or not, boxers or briefs, paper or plastic . . .

 

[Richard8655]

Yes. I leaned heavily to the "one in the hand" camp. But after understanding the longevity insurance aspect, COLA, and spousal benefits, I'm now leaning heavily towards a delay as long as feasible.

But I think the following post is more relevant, it isn't important if anyone changes their mind, maybe the information just affirms their stance, or helps one to decide? :







Logic tells me that if it is 'common sense' to take it early, then those delaying must not be sensible. Is there another way to look at that?




I tried to be clear, and I was serious - my use of the term 'ignorant' was not disrespectful, it was an observation. There are many things I am ignorant about, there is no shame in that, it is a fact.




Don't get mad at me, but it just isn't applicable to a discussion of early/delay SS. That number you reference is ~ LE at birth, it includes those who died at a young age, and never reached SS age. The relevant statistic is LE at your age, which that calculator I linked provides.



That's not true. I'm only trying to clarify the facts.



As they say, you are entitled to your own opinion, you are not entitled to your own facts. IMO, unclear/mistaken facts do not contribute to a positive conversation. I hope you will review your numbers in this light.

-ERD50

Oh my gosh. Apologies for not realizing you're so smart and have all the facts! IMHO, it's your view that could use some fresh information and reevaluation.

You say your facts are correct. I say mine are. Let's let everyone judge on their own based on the information from our posts and others. They can double check anything stated here independently.

 

[Animorph]

Since the break-even point is 81, it still makes more sense statistically and financially to start at 62.

The age 81 breakeven assumes a rate of return. Very often it is assumed to be 0%, ignored completely (though mostly to support later SS). Don't just pull these numbers out of articles uncritically. My personal longevity measured at one website using my family and personal health history is 92. That would lean towards taking SS at 70.

 

[ERD50]

Oh my gosh. Apologies for not realizing you're so smart and have all the facts! IMHO, it's your view that could use some fresh information and reevaluation.

You say your facts are correct. I say mine are. Let's let everyone judge on their own based on the information from our posts and others. They can double check anything stated here independently.

So just which of my statements specifically do you disagree with, and why? That would be more illuminating than this "is too, is not" response.

And please re-visit my post # 216, regarding break-even versus 'longevity insurance':

http://www.early-retirement.org/for...-security-early-vs-not-64409.html#post1294574

-ERD50

 

[gerrym51]

So just which of my statements specifically do you disagree with, and why? That would be more illuminating than this "is too, is not" response.

And please re-visit my post # 216, regarding break-even versus 'longevity insurance':

http://www.early-retirement.org/for...-security-early-vs-not-64409.html#post1294574

-ERD50

take late for longevity but don't buy ltc insurance to protect longevity- buying later will be astronomical

 

[gerntz]

My wife took SS early at 64. She is now 66 and has been collecting $1000/month. I am presently 64 and will reach full retirement age at 66 in 2 years. When I reach FRA the idea is to delay taking my SS until I reach 70 when it will be a greater monthly amount than what it would have been at age 66. I would instead (at age 66) apply to recieve 1/2 of the amount of what my wife recieves. This would then make the total amount we recieve from SS to be $1500/month for the next 4 years. Once I reach 70 I would stop taking the $500/month based on my wife's SS and start taking my own SS which would be $2000/month. We would then be recieving her SS of $1000 and my SS of $2000 for a total of $3000/month.

This is correct imo presuming you know that your wife's spousal benefit on your record is less than 1/2 your record's FRA spousal benefit adjusted down for her taking her SS benefit at 64. Sounds like her spousal benefit on your record would be <$750 & thus her $1000K is higher.

In our similar but slightly different case, her spousal benefit on my record for my FRA is slightly higher than her own record's benefit. So she will switch to a spousal benefit when I turn 70.

 

[Brett_Cameron]

I called SSA today they confirmed if I retired at age 62 and my wife retired at FRA (66) there would be no reduction in her spousal benefit. At 66 she would have the choice of going with her own benefit or 50% of my FRA benefit.

Thanks for the info! Good to know. And that matches was the Handbook says.

 

[ERD50]

take late for longevity but don't buy ltc insurance to protect longevity- buying later will be astronomical

LTC is an important consideration, and I'm interested in learning about it. But this thread is about SS early/delay. I realize they can both be forms of 'longevity insurance', but they are separate topics. And LTC is complex, it don't think it will be well served by mixing it into this thread.

There is an interesting one going on now, the OP may be facing a 90% increase in premiums - maybe move this discussion there?


http://www.early-retirement.org/forums/f28/how-much-ltc-insurance-is-enough-65606.html#post1294956

-ERD50

 

[gerrym51]

LTC is an important consideration, and I'm interested in learning about it. But this thread is about SS early/delay. I realize they can both be forms of 'longevity insurance', but they are separate topics. And LTC is complex, it don't think it will be well served by mixing it into this thread.

There is an interesting one going on now, the OP may be facing a 90% increase in premiums - maybe move this discussion there?


http://www.early-retirement.org/forums/f28/how-much-ltc-insurance-is-enough-65606.html#post1294956

-ERD50

my point again is that reasons for taking ss early can be contrasted with reasons not to buy ltc ins

 

[youbet]

I suggest that you study a bit. You are mis-applying 'life expectancy'. First, that is an average number, so by definition, half live longer.

As a retired factory worker living on early SS, I don't know much about dealing with numbers, especially these fancy statistics you folks keep throwing around. So, help me here.

Say 10 people are born and live their lives. 9 die at 1 year old and 1 dies at 10 years old. 19/10 = 1.9 average age at death. In this case, half did not live longer than average age at death. Only 1 did. This doesn't seem to follow the definition you gave that says half live longer than average. What am I doing wrong?

Would this have anything to do with the difference between "average" and "median?"

Thanks for your help in understanding this.

 

[gerrym51]

As a retired factory worker living on early SS, I don't know much about dealing with numbers, especially these fancy statistics you folks keep throwing around. So, help me here.

Say 10 people are born and live their lives. 9 die at 1 year old and 1 dies at 10 years old. 19/10 = 1.9 average age at death. In this case, half did not live longer than average age at death. Only 1 did. This doesn't seem to follow the definition you gave that says half live longer than average. What am I doing wrong?

Would this have anything to do with the difference between "average" and "median?"

Thanks for your help in understanding this.

as far as i know is median is at the half were the average is ages all added up and divided by number of people

 

[ERD50]

my point again is that reasons for taking ss early can be contrasted with reasons not to buy ltc ins

Then I'm not following your point, sorry. Can you elaborate?

Would this have anything to do with the difference between "average" and "median?"

Thanks for your help in understanding this.

Nope, you got me. Average LE isn't the same as median LE (though it might be close?), and I interchanged them there. I think that my thinking got skewed (to keep in the statistical lingo ) as I was just looking at that Vanguard calculator.

The Vanguard calculator looks at it differently from just an average LE. You can plug in numbers until it tells you that a person of age X has a 50% chance of reaching age Y. So then you can say that half the people reach that age (or whatever %/years you are looking at).

Sorry if I confused things with that statement.

-ERD50