when to get social security

[Rob]

I know there are many threads on this topic, but I am getting increasingly concerned. The conversations I hear are that social security will be restructured. There will be a loss of benefit even for those receiving the benefits now.

It makes me reconsider when to get social security. There are two thoughts that I have, and I'm curious where some of you are on these thoughts. The first thought I have is that I need to begin receiving payouts now (I'm 63). I'm increasingly hearing that full benefits will be less than what is currently being promised.

Another thought I have is that I should wait until full retirement age so as to receive full benefits. Social security increases its payout significantly the longer you wait, but if that is going to descrease anyway, why wait?

I'd be very curious as to whether your concerns are the same as mine.

Rob

 

[W2R]

I am 62, and my opinion is that you and I are in an age group that is much less likely to be affected by SS changes than some of the younger age groups. Still, all the talk of SS change is pretty unnerving and I understand your concern.

My original plan was to wait until age 66 to claim my benefits. Right now I am taking it year by year. It's very similar to a game of chicken in some respects, and I don't want to be frightened into changing my plans unless there is a good reason to do so.

I think that if the full benefit amount was changed for those in our age group between now and our full retirement age, there would be a massive public reaction and outcry. Anything is possible but perhaps this is less likely than some scenarios (such as increased taxation of SS benefits).

 

[RonBoyd]

Anything is possible but perhaps this is less likely than some scenarios (such as increased taxation of SS benefits).

Yes, that is the most scary of my daydreams... and the most likely to take place.

 

[rescueme]

I'd be very curious as to whether your concerns are the same as mine.

No ...

I (along with my DW) am 62. She is delaying till FRA age of 66, at which time I will file for 50% spousal benefits.

I'm delaying my SS claim till age 70; both to take advantage of the increase of benefits (such as 8% from ages 67-69) but primarily for the benefit of my DW which means she will get around 2.5x her age 62 benefit (if she would claim it today).

Regardless of my passing before I reach 70, she still will get an increased benefit, since it's calculated at 100% of the rate I would have received on the day before I passed.

As far as talk goes to modification of the program, to me it's still all talk. If the program is modified I believe that it will start with those that are still contributing - whatever age, by taxing all earnings, in addition to changing benefits for those much younger. Those are the folks that will be living longer than us in the future and will face more of a risk in their eventual retirement. As far as taxing of benefits, we will be paying it on the full current 85% due to our income level. If it means raising it to cover another 15% of SS income (taking it to 100% of SS), it's not going to be much of an impact at all.

Anyway, that's my opinion - since you asked...

PS: Here's a paper that looks at the various reasons why you may want to consider delaying SS till FRA (or later) and opinion on the taxability issues. Even though it is from an "insurance company", it has some interesting thoughts, IMHO:

http://www.prudential.com/media/managed/IB-InnovativeStrategies.pdf

 

[73ss454]

Oh, I don't think there will be a change in the benefit for us older folks. But I do think the government will figure a new way to tax it to take a larger portion back. 9 months to go to 62 and I'll be taking the money on that day.

 

[Independent]

I'm also 63 and deferring SS on a year-by-year basis. I doubt that congress would openly reduce benefits for people who are already eligible. If it does anything, it will be some sort of means test or tax.

In that case, I'm probably better off deferring SS and spending down my assets. That way, if the means test comes, I'll have fewer assets and lower non-SS income.

For tax planning, I'm assuming that 85% of my SS benefit will be taxable.

 

[ziggy29]

The math says to wait if you don't need it, but political considerations would likely say start collecting ASAP because it's extremely unlikely that any reforms that make SS a worse deal would go so far as to hit those already collecting.

But most likely they'll only screw people my age and below.

 

[Bikerdude]

9 months to go to 62 and I'll be taking the money on that day.

But you will not "see" the money for about 2 months after that day.

 

[W2R]

]As far as taxing of benefits, we will be paying it on the full current 85% due to our income level. If it means raising it to cover another 15% of SS income (taking it to 100% of SS), it's not going to be much of an impact at all.

Nothing's certain but death and taxes - - so when planning for retirement I have always assumed that I would be taxed on 100% of SS. Any portion that remains untaxed will be gravy.

 

[Rustic23]

I was going to wait until 70, however, we decided to take it at 67. After looking at our finances, we determined DW would not really need the extra cash she would receive, so we will take it this year.

Now something else to factor in. You start medicare at 65. For me it was about $95 a month. However, this year, because I was not on SS, it went up to $110. When I signed up for SS it stayed at $110. So for those considering delaying, you may end up paying more in Medicare than your get in SS, or close to a wash.

 

[ziggy29]

Nothing's certain but death and taxes - - so when planning for retirement I have always assumed that I would be taxed on 100% of SS. Any portion that remains untaxed will be gravy.

And don't get me started on the fact that all the money withheld for Social Security taxes was already taxed...

 

[grumpy]

A bird in the hand .... DW started taking her SS benefit as soon as she was eligible - age 62. As a federal retiree I won't get SS so no decision was necessary.

Our thinking was that we should take that extra income now while we are young enough and healthy enough to enjoy it rather than draw down our investments. This will give the investments additional time to grow.

This strategy might result in her drawing less in total lifetime benefits than if she waited to FRA but there is always the chance that she could get hit by a bus before drawing ANY benefits.

This decision was easier for us than it might be for others, since either way we have enough $ to support the lifestyle we want.

 

[mf15]

Just turned 62 and my first check will be in late September,taking it early. It will take me about 7 plus years just to get back what I put in and that is in todays dollars. My breakeven point is around 77 if I make it that far. So I decided to take it now, also our monthly cash flow with 2 SS incomes and my pension is more than we spend. This also means do not have to go into my IRA for monthly expenses, and it can grow until RMD's start.
Old Mike

 

[Andre1969]

I still have a ways to go, as I just turned 40 in April of this year. I plan on taking it at 62 though. I don't have much faith in it being around, in its current form, indefinitely, so I'd like to start getting my share of the pie back as soon as possible. Plus, it means I won't have to depend as much on my other investments, and can let them continue to grow.

 

[FANOFJESUS]

Is this a good tool to use? Of course you have a good guess on your year of death. I have to live until about 91 before taking it late pays off.

Social Security Benefits Calculator

 

[rescueme]

Is this a good tool to use? Of course you have a good guess on your year of death. I have to live until about 91 before taking it late pays off.

Social Security Benefits Calculator

This is the one I use:

https://secure.ssa.gov/acu/ACU_KBA/main.jsp?URL=/apps8z/ARPI/main.jsp&LVL=4

Which uses your actual earnings (except for last year, if you are still w*rking).

I'm retired and have not had SS income for over three years. I'm also over the age of 62. When I use this calculator (month by month) my age 66/70 monthly benefit does not change, but my age 62 benefit (if I would chose to draw it today) goes up by around $10/month, so I can actually see my longivity credits as they accrue.

If we ever get back to having COLA's, the age 66/70 monthly amount will change, in addition to showing the age accrual. Once I get to my FRA of age 66 (assuming I get that far), I expect that I will then see that amount increase month by month as I "get better" (not older )...

 

[FANOFJESUS]

Thanks I used your link and with the real numbers it looks like age 83 is the break even mark. That is if I take it early.

 

[youbet]

I started my SS at 62 primarily as a protection for DW. Due to GPO, she cannot collect any of my SS under any circumstance. So, I'm taking my SS payments and investing them to be available to her should I predecease her.

 

[73ss454]

But you will not "see" the money for about 2 months after that day.

I'm cool with that! It's just going to be great to know that they owe me the money. SS is as close to a pension as I'll get so I'm looking forward to it.

 

[dex]

I'd be very curious as to whether your concerns are the same as mine.

Talk about changes in the system are just beginning. I think those older than 50 will be OK.

The analysis as to when to take the SS includes
1. The return you are currently getting on the funds you will spend until you take SS and the SS return
2. Taxes - lower now than later?
3. Break even point between earliest SS payout and when you plan to take it - include 1 &2 above
3. Estate planning - do you care if you leave more or less $ to your heirs?
Again do the math for 1,2,3 above and take into account what your estate will look like at various death dates.


I'm taking mine as soon as possible - primarily due to 1 & 2.

 

[Moemg]

I started mine at 62 since I am single I did not see the advantage in waiting . It also allowed me to let my investments grow and recover after the big drop .

 

[rayvt]

IMHO, The math says to take SS as early as you can.

My SS early-or-late comparison spreadsheet
https://spreadsheets.google.com/ccc?key=0AlyWRtMroxvgdDI2MlY0UDR4WFRQRFE0Tkw0d19pTnc&hl=en

 

[rescueme]

IMHO, The math says to take SS as early as you can.

My SS early-or-late comparison spreadsheet
https://spreadsheets.google.com/ccc?key=0AlyWRtMroxvgdDI2MlY0UDR4WFRQRFE0Tkw0d19pTnc&hl=en

It does not take into consideration the option of early spousal claim, but just single life options.

For instance, I'll be getting around $900/mo from age 66-69 from my DW's SS, for a total of a bit over $43k, plus the advantage of the 8% increase of my benefits for the same period of time, since I'm delaying my SS claim till age 70. It also does not consider the difference in spousal benefits if the higher income SS person passes first and to compute the monthly difference of that claim vs. the original claimant’s age 62 claim. The "break even" would have to be calculated on not only the early spousal claim, but also the additional income till end of days for the second claimant, since the lower SS person would get the higher amount till their passing. This also works with the (assuming no known health factors) that women live longer than men. Since my DW/me are within a few months of birth date, the odds are that I'll pass well before her, and she can use my stepped-up SS to her advantage after I pass. And if she does pass first? Then I'll have a larger SS benefit than if I would have had (plus the loss of her early "contributions" to my income ages 66-69) untill it's my time to go.

I'm not saying it does not work out for you, in your singular situation. I won't debate that, since I've mentioned before that if you are 62, unmarried, and have need for the income at that age you probably should take it, but such "single use" spreadsheet/calculations should mention that limitation, IMHO.

 

[Bikerdude]

It does not take into consideration the option of early spousal claim, but just single life options.

For instance, I'll be getting around $900/mo from age 66-69 from my DW's SS, for a total of a bit over $43k, plus the advantage of the 8% increase of my benefits for the same period of time, since I'm delaying my SS claim till age 70. It also does not consider the difference in spousal benefits if the higher income SS person passes first and to compute the monthly difference of that claim vs. the original claimant’s age 62 claim. The "break even" would have to be calculated on not only the early spousal claim, but also the additional income till end of days for the second claimant, since the lower SS person would get the higher amount till their passing. This also works with the (assuming no known health factors) that women live longer than men. Since my DW/me are within a few months of birth date, the odds are that I'll pass well before her, and she can use my stepped-up SS to her advantage after I pass. And if she does pass first? Then I'll have a larger SS benefit than if I would have had (plus the loss of her early "contributions" to my income ages 66-69) untill it's my time to go.

I'm not saying it does not work out for you, in your singular situation. I won't debate that, since I've mentioned before that if you are 62, unmarried, and have need for the income at that age you probably should take it, but such "single use" spreadsheet/calculations should mention that limitation, IMHO.

How would your spousal plan work out for you if your wife had no, or low income earnings for SS benefits? Would you still do it?

 

[rescueme]

How would your spousal plan work out for you if your wife had no, or low income earnings for SS benefits? Would you still do it?

If she had no SS earnings, it would not make sense. She could claim on my SS but I could not claim on hers (which is based upon my earnings - one great big circle).

I consider her "low income" as far as her earnings/SS benefit as compared to mine. However if faced with the question on even getting a minimal benefit based upon her earnings, I would do it - strictly because of our family dynamics.

If she passes first, I would not have a problem at all (financially), since I cover all expenses and have been for our 40+ years of marriage. Due to circumstances, we've never counted on her income and without going into details, her income was always hers to do with as she wanted.

However, assuming I pass first she would be getting my SS benefit at 100% of the day before I died, regardless if I had claimed SS or not.

At this time, she expects to stay in our home if I would pass. That means that she would incur expenses she never had to worry about (taxes, insurance, utilities, etc.) along with acquiring "additional services" that we don't pay for now, such as lawn cutting, snow removal, light home maintenance, etc.

While we certainly have enough till our "end of days", the idea of having a larger SS income (about 2.5x her age 62 benefit) along with our current SPIA, and her two small pensions means that withdrawal from our (actually hers at the time) retirement portfolio would be very limited, or none at all (except for RMD's).

Here's an article that discusses what we have planned for, at this time:

http://www.indexuniverse.com/sections/features/4082-optimize-social-security-benefits-for-retirement.html

Look under the heading "Team Play" for details....