Would it be better to take Social Security at 62?

[pb4uski]

DW and I are really struggling on if we should wait until FRA, 70 or take it now. If we take it at 62 (she's 3.5 years older than me, i'm 58) its $48k per year for us. This isnt bad and we'd need to mine just a bit to be comfy. However, if we wait until 70 (12 years for me..) we'll get around $72K/year. Not bad, but 12 years to wait for me!

It depends. Are you in good health? Is your family longevity good? If so, that would favor delaying. Also, if you are on ACA for for health insurance or currently doing low tax-cost Roth conversions that would favor delaying.

Are your SS benefits similiar or is one significantly different from the other?

Have you tried opensocialsecurity.com?

 

[pb4uski]

Yeah will take SS at 62, and invest in large cap growth with a record of 15% - 18% growth per annum in the last 5-10 years. Compounding that will beat getting SS at 70 hands down.

Yeah, right. Good luck to you... you are going to need all the luck that you can get.

 

[ERD50]

Yeah will take SS at 62, and invest in large cap growth with a record of 15% - 18% growth per annum in the last 5-10 years. Compounding that will beat getting SS at 70 hands down.

I'm pretty much always bullish , but expecting 15-18% is way over the top

Yeah, right. Good luck to you... you are going to need all the luck that you can get.

cyber888, you should call into Dave Ramsey's show, tell him he's sandbagging it with his mere 8%!

-ERD50

 

[The Onceler]

We claimed early (62) based on somewhat simplistic reasoning:

1. We needed a small bridge to FRA.
2. That bridge could be fulfilled via early SSA, early claiming on private pensions, and/or withdrawing from after-tax or pre-tax investments.
3. Once FRA is reached, we are looking at a withdrawal rate of maybe 1-2%, probably at the low end.
4. Following the notion that we are likely to better enjoy increased discretionary spending when we are younger (not saying we won’t enjoy it at any age), we think that the discretionary portion of our spending is likely to be higher earlier than later (mostly due to international travel).
5. For psychological reasons, it seemed as though it would feel (and, having done it, I think in fact it does feel) easier to freely spend SSA benefits than to claim early on private pensions or withdraw from invested assets.
6. So a key “risk” for us was that we would overly defer expenditures and simply increase the estate left behind. It is in part a reversal of the mild gratification deferral approach we pursued during the accumulation phase.
7. I am not saying this is an objectively sound approach from a purely financial perspective. It is perhaps affirmatively unwise for one who is counting on robust SSA benefits as part an overall retirement plan. YMMV.

 

[TheWizard]

Yeah will take SS at 62, and invest in large cap growth with a record of 15% - 18% growth per annum in the last 5-10 years. Compounding that will beat getting SS at 70 hands down.

...and the good thing about LCG index funds is: they never crash; they just keep going up...

 

[Gumby]

...and the good thing about LCG index funds is: they never crash; they just keep going up...

Endorsed by Will Rogers.

 

[Wile E. Coyote]

we got to beta test fidelitys in house use software OPTIMIZING SOCIAL SECURITY.

it did a good job maximizing one’s social security..it came up with quite a complex plan for us at the time .

my wife is two years older so she was collecting already since 62.

it had her stopping hers at fra and letting it grow to 70 ..at 70 she would start it again .

i would be 68 and file for half hers ..

at 70 i would file and she would get a spousal adder .

it certainly found the biggest payment .

but i pointed out it didn’t account for the fact we would be fronting ourselves the ss we weren’t getting to live on .

that money either could have stayed invested or been invested if we filed early .

it didn’t consider we couldn’t get 4500 a year in spousal until i filed .

so fidelity pulled it from use after reviewing things becuse it didn’t look at the big picture .

it can actually take 22 years or so for delaying ss to equal the same internal rate of return as a balanced portfolio and early ss

that is a very long time to live .


now that i am 71 and my wife 73 , we actually have a bigger income from all the portfolio growth and earlier social security then had we followed fidelity’s plan delaying

HERE IS A BALANCED PORTFOLIO

IT TOOK ABOUT TWO DECADES , FOR DELAYING TO EQUAL A TIPS LADDER AND EARLY SS TOO

I just used the Fidelity calculator last night. Fidelity told me to take it at 70. I tried 2-3 times and it came out 70.

Of course, I agree with that. I plan to work to 67 (realize I am not an "early retiree" yet it is important to be a "retiree" at all...)...

So, I think I will just be luxuriating in the fact I am not working and cleaning out my sock drawer and getting the house up to snuff for the first 3 years of my retirement I will stay close to home and can get buy by adding just a few k dollars to my pension. I can also think about doing some rollovers during that time before SS. I can also delay beyond 70 and push that income forward into the next year because I was born in August (so, push over to January).

With the amount I will need to take out of the 401k I will recover with my higher age 70 SS payments in 3 years.

I know it's a boring story because I am not doing it at 47 with millions of dollars...

Did you all hear about the proposal to increase SS to the first $250,000 of earnings and eliminate the taxability of it (federally)? Where I don't like them charging more without giving a higher benefit amount the tax free nature of it on the other side is compelling.

 

[Koolau]

cyber888, you should call into Dave Ramsey's show, tell him he's sandbagging it with his mere 8%!

-ERD50

Or just put it all on red (or black) and double your money!

 

[Koolau]

I just used the Fidelity calculator last night. Fidelity told me to take it at 70. I tried 2-3 times and it came out 70.

Of course, I agree with that. I plan to work to 67 (realize I am not an "early retiree" yet it is important to be a "retiree" at all...)...

So, I think I will just be luxuriating in the fact I am not working and cleaning out my sock drawer and getting the house up to snuff for the first 3 years of my retirement I will stay close to home and can get buy by adding just a few k dollars to my pension. I can also think about doing some rollovers during that time before SS. I can also delay beyond 70 and push that income forward into the next year because I was born in August (so, push over to January).

With the amount I will need to take out of the 401k I will recover with my higher age 70 SS payments in 3 years.

I know it's a boring story because I am not doing it at 47 with millions of dollars...

Did you all hear about the proposal to increase SS to the first $250,000 of earnings and eliminate the taxability of it (federally)? Where I don't like them charging more without giving a higher benefit amount the tax free nature of it on the other side is compelling.

We "judge" folks here on a lot of stuff, but rarely on what they decide is "early" retirement. If, to you, it's early. It's early. It's your retirement.



Now, if there's any way we can help you retire earlier, we're here to help.

 

[statsman]

Now, if there's any way we can help you retire earlier, we're here to help.

And then, once people are committed to ER, there's the always helpful posts on how to blow that dough!

 

[Koolau]

And then, once people are committed to ER, there's the always helpful posts on how to blow that dough!

Yeah, I've actually needed more help with BTD than with FIRE. Go figure!

 

[Tetto]

It depends. Are you in good health? Is your family longevity good? If so, that would favor delaying. Also, if you are on ACA for for health insurance or currently doing low tax-cost Roth conversions that would favor delaying.

Are your SS benefits similiar or is one significantly different from the other?

Have you tried opensocialsecurity.com?

I’m in good health generally speaking. I’m still w*rking DW retiring in May. My SS is definitely much higher than hers; she may take hers right away and I delay to 65 is what I’ve been thinking. It’s a good compromise to waiting to 70. We shall see how much my BS bucket can hold. Fortunately we have cash available, so we’re in a good position. I just want to stave off the bite of withdrawals by getting SS early. We’ll see

 

[pb4uski]

I’m in good health generally speaking. I’m still w*rking DW retiring in May. My SS is definitely much higher than hers; she may take hers right away and I delay to 65 is what I’ve been thinking. It’s a good compromise to waiting to 70. We shall see how much my BS bucket can hold. Fortunately we have cash available, so we’re in a good position. I just want to stave off the bite of withdrawals by getting SS early. We’ll see

What bite of withdrawals? Did you save that money for your retirement or to hoard it? :>)

 

[mebden]

I'll take SS after I read this below

After I was shown this spread sheet on taking SS at 62, I think I will just in case I don't make it till 70 and if I do, I'll invest every penny of it while taking it at 62 years of age and be a lot richer at 70. Also seen way too many people die before getting a penny of SS so I'll be taking it at 62.

 

[mathjak107]

i always thought we would wait until 70 .

but while delaying we had to live on something so we ended up spending down our own money fronting ourselves not only our normal draw from our own money , but an extra 45k a year or so at the time to cover the social security component of spending we were not getting .

i could never see not having our full budget day one and waiting until 70 to first spend more .

it made no sense to live on less then we could earlier taking ss later

so once i considered the fact we are spending down invested dollars or money that could be invested by delaying , plus my wife couldn’t get a 4500 dollar a year spousal benefit until i filled , delaying didn’t work well for us .

so i filed earlier .

today at 71 our bigger balance from taking early ss and stopping the bleeding of our own money has us at a higher income and balance then the bigger ss payment would have if we delayed and continued the bleeding.

it also means our balance will likely provide a bigger payment if i die then the survivor would waiting until 70.

it can be so much more complex then adding up checks alone to find a breakeven point .

however what if i die should never be the criteria, dead is dead .

the real question is what if i or my spouse live

 

[Wile E. Coyote]

I am going with 65, but for a different reason. Family history. These are the ages of my parents and grandparents at the time of their passing: 56, 59, 63, 64, 71, and 93 (maternal grandfather). It is rather scary to look at on paper.

Granted, modern living could give me a better shot at a longer life, but the genetics coming through three of the four grandparent lines are atrocious. Maternal grandmother (64) had three siblings, and none of them lived to be 65. Paternal grandparents (59, 63) had three sibling among them, and none of them lived to be 65. Only my maternal grandfather (93) had siblings (three) who lived a relatively long life (83, 87, 93).

I am sorry I cannot remember where I read it. Your DNA is more similar to your parents and siblings. Grandparents are not the appropriate comparison.

 

[Wile E. Coyote]

It wasn't an "approved substitute" for social security. When social security was first enacted, it didn't apply at all to state and local government employees due to constitutional concerns. In the 1950's, those groups of people were allowed voluntarily to join social security (for themselves) if they wanted. In some states, the teachers did not join. It is simply independent of social security.

You still do not account for the difference in survivor benefits to someone who stayed home and never worked at all and someone who just did not conduct their economic activity within the social security ecosystem. Why you didn't pay into social security is irrelevant. The only relevant fact under the current system should be that your spouse did pay and you are his (or her) survivor.

As I said, if you wanted to change to a system where nobody who didn't personally pay in could get any benefit, then that would be fair. The current system is not.

I was in a local government pension plan for a few years. Our agency paid our portion for us. So, not all (teachers or whoever) are paying for their pension (equivalent to what SS would be).

 

[Wile E. Coyote]

Gumby,

This article confirms some of your concerns about fairness with SS and it may point to a couple more...

https://www.urban.org/urban-wire/recent-social-security-reform-doesnt-fix-unfair-spousal-benefits

 

[mathjak107]

We figured 6% on a balanced portfolio over 30 years

It would take 22-24 years delaying to equal that

 

[Tetto]

What bite of withdrawals? Did you save that money for your retirement or to hoard it? :>)

Yep, it is for retirement! I know there's a heavy psychological component at work here. But I think its still a sound strat to take quasi early.

 

[statsman]

I am sorry I cannot remember where I read it. Your DNA is more similar to your parents and siblings. Grandparents are not the appropriate comparison.

Just using my parents' ages is not comforting. Dad passed at 56 and mom at 71, with my mom having a health-altering stroke at 56. That history tells me I should have started at 62. I'm going to start at 65.

 

[Wile E. Coyote]

Just using my parents' ages is not comforting. Dad passed at 56 and mom at 71, with my mom having a health-altering stroke at 56. That history tells me I should have started at 62. I'm going to start at 65.

I have the same issue. The longevity in my family is with my grandmothers (who lived to 92 and 95). I was able to pull up genealogy information. I was aware they both had 12-15 children each (and a couple died very young). Between them they had 27 children. Only 3 of 27 children lived to 80 (not 81 or 82, just 80) and my mom (49) and dad (65). Further I am the last by a long stretch of 6 children and my two eldest siblings died at 71 (brother in 2014) and 77 (sister in 2020). I have three living siblings (75, 77 and 79). So, we'll see if Big Sis can break the record.

I am 61.

My BIL's mother just died a couple months ago (two months short of 100). He said she was feeling well until the last year. So, he has a ton of longevity and just retired at 78 in October.

I am planning to work until 67. imho between FRA and 70 is good enough. Even with my lack of longevity I still may wait until 70 just because it pushes the cash flow into fewer years (cash flow for late life)...

 

[mathjak107]

the problem is those who retire earlier than 70 need the money to live on if they want to delay without spending down to low trying to delay .

those who can benefit the most from delaying usually can’t afford to delay if not working.

not many who support themselves off social security and what they manage to save have enough saved to lay out

 

[Wile E. Coyote]

We figured 6% on a balanced portfolio over 30 years

It would take 22-24 years delaying to equal that

So, you calculated the future value of a stream of income using an interest rate? And then you calculated a stream of 8 years of contributions to a brokerage account accounting for the year-to-year compounding of those 8 amounts and stretching into the future?. You did this to a certain date?

 

[Wile E. Coyote]

the problem is those who retire earlier than 70 need the money to live on if they want to delay without spending down to low trying to delay .

those who can benefit the most from delaying usually can’t afford to delay if not working.

not many who support themselves off social security and what they manage to save have enough saved to lay out

Except maybe the people with pensions and less than multiple millions.