Social Security

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From what I understand, there's going be nothing left for me when I retire. But that won't matter as 1776 should commence before that happens.

I probably won't really "need" social security to get by in retirement, so my plan is to wait as long as possible. The only way to know which option is best is to know how long you'll live.

Tony,

We can't figure out what gender Caster Semenya is and you're asking us for financial advice? I suggest you contact a more informed message board for such important life choices.

You lose 8% annually by taking a benefit before Full Retirement Age (FRA). You gain another approximate 25% by waiting to take a benefit at age 70 (no increase in benefit from there). Depending on how you discount the value of the benefit, the breakeven point of waiting from FRA to 70 is about age 83. So for most waiting to FRA is a given, waiting until age 70 is more of a coin toss.

This is an odd place to be asking this. There are dozens of sites that give adice and caculators, including the gummint SS site.

See you and my hot, 68-year-old GF in the hot tub at The Villages, Fl.

Into wife swapping, wrinkles, saggy body parts along with disappointing endings?

Unless you need that income ASAP, as others have said, waiting gets 6% or more/year for each year delayed-- tough to beat for a guaranteed return.

However, if you health isn't great or your longevity odds aren't with you-- as is my family's case-- you might have an argument for taking it earlier. Can't apply for it once you're dead.

I'll probably take it sometime before full retirement age (67), but not right at 62; am 57 now.

Tony The Tiger2 wrote:

(I realize most LRC people are less than 40.) But at what age do you expect to take social security?

I am nearly 62.

My family helps me out a lot and I have a small pension so I am thinking about

investing and waiting as long as I can to retire and take social security. 66 and 6 months sounds about right.

Experts advise that if you plan to marry a young woman or have kids you are better off

having the income that will come later by waiting until you are nearly fully retired.

What is your situation or thoughts on social security?

Depends on your situation.

My Dad has a pension, and he and my mother have other retirement money that they use now in retirement, but at age 62, he was diagnosed with a then incurable cancer and given 6-7 years to live. His pension wasn't going to start until he was 65, and they didn't want to dip into the retirement money yet. So, he retired earlier than planned and started taking Social Security at age 62. He was then the first person ever cured of this cancer and he is now 79, mom is 78.

Of course if you take Social Security at 62, you get money for a longer period of time. Since we never know when we might die, this is a valid option.

Also, what if at age 62 you really want to retire and need that money then to be able to do so? I say go for it.

Ghost of Igloi wrote:

You lose 8% annually by taking a benefit before Full Retirement Age (FRA). You gain another approximate 25% by waiting to take a benefit at age 70 (no increase in benefit from there). Depending on how you discount the value of the benefit, the breakeven point of waiting from FRA to 70 is about age 83. So for most waiting to FRA is a given, waiting until age 70 is more of a coin toss.

Correct... but with a caveat.

Most people will NOT use a discounted present value to determine the breakeven point because they will be spending the money. Thus, the breakeven point is about age 76. That's the age at which the dollar amount of Social Security benefits you would have received is the same whether you started SS at 62, 67, or 70.

For the vast majority of people, they would get more money over their remaining life expectancy if they waited until age 70.

Another key point.

If you are still working at 62 to 67 with a high annual income, your Social Security benefits will be taxed at a higher rate than the typical retiree. This would be another reason to delay starting Social Security benefits.

There are at least three exceptions to this rule of thumb.

1. You need the money now. This is overwhelmingly why most people start Social Security benefits earlier. Studies show that nearly half a baby boomers started Social Security sooner than age 67 with the majority of those who started early starting Social Security benefits at age 62.

3. You have children under the age of 18 when you reach age 62. Social Security beneficiaries who have children under the age of 18 can receive an additional $1000 per month per child until those children reach age 18. This might justify starting Social Security benefits much earlier. You must apply for this. It's not automatic. I have a friend who did this.

3. You have an illness or anticipate that you might die sooner than age 76. This is especially true for those who are over 62 but have not yet started Social Security benefits because the surviving spouse will receive a survivor benefit if the deceased person had started their Social Security benefits. (There's more to this one. If your health is frail or you get diagnosed with a serious illness, you should check it out.)

4. If your spouse is younger than you, it might be to your advantage to start Social Security benefits earlier than 67 because your spouse would be eligible for a spousal benefit. The amount of this benefit is a percentage of your Social Security benefit based your the spouse's age. YOU MUST APPLY FOR THIS! It's not automatic. Meanwhile, your spouse can delay starting her benefits until age 67-70 so her eventual monthly SS on her own behalf would continue to grow. My wife and I did this once I discovered this benefit and did the math. I started SS a little early at 66 while she gets a spousal benefit of ~$700/month. When she eventually starts her own SS, her spousal benefit will stop and she will get her own SS monthly payment.

The "experts" who write about when you should take SS benefits seldom mention the spousal benefit option. The amazing thing is that it's free. All you have to do is know that it exists and apply for it.

-fisky (my dog's name), retired CFP

Oops, sorry about the misnumbering. It should be 1, 2, 3, 4 and it should say "At least four exceptions."

Flagpole wrote:

My Dad . . . was diagnosed with a then incurable cancer and given 6-7 years to live . . . [h]e was then the first person ever cured of this cancer and he is now 79, mom is 78.

Crap, it is 8:54 am eastern and the coolest thing that I will hear all day has already been heard.

You can start receiving social security benefits at 65 without penalty.

Social security is determined by your highest earning 20 years of employment, but it does max out if you're high income at a certain point. If you wait older than 65 (to first receive benefits), your social security benefits will increase further by a percentage for each year you wait (to first receive benefits). They max out if you wait til 70, at which point they become 120% of what they would have been per year had you received them at 65. Example: if your social security benefits are set to be $2000/month ($24,000/year) but you have other sources of income to rely on til 70, then you receive the benefits they'll increase by 20% percent to $2400/month ($28,800/year).

My position is if you have the financial means to wait til 70, then wait. Only exception is if people in your family don't live long. If everyone in your family peaces out in early/mid 70s, maybe take the benefits at 65 instead of waiting til 70. Also, if two spouses are retiring at around the same age, a good strategy is to receive the lower earning spouse's social security benefits then wait to receive the higher earning spouse's benefits until they're 70.

Ghost of Igloi wrote:

You lose 8% annually by taking a benefit before Full Retirement Age (FRA). You gain another approximate 25% by waiting to take a benefit at age 70 (no increase in benefit from there). Depending on how you discount the value of the benefit, the breakeven point of waiting from FRA to 70 is about age 83. So for most waiting to FRA is a given, waiting until age 70 is more of a coin toss.

Not true. You don’t “lose” anything. You’re getting the same money over a lengthened time.

What if you don't need SS at 62, or 65 or 69? I'm 4 years from 62 so I need to think about this some.

My main goal is to not run out of money before I die. I have enough, I believe, to not NEED to take SS at 62 or 65 or 69. I can wait to 70 simply because I don't think I'll need the money. I really don't care if by some misfortune I die at 71 and 'missed out' on SS disbursements from age 62. I'd be dead and I wouldn't care one bit! Again, my goal isn't to maximize the cash I take from SS but to make sure I don't run out of money by the time I die. In that case, assuming you have enough to meet your needs to 70, wouldn't it make sense to not take the money till 70?

Fisky - thanks - very good summary

I have a high income - I think - 3x and then some six figures - and will likely work until 67 - 8 or so more years. Getting promoted as I write this - not sure of the income that will come out of it - but it will likely be even more than I make now.

Lots in 401k and general accounts - but want to double them before I retire - obviously through socking away most of my after tax income. I have no mortgage on a near $1M house, no car debt, only property taxes, insurance (home and auto), utilities and food to pay. Still busy working so vacations are of the take a Friday off and do a three day weekend type - not expensive. In short, I live comfortably but kind of frugally.

If I take SS at 62, I absolutely would not spend the money and would invest all of it. My investments over the past 10 years have averaged 6-7 percent return - good but by no means great (and great likely means taking risks I don't want to take at this stage in life). Given my family history, as dismal as it sounds, making it to 80 and no more seems likely.

Doing the math, it makes some sense for me to take benefits at 62, although every fiber of being still says no. Again, I would truly invest every penny and not spend any of it - I think the prospect of having the highest marginal tax bracket for the next 8 years makes the decision not so easy. I think I will wait for FRA - despite the prospect of leaving a bigger chunk of investment for my spouse, who will outlive me by all probabilities and is younger.

I certainly won't be offended is the answer is to see a CFP - obviously a good one.

You young guys on Lets Run - I know this all seems boring - but it is never too early to invest and save - not a preachy statement, just the voice of experience from someone who was raised in complete poverty and who has been exceedingly lucky in not having my past various iterations of stupid come back to bite me.

What the hell are you going to do with that money when you are 80? When you are 62 you might actually be able to enjoy it some. Take it then.

Tony The Tiger2 wrote:

My family helps me out a lot and I have a small pension so I am thinking about

investing and waiting as long as I can to retire and take social security.

What do you mean your family helps you out a lot? They give you money?

Are you talking about using money from family help to invest and wait?

You didn't mention your work other than saying when you retire and take SS.

But taking social security doesn't mean you have to retire.

Anyway, the decision between taking SS at 62-70 or anywhere between depends on how much you need the money at the time and how long you expect to live.

Always assume you will live long if you are currently healthy because, as someone said, if you do die earlier than expected you won't care about the money you could have had.

But if you live longer than expected, taking it early will hurt.

If you are 62, broke, sick and jobless then take the money now.

I split the difference, took a benefit at my FRA (age 66). I continue to work. My work record is greater than my spouse, so she will get 1/2 of my FRA benefit. I will receive in addition a company pension, sufficient retirement accounts. I am glad I made my choice since I was diagnosed with follicular lymphoma 3a the following year. I have been treated (chemo, radiation) and am currently cancer free. However, about 20% with my disease relapse and live under ten years following diagnosis.

1776 wrote:

From what I understand, there's going be nothing left for me when I retire. But that won't matter as 1776 should commence before that happens.

That is NONSENSE, it will be there longer than anyone who is living, they have been saying it will end for a LOOOOOOONG time, truth is it is payed for by taxpayers, and that is the REAL REASON for MASS IMMIGRATION, MOST Immigrants will be taxpayers and will pay for future SSI and Pensions.