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Post by chang on Mar 23, 2021 11:44:04 GMT
Writing on my phone, so will keep this abbreviated and to the point.
Conventional wisdom: if you are in good health and don’t need the income, delay taking SS as long as possible (I believe the options are 62, 65 or 68?).
I understand the math: if you live to a certain age (let’s say 90) then you will pocket many more dollars if you delay starting SS as long as possible, because of the relative amounts in $/month.
But I see things differently:
1. If you don’t need the money at age 62, then you probably won’t need it at age 65 or 68.
2. The sooner you take the money, the sooner you can invest it and earn a better rate of return.
3. The future is always uncertain; when something good is offered, take it.
4. It’s my money, after all. I’d prefer to get it back sooner rather than later.
5. From 62 to 90, however good my health is, I expect to become less active and incur less discretionary spending. Why delay the income to a time when you can’t enjoy it?
I’m a few years away from deciding, but the subject came up with my wife, so I thought I would ask the brain trust here. In my opinion, “conventional wisdom” is not obvious at all.
What decision making process do others find logical to decide when to start SS? TIA.
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Post by yogibearbull on Mar 23, 2021 12:51:07 GMT
In take early vs late analysis, breakeven age is quite high - late 80s or early 90s. And a high risk is that there is no residual, i.e. the direct benefits end at death and nothing goes to beneficiary [except survivor benefits that don't depend on when one takes own benefit].
Data show that many do start taking early, whatever their personal reasons.
A minor advantage of taking before the Medicare age 65 is that Medicare signup becomes automatic. Otherwise, one has to apply for Medicare a few months ahead of 65. I don't know if this is even a factor if you are overseas [there is little overseas coverage under Medicare].
I am not eligible for Social Security and my signup for Medicare was VERY messy. Seeing that, my wife decided to start early at 62, even though she could have waited for a few years.
Anyway, I/we fall into take early or before 65 camp.
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Post by Mustang on Mar 23, 2021 13:50:13 GMT
I fall into the take social security early camp as well but I know a lot of people who don't. They basically have no other retirement (or other retirement is insufficient to meet their needs). My brother and several friends intend to take social security at full-retirement age because they can continue working without penalty and it keeps their company health insurance.
I was in a different situation. I had a military retirement, was working a second career and teaching at night. I retired from my full-time job at 60. I took social security at 62 and we started investing 100% of my wife's pay to see if we could live on just my pension and social security. We could. She retired at 56 and started taking social security at 62. We both continued to teach part-time but stayed under the limit and we invested her social security payments. We could do this primarily because we had our own medical insurance. That is an important factor. Taking social security early means you cannot work full-time. I know people who continue working mostly for the health insurance. We have both retired from part-time teaching but still invest her social security checks.
If someone can afford to do it there are numerous advantages to taking social security early. It allows part-time retirement. The money becomes the individual's money not just a promise of future payments. It can be invested and inherited. As others have pointed out, it makes getting on Medicare easy. My wife goes on Medicare this summer. Her Medicare card automatically came in the mail. The biggest disadvantages are lower lifetime payments and restricted earnings until full-retirement age.
But, not everyone can do it. It really depends upon the availability of other retirement incomes and health insurance. Those without other options need to wait.
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Post by Deleted on Mar 23, 2021 16:10:39 GMT
I’m a year away from FRA and plan to take SS then. Did some calculations a few years ago and break even was around 78 years old when comparing 62 with 66yrs 4mo. It’s basically a coin flip issue in my view. You only know the best choice much later in retrospect. Sometimes I think about taking it earlier because we are living off our investments, which fortunately are easily sufficient. Our goal, however, is to pass along as much as we can to our heirs and chosen charities. It is a quandary of sorts.
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Post by Deleted on Mar 23, 2021 16:15:10 GMT
Admin/chang - my understanding is you can take SS at anytime 62 and above, not just the three specific years you mentioned in your post (i.e., 62, 65, 68). Maybe I’m misunderstanding your statement.
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Post by richardsok on Mar 23, 2021 16:47:44 GMT
When I was 58 or so I had heart issues; quad bypass, pulmonary embolism, ICU, collapsed lung; lotsa goodies. Decided to take SS ASAP. Four years later I was fully recovered & feeling way better and thought, wel-l-l-l, maybe I'd stretch it a bit. Finally compromised, split the difference, and took it at 64. (Thinking: whatever was best, I wouldn't be TOTALLY wrong.) I might have waiting a while more, but Second-Guessing is my middle name. We don't really need the income stream, but use it for an accelerated pay-down of the mortgage for our third real estate investment; a condo for my daughter. The other two properties I own outright. (Is that you chuckling, R48?) For living expenses, my pension & investment income is more than enough.
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Post by yogibearbull on Mar 23, 2021 17:14:33 GMT
Admin/chang - my understanding is you can take SS at anytime 62 and above, not just the three specific years you mentioned in your post (i.e., 62, 65, 68). Maybe I’m misunderstanding your statement. I think he was writing freestyle from iPhone and touched on major points. But you are right, one can take it anytime after 62. But 3 decision points often are 62 [earliest], FRA [varies, 65-67], 70 [latest, or no point delaying beyond].
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Post by anitya on Mar 23, 2021 18:54:35 GMT
Does not SS income factor into Medicare premiums? May be the income effect on Medicare premium is inconsequential/ immaterial.
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Post by yogibearbull on Mar 23, 2021 19:20:58 GMT
Does not SS income factor into Medicare premiums? May be the income effect on Medicare premium is inconsequential/ immaterial. Medicare Part B Premium goes up in big quantum steps. It is based on MAGI [= AGI + tax-exempt interest] from 2 years prior. AGI does include Social Security. So long as one stays within MAGI ranges, Part B Premium remains the same, but exceed those by $1 and Part B Premium jumps to the next quantum level. These IRMAA hits [to Part B & Part D] are painful in the year they hit but then people get used to them. www.medicare.gov/your-medicare-costs/part-b-costs
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Post by dgva on Mar 23, 2021 20:15:04 GMT
When to take it does depend on 1) whether or not you need the income immediately, 2) whether current health or perhaps family risk factors suggest a shortened life span compared to average or expected and 3) whether you feel confident you can make a consistent 8% return on SS taken but not needed and 4) whether you think SS benefits could be cut for those who have not yet enrolled for benefits. The SS table showing the exact % impact on income for each month SS is delayed is here for those whose FRA is 66: www.ssa.gov/benefits/retirement/planner/1943-delay.htmlA similar table showing the % impact on income for each month SS is taken before FRA and the impact on spousal benefits is here: www.ssa.gov/benefits/retirement/planner/1943.htmlOur current break even ages are 79.8 and 82. We are debating whether it is worth going beyond a break even age of 82. Actuarial tables suggest we could reasonably wait longer, but family history suggests maybe not.
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Post by Deleted on Mar 23, 2021 20:16:12 GMT
How does medicare and medicaid work? How much does it cover after age of 65? What if one has a big expensive surgery?
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Post by yogibearbull on Mar 23, 2021 20:26:10 GMT
so after age of 65, medicare and medicaid can cover 80% of ones medical costs? is that correct? And 20% is from our savings? So 20% of a big surgery can easily wipe some one out financially? Most get a medigap policy to cover 20% not covered by Medicare. Plans are A-N, but many select Plan G now - it is hard to change later if one is in a bad plan. Medicare Advantage is a way to go too that integrates Medicare Parts A, B, D; it is also called Part C. Medicaid is for poor only.
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Post by retiredat48 on Mar 23, 2021 23:17:09 GMT
In take early vs late analysis, breakeven age is quite high - late 80s or early 90s. And a high risk is that there is no residual, i.e. the direct benefits end at death and nothing goes to beneficiary [except survivor benefits that don't depend on when one takes own benefit]. Data show that many do start taking early, whatever their personal reasons. A minor advantage of taking before the Medicare age 65 is that Medicare signup becomes automatic. Otherwise, one has to apply for Medicare a few months ahead of 65. I don't know if this is even a factor if you are overseas [there is little overseas coverage under Medicare]. I am not eligible for Social Security and my signup for Medicare was VERY messy. Seeing that, my wife decided to start early at 62, even though she could have waited for a few years. Anyway, I/we fall into take early or before 65 camp. +1...I agree w/Yogi.Except my view is that in 99.9% of cases, TAKE IT EARLIER. Caution that some studies have a fatal flaw in that they do not assume you reinvest the early SS you take. The only fair way to compare is to assume you do reinvest it. Second, the investment rate of return affects calculations a lot. Yogi has age late eighties breakeven point--I agree. Lastly, always remember if you defer, and die just before taking SS (like age 69), you really messed up and let lots of money on the table (SS kept it). Disclosure...I took SS ate age 62. Observation: Don't let people pooh pooh that monthly check. Spouse and I get about $2500 a month every 30 days. It seems like sent from heaven!! R48
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Post by chang on Mar 24, 2021 0:58:59 GMT
Admin/chang - my understanding is you can take SS at anytime 62 and above, not just the three specific years you mentioned in your post (i.e., 62, 65, 68). Maybe I’m misunderstanding your statement. My mistake - I thought you had to pick one of these starting points. As you can tell, I haven’t really thought much about SS yet.
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Post by chang on Mar 24, 2021 3:52:27 GMT
I checked out some “break even age” calculators, and it seems to be that the monetary advantage in delaying is minimal and requires a long wait — which entails the risk of not surviving, and also begs the question (as in my OP) how much scuba diving and mountain climbing you plan to do after age 90.
All the comments here reaffirm my inclination to just start taking SS at 62 and not try to over analyze it. That will also allow me to think less about withdrawing from my existing investments.
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Post by richardsok on Mar 24, 2021 13:06:09 GMT
I checked out some “break even age” calculators, and it seems to be that the monetary advantage in delaying is minimal and requires a long wait — which entails the risk of not surviving, and also begs the question (as in my OP) how much scuba diving and mountain climbing you plan to do after age 90. All the comments here reaffirm my inclination to just start taking SS at 62 and not try to over analyze it. That will also allow me to think less about withdrawing from my existing investments. Chang -- I don't mean to dissuade you from your decision, just to recount a bit of personal knowledge on how perspectives might evolve. I know two Philadelphia guys -- two close friends who took early retirement from teaching and SS at 62. Each, in his own way was confident and even boastful it was the smart path. One would inevitably chortle over the free time, the vacations and the nifty stuff he was buying from the gov's largesse. They are now in their 70s, and after years of inflation, are sour they could have gotten so much more each month had they only waited a little bit -- and are regularly bitter their COLAs are so meagre. Now we see each other much less, and when we do, I never touch on the topic. Am tired of the 20-minute harangues. I know they both think they are smarter than I am, and in some respects I suppose they are. It must be their bitter pill to pinch pennies around me now. FWIW.
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Post by fishingrod on Mar 24, 2021 13:35:27 GMT
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Post by Deleted on Mar 24, 2021 13:48:44 GMT
I misstated the break even age in my prior post. Went back and looked at the calculations we made a few years ago and also ran the numbers this morning after logging into SSA site. In both instances the break even is age 80 for me (age 65 vs 66/4) Would guess roughly the same for the Original Poster. The age to take SS is a personal choice and one only knows the best choice in retrospect. Even when you know the best choice many years down the road, having not selected the best option is only a minor difference. It seems in the example richardsox made, the people were simply financially irresponsible which led to issues later.
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Post by yogibearbull on Mar 24, 2021 13:54:16 GMT
Only the winners of life-lottery get to complain about their decisions - too early or too late.
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Post by chang on Mar 24, 2021 14:09:18 GMT
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Post by yogibearbull on Mar 24, 2021 15:10:40 GMT
Short version of long story: My state employer was exempt from Social Security and Medicare system. My eligibility was triggered late from an obscure rule on spousal-eligibility when my wife became eligible for Social Security based on her employment record. My SSA processing was complicated because it appeared to Social Security as if I had disappeared after the initial issuance of the Social Security number* and showed up out of the blue with almost a blank record . There was lot of related misinformation that was sorted out at the end but some aspects were costly for me. Things were much smoother for my wife's signup as she existed in the SSA system all along. *Well, there was a year of earnings from graduate assistantship but those were exempted later.
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Post by retiredat48 on Mar 24, 2021 16:27:44 GMT
I misstated the break even age in my prior post. Went back and looked at the calculations we made a few years ago and also ran the numbers this morning after logging into SSA site. In both instances the break even is age 80 for me (age 65 vs 66/4) Would guess roughly the same for the Original Poster. The age to take SS is a personal choice and one only knows the best choice in retrospect. Even when you know the best choice many years down the road, having not selected the best option is only a minor difference. It seems in the example richardsox made, the people were simply financially irresponsible which led to issues later. st6...may I ask: --I assume you took the early SS payouts, and invested them. --What annual rate of return did you assume for that money? TIA R48
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Post by retiredat48 on Mar 24, 2021 16:39:46 GMT
I checked out some “break even age” calculators, and it seems to be that the monetary advantage in delaying is minimal and requires a long wait — which entails the risk of not surviving, and also begs the question (as in my OP) how much scuba diving and mountain climbing you plan to do after age 90. All the comments here reaffirm my inclination to just start taking SS at 62 and not try to over analyze it. That will also allow me to think less about withdrawing from my existing investments. Chang -- I don't mean to dissuade you from your decision, just to recount a bit of personal knowledge on how perspectives might evolve. I know two Philadelphia guys -- two close friends who took early retirement from teaching and SS at 62. Each, in his own way was confident and even boastful it was the smart path. One would inevitably chortle over the free time, the vacations and the nifty stuff he was buying from the gov's largesse. They are now in their 70s, and after years of inflation, are sour they could have gotten so much more each month had they only waited a little bit -- and are regularly bitter their COLAs are so meagre. Now we see each other much less, and when we do, I never touch on the topic. Am tired of the 20-minute harangues. I know they both think they are smarter than I am, and in some respects I suppose they are. It must be their bitter pill to pinch pennies around me now. FWIW. Richardsok...I don't get it? It is simply a matter of mathematics that you are not ahead in your seventies, due higher payments. You do not "carte blanch" get higher payments by waiting. You give up substantial annual payouts to get the higher payment, by starting SS later. This is real money. Are you missing this aspect? And when your crossover date is, that is, when you "catch up" is dependent on the rate of return (CAGR) you will get investing the money. But SS is based on about a 2% inter-agency bond investment return. Do you think you could do better? I suspect yes. I surely did. I would never catch up to my investment returns, had I waited. And if I died age 70, I would have left about $192,000 plus interest, with the IRS...none going to my kids! Edit to add: BTW r, I have medical appointments/visits to take my wife to all week, incl Saturday! Looks like next week for lunch. R48
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Post by Deleted on Mar 24, 2021 17:28:19 GMT
I misstated the break even age in my prior post. Went back and looked at the calculations we made a few years ago and also ran the numbers this morning after logging into SSA site. In both instances the break even is age 80 for me (age 65 vs 66/4) Would guess roughly the same for the Original Poster. The age to take SS is a personal choice and one only knows the best choice in retrospect. Even when you know the best choice many years down the road, having not selected the best option is only a minor difference. It seems in the example richardsox made, the people were simply financially irresponsible which led to issues later. st6...may I ask: --I assume you took the early SS payouts, and invested them. --What annual rate of return did you assume for that money? TIA R48 I did straight math, but even if you presume a 5% annual return it adds less than one year.
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Post by Capital on Mar 24, 2021 23:02:19 GMT
Short version of long story: My state employer was exempt from Social Security and Medicare system. My eligibility was triggered late from an obscure rule on spousal-eligibility when my wife became eligible for Social Security based on her employment record. My SSA processing was complicated because it appeared to Social Security as if I had disappeared after the initial issuance of the Social Security number* and showed up out of the blue with almost a blank record . There was lot of related misinformation that was sorted out at the end but some aspects were costly for me. Things were much smoother for my wife's signup as she existed in the SSA system all along. *Well, there was a year of earnings from graduate assistantship but those were exempted later. yogibearbull that is truly a sad story. Seems very unfair as well IMHO. I hope you can at least qualify for a spousal benefit.
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Post by yogibearbull on Mar 24, 2021 23:12:57 GMT
Short version of long story: My state employer was exempt from Social Security and Medicare system. My eligibility was triggered late from an obscure rule on spousal-eligibility when my wife became eligible for Social Security based on her employment record. My SSA processing was complicated because it appeared to Social Security as if I had disappeared after the initial issuance of the Social Security number* and showed up out of the blue with almost a blank record . There was lot of related misinformation that was sorted out at the end but some aspects were costly for me. Things were much smoother for my wife's signup as she existed in the SSA system all along. *Well, there was a year of earnings from graduate assistantship but those were exempted later. yogibearbull that is truly a sad story. Seems very unfair as well IMHO. I hope you can at least qualify for a spousal benefit. Thanks for the thought. But GPO killed that. So, no Social Security, but only Medicare as a spousal benefit. I joke with my wife that if it wasn't for her, I would still be in state group health plan. www.ssa.gov/pubs/EN-05-10007.pdf
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Post by richardsok on Mar 25, 2021 12:28:35 GMT
Chang -- I don't mean to dissuade you from your decision, just to recount a bit of personal knowledge on how perspectives might evolve. I know two Philadelphia guys -- two close friends who took early retirement from teaching and SS at 62. Each, in his own way was confident and even boastful it was the smart path. One would inevitably chortle over the free time, the vacations and the nifty stuff he was buying from the gov's largesse. They are now in their 70s, and after years of inflation, are sour they could have gotten so much more each month had they only waited a little bit -- and are regularly bitter their COLAs are so meagre. Now we see each other much less, and when we do, I never touch on the topic. Am tired of the 20-minute harangues. I know they both think they are smarter than I am, and in some respects I suppose they are. It must be their bitter pill to pinch pennies around me now. FWIW. Richardsok...I don't get it? It is simply a matter of mathematics that you are not ahead in your seventies, due higher payments. You do not "carte blanch" get higher payments by waiting. You give up substantial annual payouts to get the higher payment, by starting SS later. This is real money. Are you missing this aspect? And when your crossover date is, that is, when you "catch up" is dependent on the rate of return (CAGR) you will get investing the money. But SS is based on about a 2% inter-agency bond investment return. Do you think you could do better? I suspect yes. I surely did. I would never catch up to my investment returns, had I waited. And if I died age 70, I would have left about $192,000 plus interest, with the IRS...none going to my kids! Edit to add: BTW r, I have medical appointments/visits to take my wife to all week, incl Saturday! Looks like next week for lunch. R48 Hi, Bob--- My post wasn't meant as a rational argument for waiting. (An episode isn't data.) To retire early with pension & take 62SS is a choice: take sure benefits now in the belief your can succeed with investments later, and if not, you can live happily frugal.. (Certainty now with risks later.) When contemplating retirement you have a finite (but unknown) number of months ahead to live, yes?. To "take the leap" early means you (A) forego the usually far larger salary checks for (B) MORE (but smaller) monthly SS checks. I do get it. (Can you afford the difference between SALARY income vs PENSION + SS income? That's another question.) With one Philadelphia friend of mine it got so he would only eat out if it was a Chinese restaurant and stopped ordering beer or even soda. He came to drink only water at table. Last time I saw him, we were all ordering together with wives at one such place. I happened to mention "...and how about we share a plate of fried rice for the table?" He snapped, "Anything YOU order, YOU pay for." My point: for some folks, "retire early" choices work, as it did for you. It doesn't for everyone.
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Post by rhythmmethod on Mar 25, 2021 12:53:28 GMT
Everyone makes good points. I’m delaying because I expect to beat the drums until the last quarter note has been played. Lucky I can still monetize it at a rate I’d be punished for taking it early. I know folks that are similar to the situation richardsok , described. It’s sad. It’s called SOCIAL SECURITY, not possible investment cash flow. For most folks reading here, early withdrawal makes sense. For the vast public, not so much. chang, I suspect you’ve calculated the difference if you were to return to work before 66, correct?
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Post by yogibearbull on Mar 25, 2021 13:12:40 GMT
Social Security is a unique kind of lifetime annuity that is strongly age-based [in range 62-70], inflation-adjusted [CPI-W], single-life. Opinions vary as people value its aspects differently. So, the decision comes down to personal situation and preference.
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Post by Capital on Mar 25, 2021 13:38:50 GMT
Being married to someone 8 years my junior with family members living into their late 90s has forced me to take a different view of our SS joint benefits. The only way her benefit could possibly be larger than mine is if I had taken my benefit at 62 and she waited until 70. Since I must work to age 70 to pay to get teenagers out of my house taking at 62 was not available to me two years ago. Since my benefit will be the largest I am using her lifetime to decide when to take my benefit (age 70); and, my lifetime to decide when to take her benefit. The spouse gets deferred credits when computing the survivor benefit from my understanding. If I start at 70 then she will be left with the largest possible SS benefit I can leave to her. My starting at 70 is the same as starting my benefit at her age 62. If she lives to 97 as many in her family have averaged then my benefit would have been drawn for her age 62 to her age 97. That is 35 years. I am assuming that I will be the first to go. This is all based upon the best information that we have at this time.
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