When to take Social Security

[stats]

I have always been in the take as late as possible camp. But I am changing my opinion. First, around age 78, there is a break even point, for the amount received by everyone, regardless of when SS was taken. In the past, I was swayed by the higher income later in life. But as we get older, I am noticing funds later in life are less important as spending naturally decreases. Also, if you are unlucky, having an early death, you still will have received some SS.

If you have a spouse, the rules of SS, imply you should at least wait until full retirement age.

Stats

[Mustang]

My wife is 7 years younger than I am. As stated before we both started taking social security at age 62. My social security payment is 50% larger than hers for many reasons: constant moves making it impossible to hold a long-term job and long absences making her a single parent taking care of two kids by herself are a couple. Similar to what others have posted she is younger, she is female and her family is longer lived than mine.

Survivor benefits say she may take the higher of hers or mine when I'm gone. www.aarp.org/retirement/social-security/questions-answers/social-security-spouse-dies.html

So I can see how that would be a benefit to many widows if I had waited until full retirement age. Her survivor benefit would be much higher. I never even considered it at the time and luckily it wouldn't have made much of a difference.

[chang]

Mar 25, 2021 12:53:28 GMT rhythmmethod said:

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? 

Ah. That would be a game changer. If I go back to work and earn a paycheck again, I would rethink the SS question. I am involved at the moment in discussions with a company about that. But if I do go back to work, I am thinking it would be for 3-5 years at the very most, so I would still retire again well before 65.

All in all, I find it compelling to start taking SS as soon as I can and put the money to work in *my* brokerage account.

[chang]

Novice question: if I die first, will my wife inherit/continue to receive any of my SS allowance?

[rhythmmethod]

chang, My bet is you’ll be in the workforce, as your own boss.

[yogibearbull]

Mar 25, 2021 22:15:35 GMT chang said:

Novice question: if I die first, will my wife inherit/continue to receive any of my SS allowance?

There is spousal benefit. But your direct benefit disappears with you. www.ssa.gov/oact/quickcalc/spouse.html

[chang]

Mar 25, 2021 22:40:07 GMT yogibearbull said:

Mar 25, 2021 22:15:35 GMT chang said:

Novice question: if I die first, will my wife inherit/continue to receive any of my SS allowance?

There is spousal benefit. But your direct benefit disappears with you. www.ssa.gov/oact/quickcalc/spouse.html

So she can actually receive a benefit based on my SS, once she reaches 62, which will last for her lifetime? (Even though she has never contributed to SS?) That’s nice, didn’t know that.

[steadyeddy]

Mar 25, 2021 23:50:00 GMT chang said:

Mar 25, 2021 22:40:07 GMT yogibearbull said:

There is spousal benefit. But your direct benefit disappears with you. www.ssa.gov/oact/quickcalc/spouse.html

So she can actually receive a benefit based on my SS, once she reaches 62, which will last for her lifetime? (Even though she has never contributed to SS?) That’s nice, didn’t know that.

LINK 

chang, In general the spouse gets at most half of the primary claimant's monthly payment. Whole bunch of conditions exist.

[Mustang]

And then there are survivor benefits which are different. If she is taking spousal benefits then most of the time the switch is automatically made when the death is reported.

[chang]

The SS website isn’t clear. Can my wife start collecting at age 62 even while I am alive and also collecting? Or can she collect only after I die?

[retiredat48]

For those of you posting/reading who have a spouse of significant age difference, be aware there is a product called "longevity insurance."(LI)

LI is not well known, but you can insure against living a long life.  An example is you buy an annuity type payment that will begin at let's say age 85...if you live that long.  So if the concern is a spouse will live a long time, you get this insurance.  

Rates are actually quite reasonable, because the actuarial tables are that many will not live to collect (the purpose of insurance).  You fund the insurance annually from the Social Security you start at lets say age 62.

If anyone interested, I have in my library sample rates for age 85 and up payouts.

So anyone worried about living to age 102...get longevity insurance!  Not nearly as expensive at age 62 as life insurance is, or buying a current-payout annuity.

R48

[Chahta]

Mar 25, 2021 23:50:00 GMT chang said:

Mar 25, 2021 22:40:07 GMT yogibearbull said:

There is spousal benefit. But your direct benefit disappears with you. www.ssa.gov/oact/quickcalc/spouse.html

So she can actually receive a benefit based on my SS, once she reaches 62, which will last for her lifetime? (Even though she has never contributed to SS?) That’s nice, didn’t know that.

Survivor benefits (reduced) can start at 60 years. Remarrying can have an impact before 60 years of age.

[yogibearbull]

Mar 26, 2021 3:19:20 GMT chang said:

The SS website isn’t clear. Can my wife start collecting at age 62 even while I am alive and also collecting? Or can she collect only after I die?

Spousal benefits kick in when she is 62 and you are around. These are her benefits.

Social Security is a social support system. Spousal benefits trigger even if couples divorce.

[anitya]

Mar 26, 2021 12:27:57 GMT yogibearbull said:

Mar 26, 2021 3:19:20 GMT chang said:

The SS website isn’t clear. Can my wife start collecting at age 62 even while I am alive and also collecting? Or can she collect only after I die?

Spousal benefits kick in when she is 62 and you are around. These are her benefits.

Social Security is a social support system. Spousal benefits trigger even if couples divorce.

yogibearbull , Only if you know the answers on top of your head - not relevant to me but

can the surviving spouse receive the benefits at 62 if the spouse passes away before the surviving spouse turns 62?  I am assuming Yes.
can the surviving spouse receive benefits even if remarried?  I am assuming No.
can all the sister wives receives the benefits?  I am assuming Yes.

[yogibearbull]

Mar 26, 2021 17:55:10 GMT anitya said:

Mar 26, 2021 12:27:57 GMT yogibearbull said:

Spousal benefits kick in when she is 62 and you are around. These are her benefits.

Social Security is a social support system. Spousal benefits trigger even if couples divorce.

yogibearbull , Only if you know the answers on top of your head - not relevant to me but

can the surviving spouse receive the benefits at 62 if the spouse passes away before the surviving spouse turns 62?  I am assuming Yes.
can the surviving spouse receive benefits even if remarried?  I am assuming No.
can all the sister wives receives the benefits?  I am assuming Yes.

Survivor benefits are more complicated due to varying situations. There are several SSA links focusing on different aspects.

A surviving spouse may claim benefits at 60, or wait until FRA; even earlier if disabled or caring for minor child of the deceased.

At least 10 years of marriage for surviving divorced spouse benefit eligibility and no effect if remarry after 60 [What is the logic in that?].

Remarrying may stop spousal or survivor benefits.

Sister wives is an interesting term - it probably means people who were married & divorced multiple times. Probably yes, if each surviving divorced spouse had 10 years of marriage and not remarried before 60.

I have heard of cases of marriages for immigration and pension, but SSA was thinking ahead trying to avoid marriages for Social Security.

Overview www.ssa.gov/benefits/survivors/onyourown.html
Search www.google.com/search?q=social+security+survivor+benefit&rlz=1C1MKDC_enUS774US774&oq=social+security+&aqs=chrome.1.69i57j69i59l2j69i60l2j69i61j69i65l2.12587j0j7&sourceid=chrome&ie=UTF-8

[Capital]

Mar 26, 2021 1:25:55 GMT steadyeddy said:

Mar 25, 2021 23:50:00 GMT chang said:

So she can actually receive a benefit based on my SS, once she reaches 62, which will last for her lifetime? (Even though she has never contributed to SS?) That’s nice, didn’t know that.

LINK 

chang , In general the spouse gets at most half of the primary claimant's monthly payment. Whole bunch of conditions exist.

www.ssa.gov/benefits/survivors/ifyou.html#h6

Once you are gone the survivor benefit, not the spousal benefit, will apply.

edit to add - great comments in the prior post by yogibearbull

[liftlock]

Here a a few thoughts not mentioned by others:

Social Security is a unisex benefit that is worth more to women who on average live longer than men.  This includes any benefits that may accrue from delaying the start of benefits.

Social Security provides a form of longevity insurance which can be important to someone who has not saved enough for their retirement, and risks running out of money before they die. Delaying Social Security until age 70 can help improve the long term financial survival of someone with limited savings.

Calculating the probability of receiving Social Security benefits at different claiming ages provides a way to determine the claiming strategy that is most likely to maximize lifetime benefits based on the probability of receiving them.  There is a high probability of receiving benefits at age 62 and the probability declines as one ages.  Actuarial tables can be used to calculate the probable value of receiving benefits for each age.  The last time I performed these calculations I concluded that a white collar working male is likely to maximize the probable value of receiving their benefits by claiming them at age 68.   Women maximized the probable value of receiving their benefits by claiming them at age 70.  Married couples might want to base their calculations on joint life probabilities of survival.   A spreadsheet for calculating this can be found at www.financialarchitectsllc.com/resources

Delaying Social Security benefits can be used to distribute / drawdown excessive amounts saved in tax deferred accounts at lower tax rates.  A maximum of 85% of the increased payout from delaying social security is subject to ordinary income tax.

The optimal claiming strategy for a married couple can be quite complex.  The general advise is for the higher earning spouse to defer benefits until age 70 while the lower earning spouse claims benefits at the earliest possible age.  This will maximize the benefits of the surviving spouse who can only claim the greater of the couples benefits.  Age differences of the two spouses is a complicating factor along with the earnings record of the lower earning spouse.  Married couples should try to maximize the number of years that both parties receive benefits without sacrificing benefits to the surviving spouse.  It rarely pays for both spouses to delay benefits until age 70.  The claiming options for Married couples are numerous and one of the paid Social Security calculators can help sort things out.

Social Security benefits provide some inflation protection.  Deferring benefits increases the inflation protection benefit.

[chang]

Thanks liftlock. What seems most on-point to me are the "break even age" calculations. As long as these point to an age in the late 80s, I continue to be of a mind to start taking SS at 62 whether I need it or not. From age 62 to my late 80s I can envisions lots of ways to spend money .... after 85, not so many. I'd rather take it, keep it, spend it, invest it, whatever .... rather than leave it in Uncle Sam's piggy bank.

[Chahta]

I suspect you were born after 1960. As such your Full Retirement Age is 67. You would take a 30% reduction to draw SS at 62. If your benefit is $1000/month ($700 after reduction) then by age 80 you would have been paid $151,200. If you waited until FRA then the amount would be $156,000. That is a long time to wait for $4800 given the lost opportunity of money and you actually make it to 80 years.

Thanks for the link, liftlock.

[retiredat48]

Apr 14, 2021 12:09:10 GMT Chahta said:

I suspect you were born after 1960. As such your Full Retirement Age is 67. You would take a 30% reduction to draw SS at 62. If your benefit is $1000/month ($700 after reduction) then by age 80 you would have been paid $151,200. If you waited until FRA then the amount would be $156,000. That is a long time to wait for $4800 given the lost opportunity of money and you actually make it to 80 years.

Thanks for the link, liftlock.

In a brief summary, this post by Chahta says it all.

And this is not counting the fact that taking SS at age 62, you have the money LONGER and can earn an investment return.

Historically, anyone taking SS at age 62, and invested the early money received into an untouched  stock portfolio, there would never be a breakeven age by delaying.  You would die before that age.

R48

[chang]

Yep retiredat48 that's how it looks to me as well. Still got a couple of years to go, but time seems to be passing faster and faster with every year.

[johntaylor]

There may be a math reason why, as Wm James said, time seems to pass more quickly with age -- each day becomes a smaller part of your total amount of life-experience.   

In his book Biological Time,  Lecomte du Nouy made related points about physiological v chronological time.

To slow time, spend a week in some new foreign city.

[richardsok]

Jul 28, 2021 13:55:35 GMT johntaylor said:

There may be a math reason why, as Wm James said, time seems to pass more quickly with age -- each day becomes a smaller part of your total amount of life-experience.   

In his book Biological Time,  Lecomte du Nouy made related points about physiological v chronological time.

To slow time, spend a week in some new foreign city.

To slow time, sit next to my brother-in-law at Thanksgiving.

[retiredat48]

Jul 28, 2021 13:55:35 GMT johntaylor said:

There may be a math reason why, as Wm James said, time seems to pass more quickly with age -- each day becomes a smaller part of your total amount of life-experience.   

In his book Biological Time,  Lecomte du Nouy made related points about physiological v chronological time.

To slow time, spend a week in some new foreign city.

Ah, but each day also means the next day is a higher percentage of one's remaining time.  Important for those in their seventies or higher.

I don't know how my living 101 y/o mother-in-law grapples with this high percentage, while being like in-prison in a Nursing Facility!?  Bless her.

R48

[shipwreckedandalone]

SS is guaranteed to go up every year until you claim it (8%/year).
Taking SS early in order to expose it to risk in the stock market could result in possible negative yearly return.
Even tho the COLA increases are the same % for every recipient, those that wait have a higher monthly benefit base in which the COLA compounds yearly for the rest of their lives.
Some people believe we are about to enter an inflationary cycle.
From 1975-81 the SS COLA increased averaged aver 8%.
Everybody has different budgetary requirements. Not a recommendation.

If you anticipate your last years without significant elderly care assistance or children to assist you, you might consider a Medigap policy since changes may be less frequent than Advantage plans and cognitive skills may diminish. Changing these plans are tricky sometimes for someone in their 90's.

[FD1000]

Apr 14, 2021 12:09:10 GMT Chahta said:

I suspect you were born after 1960. As such your Full Retirement Age is 67. You would take a 30% reduction to draw SS at 62. If your benefit is $1000/month ($700 after reduction) then by age 80 you would have been paid $151,200. If you waited until FRA then the amount would be $156,000. That is a long time to wait for $4800 given the lost opportunity of money and you actually make it to 80 years.

Thanks for the link, liftlock.

Let's look at more realistic numbers.  If you start at age 62 you get $1700 and at age 66 $2244(8% more annually = 32% higher). Assume 8% annual return and investing monthly.  COLA is unknown, so let's assume zero.

At age 80.  The 62 has 18 years.  The 66 has 14 years
Total...............$367.2K...................$376.9K....the 66 years old catch up at age 80, but wait, what if they live to age 95.


At age 95. The 62 has 33 years. The 66 has 29 years

Total...............$594K...................$780.9K....that's almost $187K more

================

Taking early or not assume several unknown factors.  Since I don't believe in predictions, my wife and I will take SS at age 65...why?
1) It's between 62 to 70 but closer to 62.
2) If you die prior to taking SS it's not good and waiting 3 years sounds good to me.
3) I ran several scenarios and they came up pretty close.
4) SS at age 62 may increase your ACA premium by a lot when you don't work, and why it's good to wait until SS.
4) SS will pay for my Medicare and any taxes.  It's just an easy solution

KISS

[paulr888]

Chang ... This is a very important decision and I would not depend solely on the collective wisdom of the brain trust here even though we are so darn smart. There are wealth advisors who keep up with all the changes to strategy and I would lean on one of the ones who do. The smartest guy I know on this topic is Rick Plum with Lucia Securities in San Diego, CA. But do chose a CFP.

Here are some thoughts for you based upon my outdated information:

- If you contemplate making some Roth conversions, the sweet spot for doing that is before taking SS because at some point the marginal dollar you Roth convert will carry a booger on it with additional tax on a portion of your SS, maxing out at 85%.

- I am single. I retired early. My golf country club dues and expenses are high and after depleting my taxable account I didn't want to eat into my IRA so much so I took SS at 62. Upon my demise, my left over IRA will go to my beneficiaries and my SS expires so in my situation it was a no brainer decision for me.

- Being married that you are, the situation is complicated. Issues to consider is relative ages of spouses, which spouse has higher SS, life expectancies based on current health and family history among others. There are "Couples Strategies" to identify and understand. What I have seen is the higher SS spouse defers to 70 and the lower spouse takes SS with the higher spouse taking spousal benefits on that. But that could have changed. Ceteris paribus, men die first. So stats say your wife will inherit your higher SS when you are gone, suggesting your deferral makes sense. Anyway, this is a very complicated deal. Suggest you find someone very knowledgeable on current rules. Good luck.

[Norbert]

Jul 28, 2021 13:55:35 GMT johntaylor said:

There may be a math reason why, as Wm James said, time seems to pass more quickly with age -- each day becomes a smaller part of your total amount of life-experience.   

In his book Biological Time,  Lecomte du Nouy made related points about physiological v chronological time.

To slow time, spend a week in some new foreign city.

I agree. Time seems to pass more quickly when I get into a rut, doing the same things all the time.

Time slows down when doing new, challenging things every day; meeting new people, visiting new places, doing sports, reading good books, etc. Then life seems rich, full of new accomplishments and memories.

[chang]

paulr888 Thanks, fortunately I still have a few years before this becomes an imminent decision. Based on the "break even" calculators, my original reasoning still seems sound: start at 62. I wasn't aware of the spousal benefits, so I will also get those going when she is 62.

Next time I'm home in the US I plan to discuss wills, trusts, etc. with the family attorney and she can probably give me some sage advice as well.

[anitya]

For me, the sense of time has not changed - when I am having fun, it seems to go by fast and when I have to do things I do not enjoy (like sleep) it seems to go by slow.

On the topic of doing new things, when I seek information from Asset Managers they give access to / provide different info depending on whether I am an RIA or just an individual investor. Sometimes, this designation also effects whether a particular class of an OEF is available or not.  Mostly for the first reason, I am thinking of getting an RIA certification.  How much does it cost initially and annually?  I will do some internet search about this but thought I would also post in case somebody here has experience in this matter or knows of hand a source for this info.