Social Security- take early or later?

[erc]

False. I'm a Gen-Xer, and I have a pension. I have many younger co-workers who have pensions.

Yes, not gone completely but way way less:

In 1980, more than 148,000 DB plans covered 30 million active workers (38% of the workforce), but by 2008 just over 48,000 DB plans covered 18.9 million American active workers (13% of the workforce).

 

[runwad]

I guess I'm the only one who wouldn't be upset if I didn't collect all of the money I paid into social security.

I understand the program as it was originally intended, the money out of my check is going to fund the social security checks of those now retired.

It's not MY money; for my social security checks, its to help the generation before me. And you know what, I'm fine with that. If my donation is enabling someone else to have a good life, well I look at it as my contribution to a better society.

 

[Alexle2007]

Money from the SS pot also goes to disabled people and children under 18 who've lost a parent.

This is not accurate. Disability funds are in a separate trust fund than retirement funds. People who collect disability are not depleting the retirement funds over older Americans.

 

[tguz]

We are leaning on taking it at 62 and letting it pay for our medical plan and housing costs. We can then draw down less of our 401K per month.

 

[mikehn]

take it asap. If you dont need it fine, reinvest it for a better return, give it to your kids, etc. Congress can change things on any given day, and they will never change things to give you more.

 

[georgina]

You do what you think is right. There’s no one size fits all solution. No way would we start before FRA. DH and I both have longevity in our family and he’s letting his grow. I will start at 67. From the ssa website there could be a 77% increase in monthly benefits from taking at age 62 vs 70 -

Let’s say you turn 62 in 2023, your full retirement age is 67, and your monthly benefit that starts at full retirement age is $1,000. If you start to get benefits at age 62, we’ll reduce your monthly benefit 30%
to $700 to account for the longer time you receive benefits. This decrease is usually permanent.
If you choose to delay your receipt of benefits until age 70, you would increase your monthly benefit
to $1,240. This increase is the result of delayed retirement credits you earn for your decision to postpone receipt of benefits past your full retirement age. The benefit at age 70 in this example is about 77% more than the benefit you would receive each month if you start to get benefits at age 62

 

[amylevan]

There is no right answer, there’s only a best guess.

Ultimately, you make less money per month retiring earlier, but you make it for a longer time.

In the case of $1000 benefit at 67, if you take your retirement at 62, you will break even at 78.8. Considering the average life expectancy of a U.S. male is currently 74.2, men might consider taking it at 62. The average life expectancy for females is 79.9, so they might consider delaying. Note that this break even doesn’t take into account any gains you would make if you were able to save it or not take money out of a different retirement account. Those gains makes the break even point even older.

Conversely, delaying taking SS until 70, that break even point compared to 67 is 82.5. That is well past the average life expectancy of men in this country. It’s also 2.5 years past the average for women. Again, any gains makes this age later.

All of these calculations are useless though if you don’t have other savings. If you “need” the extra percentage to make ends meet, then you need to wait. If you are forced out of a job and need to retire and need the money, then you take the money. Not all of us will have the luxury of determining when we retire.

 

[DLgal]

There is no right answer, there’s only a best guess.

Ultimately, you make less money per month retiring earlier, but you make it for a longer time.

In the case of $1000 benefit at 67, if you take your retirement at 62, you will break even at 78.8. Considering the average life expectancy of a U.S. male is currently 74.2, men might consider taking it at 62. The average life expectancy for females is 79.9, so they might consider delaying. Note that this break even doesn’t take into account any gains you would make if you were able to save it or not take money out of a different retirement account. Those gains makes the break even point even older.

Conversely, delaying taking SS until 70, that break even point compared to 67 is 82.5. That is well past the average life expectancy of men in this country. It’s also 2.5 years past the average for women. Again, any gains makes this age later.

All of these calculations are useless though if you don’t have other savings. If you “need” the extra percentage to make ends meet, then you need to wait. If you are forced out of a job and need to retire and need the money, then you take the money. Not all of us will have the luxury of determining when we retire.

All of this.

We are taking SS (if it still exists) at 62 and investing it. We won't need it, due to military retirement pension and VA disability payments. Hoping to leave our kids a nice inheritance.

 

[QueenIsabella]

Yeah, I'm leaning towards taking it early. My parents died in their 70's--no reason to think I'll live to 95 or more. We have plenty of other assets that we can leave alone to grow if we have SS $ coming in. And when it comes to the government, I'd rather have cash in hand versus a promise of more at a later time. Everyone needs to evaluate their own, particular circumstances and make an informed decision.

 

[georgina]

Yep, extremely individual. Would rather wait to have the higher amount for the rest of our life, plus if he goes first I will get the higher amount. (He is 8 years older) That's why advice here is not relevant to many specific cases. To us SS is more like an old age insurance policy. I am using our lower income years before DH takes SS to convert some of his sizable 401k/IRA funds to Roth. Now he can hold off until 73 to take mandatory withdrawals, I have a little longer to decrease that amount.

 

[Debbie Jean]

Since this is an old thread, I had to go back to see what I had posted originally in Feb 2020… found this

I'm a boomer and I resemble that remark! LOL

BTW, I'm 67 still working and will until I max out my benefits at 70. Not all boomers are created equal.

That was the plan but how did I do?

Well, I did work until 70 and retired last summer. But after runnning the numbers, I decided to start taking social security at 67 when I reached full retirement age. Banked the payments and used them towards the perfect retirement condo on the Jersey shore.

As a single person, I didn’t need to coordinate benefits with a spouse which made the decision simpler… circumstances are so variable everyone needs to look at their own particular situation.

I feel really fortunate that things worked out so well… being flexible on the social security benefits definitely turned out to be a key decision.

 

[2TxAgs]

While life expectancy is to the 70s from birth, if you have lived into your 50s/60s, your life expectancy is actually much longer. This takes into account that you've survived childhood/young adult accidents and early deaths due to disease, etc. As we get older, we all know someone who died prematurely/at a younger age. However, we forget how MANY people we know, our age or older, who are still alive. The folks who study financial security are warning that we're acting without understanding the full picture of how long most of us will live. From a recent retirement publication:

Did you know life expectancy increases with age? It’s true! At birth, the average life expectancy for boys and girls is around 75 and 80, respectively. But every year you live, your life expectancy increases. So our question is this: What is the average life expectancy for a 65-year-old man and woman?

Ready for the answer?

For females, the average 65-year-old can expect to live to 86 years old, and males can expect to live to 83. According to the CDC, as of 2019, a 65-year-old woman lived an average of an additional 20.8 years, and 65-year-old men lived an average of an additional 18.2 years.

 

[QueenIsabella]

While life expectancy is to the 70s from birth, if you have lived into your 50s/60s, your life expectancy is actually much longer. This takes into account that you've survived childhood/young adult accidents and early deaths due to disease, etc. As we get older, we all know someone who died prematurely/at a younger age. However, we forget how MANY people we know, our age or older, who are still alive. The folks who study financial security are warning that we're acting without understanding the full picture of how long most of us will live. From a recent retirement publication:

Did you know life expectancy increases with age? It’s true! At birth, the average life expectancy for boys and girls is around 75 and 80, respectively. But every year you live, your life expectancy increases. So our question is this: What is the average life expectancy for a 65-year-old man and woman?

Ready for the answer?

For females, the average 65-year-old can expect to live to 86 years old, and males can expect to live to 83. According to the CDC, as of 2019, a 65-year-old woman lived an average of an additional 20.8 years, and 65-year-old men lived an average of an additional 18.2 years.

Anyone who has taken RMDs knows this. My DH has RMDs from an inherited IRA (from before the recent law changes). His RMD is based on his life expectancy--he's 60, and it was something like 7% for 2022.

Since none of knows our death date, all you can do is make your best prediction, based on your factors (health, genetics, etc.).

While DH's father died young (cancer, age 58), his mother and all his aunts/uncles lived past 80 (a couple are still alive). While my parents died in their 70's, my mother's family has a "Methuselah gene" kicking around--she had a few aunts/uncles who lived to be 100+. You just don't know...

 

[2TxAgs]

You just don't know...

No argument there!

No crystal balls here, just reminding folks that while many of us know someone who died too young, the averages still say we'll live into our 80s if we're not chronically ill at 65. It's sad to hear that older people in my mother's retirement community are panicking because inflation, medication and rent increases are leaving them wondering how they can pay their bills.

Maximizing one's SS is a hedge against this kind of distress when you're a little old lady or little old man who has diabetes, is hard of hearing and walks with a cane... there won't be any part time jobs to help you out. Spend a few hours in any retirement setting and you'll be shocked at how many OLD people are still hanging in there and relying on whatever combination of retirement funds, pensions and SS they have.

 

[MrsPete]

Yes, not gone completely but way way less:

In 1980, more than 148,000 DB plans covered 30 million active workers (38% of the workforce), but by 2008 just over 48,000 DB plans covered 18.9 million American active workers (13% of the workforce).

Yes, fewer people have pensions today, but at no point in American history have the majority had a pension.
Consider, too, that few people stay with the same employer for a whole career anymore; and to max out a pension, you have to stay put. One reasons 401Ks became popular is that people didn't want their retirement to be tied to one company.

We are leaning on taking it at 62 and letting it pay for our medical plan and housing costs. We can then draw down less of our 401K per month.

Yes, that's our plan too -- we're going to take SS at 62 (or shortly after) so that we can preserve our other accounts. Our thought: If we die younger, our accounts can be passed on to our children, whereas SS cannot.

 

[sheilafri]

There is a free open source calculator you can use to decide on an optimal claiming strategy: https://opensocialsecurity.com/

It was created by Mike Piper, who wrote a book called Social Security Made Simple, and has been beta tested with good folks over at Bogleheads.org.

You will need your (and, if you are married, your spouses) PIA, I.e., Primary Insurance Amount. The PIA can be estimated using the tools at socialsecurity.gov.

For most people, delaying will provide longevity insurance, I.e., better protection against outliving your savings. For couples, the higher earning spouse should probably delay. And count yourself lucky if you need to make this decision; most people don’t have sufficient savings to make delaying an option.

Thank you for this. DH is a high earner (thankfully) so we plan to delay him drawing SS until age 70. Especially as he will continue to have high earnings due to the nature of our businesses. As I will take more as his spouse than under my own earnings history, my understanding is it is limited to 1/2 the earners full retirement age amount so it seems there is no reason for me to delay taking the spousal amount past his full retirement age (66 1/2).

 

[lanejudy]

so it seems there is no reason for me to delay taking the spousal amount past his full retirement age (66 1/2)

There are rules. Check with a financial advisor but this is my understanding: First your spouse must be collecting before you can collect the spousal share. Prior to that you can collect against your own account, and then switch to the spousal share from his account once he begins collecting. However, if you file to collect your SS before reaching your full retirement age, it will later reduce how much spousal benefit you can collect later (it won't be the full 50%).

But again, check with a financial advisor for your specific situation based on your ages, etc.

 

[sheilafri]

There are rules. Check with a financial advisor but this is my understanding: First your spouse must be collecting before you can collect the spousal share. Prior to that you can collect against your own account, and then switch to the spousal share from his account once he begins collecting. However, if you file to collect your SS before reaching your full retirement age, it will later reduce how much spousal benefit you can collect later (it won't be the full 50%).

But again, check with a financial advisor for your specific situation based on your ages, etc.

I think you are right. I hadn’t come across that in my previous searches. Thank you for the info. It’s still a a few years away.

 

[MimitoAlex]

So I will be eligible to draw SS at the end of the year at 62, I am a stay at home wife. DH is several years younger than me, his job allows me to stay home, we are comfortable, so financially that money is not needed. The financial planner said it would be better in the long run to wait, more money for after he stops working. After looking at it all, doing a 360 several times.. this is the route we decided on.

I will say that we have several friends that took SS at 62 and now are over 65 and completely regretting it. Two of our friends have had to go back to work at 68 full time to make ends meet. Another friend is having to go back to work to cover the cost of his wife meds and cover the cost of the supplemental.

My Dad had to take SS at 62 for medical reasons and he said that it was the worst thing that he had to do, now at 84, him and my mom need that extra money, to cover the cost of medical bills, meds, and with all the inflation the cost of just about everything else. No amount of planning can and will cover whatever life throws at us.

Medicare only pays so much, then you must have a supplemental for the difference which you have to pay for and still there is money out of pocket.

 

[sheilafri]

So I will be eligible to draw SS at the end of the year at 62, I am a stay at home wife. DH is several years younger than me, his job allows me to stay home, we are comfortable, so financially that money is not needed. The financial planner said it would be better in the long run to wait, more money for after he stops working. After looking at it all, doing a 360 several times.. this is the route we decided on.

I will say that we have several friends that took SS at 62 and now are over 65 and completely regretting it. Two of our friends have had to go back to work at 68 full time to make ends meet. Another friend is having to go back to work to cover the cost of his wife meds and cover the cost of the supplemental.

My Dad had to take SS at 62 for medical reasons and he said that it was the worst thing that he had to do, now at 84, him and my mom need that extra money, to cover the cost of medical bills, meds, and with all the inflation the cost of just about everything else. No amount of planning can and will cover whatever life throws at us.

Medicare only pays so much, then you must have a supplemental for the difference which you have to pay for and still there is money out of pocket.

I’m glad you have the means to delay DH taking SS. From everything we’ve come across that is the best long-term strategy. We plan for DH to do that. It maximizes the payments to him and to me. We are thinking that I will draw SS against my earnings at FRA, which is very modest as I have mostly been a SAH mom, then we step it up when he starts drawing at age 70. We’ve yet to check with our financial planner about it as we still have a few years to go, too. DH keeps saying to look at it as longevity insurance rather than a retirement savings program.