Why not take Social Security at 62

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Lancelot
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Re: Why not take Social Security at 62

Post by Lancelot » Fri Nov 24, 2017 2:35 am

TheTimeLord wrote:
Wed Nov 22, 2017 9:20 pm
Never have thought much about taking SS at 62, but my FRA is 67 not 65, thought even less about taking it at 70. What's wrong with taking it at FRA? Does everything have to be an extreme, either 62 or 70?
Nothing at all.

Most of us are in the FRA cohorts of 66 and 67. Since you are in the 67 bracket you would take a 30% haircut at 62. When you reach 67, even a six month delay would give you an additional 4%- for life :)
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Re: Why not take Social Security at 62

Post by TheTimeLord » Fri Nov 24, 2017 8:51 am

Lancelot wrote:
Fri Nov 24, 2017 2:35 am
TheTimeLord wrote:
Wed Nov 22, 2017 9:20 pm
Never have thought much about taking SS at 62, but my FRA is 67 not 65, thought even less about taking it at 70. What's wrong with taking it at FRA? Does everything have to be an extreme, either 62 or 70?
Nothing at all.

Most of us are in the FRA cohorts of 66 and 67. Since you are in the 67 bracket you would take a 30% haircut at 62. When you reach 67, even a six month delay would give you an additional 4%- for life :)
I get that but that 4% will be indexed to inflation while hopefully money invested in the market outperforms inflation, although the security of a regular income stream is nice. I guess that is while I plan to start at approximately FRA, because I see it as good split the baby option.
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Re: Why not take Social Security at 62

Post by Lancelot » Fri Nov 24, 2017 9:49 pm

TheTimeLord wrote:
Fri Nov 24, 2017 8:51 am
Lancelot wrote:
Fri Nov 24, 2017 2:35 am
TheTimeLord wrote:
Wed Nov 22, 2017 9:20 pm
Never have thought much about taking SS at 62, but my FRA is 67 not 65, thought even less about taking it at 70. What's wrong with taking it at FRA? Does everything have to be an extreme, either 62 or 70?
Nothing at all.

Most of us are in the FRA cohorts of 66 and 67. Since you are in the 67 bracket you would take a 30% haircut at 62. When you reach 67, even a six month delay would give you an additional 4%- for life :)
I get that but that 4% will be indexed to inflation while hopefully money invested in the market outperforms inflation, although the security of a regular income stream is nice. I guess that is while I plan to start at approximately FRA, because I see it as good split the baby option.
About 4%, I just mentioned the slight bonus for a relatively short, six month additional delay. For your cohort, the increase from 62 to 63 is 5% Just sayin.

If you feel you would do better in the market, why not start at 62? Or somewhere between 62 and 67?

https://www.ssa.gov/OACT/ProgData/ar_drc.html
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TheTimeLord
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Re: Why not take Social Security at 62

Post by TheTimeLord » Fri Nov 24, 2017 10:07 pm

Lancelot wrote:
Fri Nov 24, 2017 9:49 pm
TheTimeLord wrote:
Fri Nov 24, 2017 8:51 am
Lancelot wrote:
Fri Nov 24, 2017 2:35 am
TheTimeLord wrote:
Wed Nov 22, 2017 9:20 pm
Never have thought much about taking SS at 62, but my FRA is 67 not 65, thought even less about taking it at 70. What's wrong with taking it at FRA? Does everything have to be an extreme, either 62 or 70?
Nothing at all.

Most of us are in the FRA cohorts of 66 and 67. Since you are in the 67 bracket you would take a 30% haircut at 62. When you reach 67, even a six month delay would give you an additional 4%- for life :)
I get that but that 4% will be indexed to inflation while hopefully money invested in the market outperforms inflation, although the security of a regular income stream is nice. I guess that is while I plan to start at approximately FRA, because I see it as good split the baby option.
About 4%, I just mentioned the slight bonus for a relatively short, additional, delay.

If you feel you would do better in the market, why not start at 62? Or somewhere between 62 and 67?

https://www.ssa.gov/OACT/ProgData/ar_drc.html
I don't think my planned tax situation will make taking SS at 62 wise.
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Re: Why not take Social Security at 62

Post by Lancelot » Fri Nov 24, 2017 10:12 pm

^ Well you have put some thought in to it, so go for it. There is no one perfect answer for all SS recipients. We are fortunate to have a choice on when to start benefits.
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Re: Why not take Social Security at 62

Post by TravelforFun » Fri Nov 24, 2017 10:14 pm

Real life example here:

I'm 65 and my wife is 61.

Our scheduled monthly SS benefits at 62, Full Retirement Age, and 70 for me and my wife are: $2,380, $2,684, $3,606 (mine); and $750, $1,018, $1,316 (my wife's)

Next year, my wife will file for her benefit when she turns 62 and receive $750. I will file a restricted application and receive the spousal benefit which is 1/2 of my wife's principle insurance amount (1/2 of $1,018 or $509). The reason I can do this is because I was born before January 2,1954.

Then I will file when I turn 70 and receive $3,606; and my wife will file for her spousal benefit and receive $1,074 (1/2 of my principle insurance amount minus her early filing penalty).

If I die first, my wife will receive the survivor's benefit of $3,606.

This is our game plan.

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Re: Why not take Social Security at 62

Post by delamer » Fri Nov 24, 2017 10:37 pm

DrGoogle2017 wrote:
Thu Nov 23, 2017 3:31 pm
Diogenes wrote:
Thu Nov 23, 2017 12:53 pm
DrGoogle2017 wrote:
Thu Nov 23, 2017 11:40 am
I’m delaying and here are my reasons:
1) I’ve already enough to spend
2) I need the income space for Roth Conversion
3) I’m still in robust health, 2 of my aunts in their 90s are still conscious and walking, and doing some cooking. No one in my family has Alzheimers . One is not on any medicine at all. I found out from my brother that my grandfather did live healthily until he passed away at 93, died in his sleep. I might have longevity in my gene so I better be prepared. Plus the 2 X chromosomes. I tried to google oldest supercentarians ever lived and most of them were females.
4) Insurance against sequence of risk, bad investment decision due to senility, and not just insurance for longevity.
5) Simplify my life when I get older, make life easier for me and my kids.
6) If possible, I would like to get credit for delaying until I’m 75.
Unfortunately, you will have no control over what the amount of your actual payment will be. SS is not an annuity or an investment account. It is an entitlement payment, as after about 7 years most will have received back what they have contributed. Those amounts can be changed or means-tested at any time. If you feel that demographics will support the current levels into the future then you should delay. If you have a pension that keeps you above Roth conversion thresholds anyway, then delaying is likely not useful. You have a point with number 4, but there are other ways to handle the possible senility issue.
The best case may be if you could delay without touching your retirement accounts as that will minimize the risks. If you delay SS but must live by withdrawing from your own tax-sheltered accounts in the 8 years meanwhile, you are taking the risk while ensuring a smaller balance in your personally-controlled accounts, and thus a smaller inheritance for your kids.
I believe SS is already mean tested as of today, not when you receive it, but when you pay tax. The argument that if you hurry and take it at 62 to avoid the 25% cut when the trust fund is depleted may not hold. What makes you think those who take it at 62 will be spared?

I think for a couple, the best approach maybe to stretch it out as long as possible, may not be as simple as a single person. So my husband already took at 64.5, I will take it at 70. We are 8 years apart.

DrGoogle2017 first point above is what I don't understand either. Do people who are concerned about changes to the SS program think that they will somehow be innoculated against their benefits being reduced if they take them at 62? Or do they think the whole system is going to collapse and no one will receive any benefits after a certain date and they want to grab every penny before then?

I just don't get it.

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Re: Why not take Social Security at 62

Post by Diogenes » Sat Nov 25, 2017 12:02 am

delamer wrote:
Fri Nov 24, 2017 10:37 pm

DrGoogle2017 first point above is what I don't understand either. Do people who are concerned about changes to the SS program think that they will somehow be innoculated against their benefits being reduced if they take them at 62? Or do they think the whole system is going to collapse and no one will receive any benefits after a certain date and they want to grab every penny before then?

I just don't get it.
Not that simplistic. If someone is not planning Roth conversions, the answer is much less clear. The issue of possible future changes is just another extra wrinkle. If cash is not needed from either SS or investments until FRA, or 70, the easy answer is to defer filing. However, if you plan to draw down investments under your control while you wait for a higher future payout, you must consider how long it will take to break even, and what impact changes would have.
In my wife’s case, if she deferred from 62 to 66, while taking the same amount from her 401k, and paying the taxes, it would take 8 years past 66 just to break even. Much longer if she waited to 70. Meanwhile, should the market continue to do well, the lower 401k balances that we control would extend the break-even dates further.
At the same time, if there are any changes to the system which demographics will at some point require, it will likely not result in a higher future benefit.
About 48 percent of folks file when they are 62, and a large majority by FRA. Perhaps many just need the money, but many others here make the decision for the reasons above.

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Re: Why not take Social Security at 62

Post by delamer » Sat Nov 25, 2017 1:10 am

Diogenes wrote:
Sat Nov 25, 2017 12:02 am
delamer wrote:
Fri Nov 24, 2017 10:37 pm

DrGoogle2017 first point above is what I don't understand either. Do people who are concerned about changes to the SS program think that they will somehow be innoculated against their benefits being reduced if they take them at 62? Or do they think the whole system is going to collapse and no one will receive any benefits after a certain date and they want to grab every penny before then?

I just don't get it.
Not that simplistic. If someone is not planning Roth conversions, the answer is much less clear. The issue of possible future changes is just another extra wrinkle. If cash is not needed from either SS or investments until FRA, or 70, the easy answer is to defer filing. However, if you plan to draw down investments under your control while you wait for a higher future payout, you must consider how long it will take to break even, and what impact changes would have.
In my wife’s case, if she deferred from 62 to 66, while taking the same amount from her 401k, and paying the taxes, it would take 8 years past 66 just to break even. Much longer if she waited to 70. Meanwhile, should the market continue to do well, the lower 401k balances that we control would extend the break-even dates further.
At the same time, if there are any changes to the system which demographics will at some point require, it will likely not result in a higher future benefit.
About 48 percent of folks file when they are 62, and a large majority by FRA. Perhaps many just need the money, but many others here make the decision for the reasons above.
Oh, I think there are good reasons to not defer. I just don't think anticipating catastrophic changes to the SS program is among the good reasons.

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Re: Why not take Social Security at 62

Post by tampaite » Sat Nov 25, 2017 8:05 am

Deleting my messages on this forum
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Re: Why not take Social Security at 62

Post by Call_Me_Op » Sat Nov 25, 2017 8:34 am

tampaite wrote:
Sat Nov 25, 2017 8:05 am
chipperd wrote:
Tue Nov 21, 2017 6:00 am
Most of what I find on the web says to wait at least until age 67 (my full benefit age). I am having a difficult time making the math justify most of what I read, and as is typical for me it seems, it seems like I will buck the trend and take Social Security at 62,
My 2 cents. Take it at 62. Most people don't realize they die before they turn 78(life expectancy in US)
That's the life expectancy at birth, not the life expectancy for someone who has reached 62 (which is between 83 and 85).
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Re: Why not take Social Security at 62

Post by KSOC » Sat Nov 25, 2017 8:50 am

My plan is to take SS at 62. Small pension too. 401k & tIRA will grow and supplement if needed. My crossover is age 77. Male longevity history in my family not good. Mother just past away at 95. Dad died at 58. Not gonna roll that dice.
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Re: Why not take Social Security at 62

Post by TravelforFun » Sat Nov 25, 2017 9:14 am

tampaite wrote:
Sat Nov 25, 2017 8:05 am
chipperd wrote:
Tue Nov 21, 2017 6:00 am
Most of what I find on the web says to wait at least until age 67 (my full benefit age). I am having a difficult time making the math justify most of what I read, and as is typical for me it seems, it seems like I will buck the trend and take Social Security at 62,
My 2 cents. Take it at 62. Most people don't realize they die before they turn 78(life expectancy in US)
Not the best strategy for everyone. It's simple if you're single but a lot more complicated for married people as they have to deal with two sets of data including benefits, health, and ages. See my real life example post above.

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Re: Why not take Social Security at 62

Post by TheTimeLord » Sat Nov 25, 2017 10:10 am

Lancelot wrote:
Fri Nov 24, 2017 10:12 pm
^ Well you have put some thought in to it, so go for it. There is no one perfect answer for all SS recipients. We are fortunate to have a choice on when to start benefits.
Totally agree, especially since one's future is unknowable. We all just try to do the best we can with these decisions and for most they seem to work out okay one way or the other.
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Re: Why not take Social Security at 62

Post by TheTimeLord » Sat Nov 25, 2017 10:15 am

I admit I have heard a few interesting reasons for considering taking it earlier than FRA which I will consider. 62 won't work but maybe 65 in my case. I think right now 70 is off the table for me with all the uncertainties.
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Re: Why not take Social Security at 62

Post by Artsdoctor » Sat Nov 25, 2017 10:27 am

TheTimeLord wrote:
Sat Nov 25, 2017 10:10 am
Lancelot wrote:
Fri Nov 24, 2017 10:12 pm
^ Well you have put some thought in to it, so go for it. There is no one perfect answer for all SS recipients. We are fortunate to have a choice on when to start benefits.
Totally agree, especially since one's future is unknowable. We all just try to do the best we can with these decisions and for most they seem to work out okay one way or the other.
I think that's one thing that this thread has done: extraordinary number of variables.

One thing I'd like to clarify. There have been a lot of good arguments for taking social security benefits early. However, there are earned income limits, from what I understand. If you're going to be continue working at 62 (say, 62-65), your social security benefits would be delayed, right? You won't be able to collect.

https://www.ssa.gov/planners/retire/whileworking.html

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Re: Why not take Social Security at 62

Post by TheTimeLord » Sat Nov 25, 2017 10:43 am

Artsdoctor wrote:
Sat Nov 25, 2017 10:27 am
TheTimeLord wrote:
Sat Nov 25, 2017 10:10 am
Lancelot wrote:
Fri Nov 24, 2017 10:12 pm
^ Well you have put some thought in to it, so go for it. There is no one perfect answer for all SS recipients. We are fortunate to have a choice on when to start benefits.
Totally agree, especially since one's future is unknowable. We all just try to do the best we can with these decisions and for most they seem to work out okay one way or the other.
I think that's one thing that this thread has done: extraordinary number of variables.

One thing I'd like to clarify. There have been a lot of good arguments for taking social security benefits early. However, there are earned income limits, from what I understand. If you're going to be continue working at 62 (say, 62-65), your social security benefits would be delayed, right? You won't be able to collect.

https://www.ssa.gov/planners/retire/whileworking.html
In my case I don't foresee a situation where I would want to take SS while working. It seems like a lot of this comes down to how you plan to manage Roth conversions, RMDs, taxes plus whether your preference is to withdraw from tax advantaged accounts or start SS. I don't think I have seen this discussed but I think this would scenario would warrant consideration. Say you are retired 63 or 64 years old and a Bear Market hits, would it be in your best interest to withdraw from tax advantaged accounts or start SS?
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Re: Why not take Social Security at 62

Post by dbr » Sat Nov 25, 2017 10:44 am

Artsdoctor wrote:
Sat Nov 25, 2017 10:27 am
TheTimeLord wrote:
Sat Nov 25, 2017 10:10 am
Lancelot wrote:
Fri Nov 24, 2017 10:12 pm
^ Well you have put some thought in to it, so go for it. There is no one perfect answer for all SS recipients. We are fortunate to have a choice on when to start benefits.
Totally agree, especially since one's future is unknowable. We all just try to do the best we can with these decisions and for most they seem to work out okay one way or the other.
I think that's one thing that this thread has done: extraordinary number of variables.

One thing I'd like to clarify. There have been a lot of good arguments for taking social security benefits early. However, there are earned income limits, from what I understand. If you're going to be continue working at 62 (say, 62-65), your social security benefits would be delayed, right? You won't be able to collect.

https://www.ssa.gov/planners/retire/whileworking.html
Yes, the discussion is for people who are not working. If you are working there are limits, but if you are working you are also accruing credits which may be a big deal for some people or of little impact for others.

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Re: Why not take Social Security at 62

Post by supersharpie » Sat Nov 25, 2017 11:29 am

Jack FFR1846 wrote:
Tue Nov 21, 2017 7:33 am
You'd want to be very realistic. Where you're 50, you'll take SS at earliest in 2029. In another 5 years, the trust fund is expected to run out of money and drop payments by 25%, so waiting is less of a "no brainer" than it is for other long lived family members who are older. If you're making a spreadsheet, drop the expected payments in 2034 by 25%.

What your situation is matters. Make a spreadsheet where you take SS at various ages and see where the break even point is. Are you leaving a spouse with the remainder of your SS when you die? That amount is based on when you take SS. What about strategy to reduce RMDs and affect medicare payments? If you're not taking SS, you would likely be pulling money out of other accounts, reducing the eventual RMD numbers.

Lots of moving parts and you really need to decide for yourself. You're not bucking the trend by taking the job at 62, except in Bogleheads. It's the most common age where people take SS.
There will be reform to shore up the trust funds prior to 2034. It is doubtful OP will be impacted by those reforms. Everyone 45 and older were grandfathered the last time there was major reform to the system in 1984.

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Re: Why not take Social Security at 62

Post by The Wizard » Sat Nov 25, 2017 11:30 am

TheTimeLord wrote:
Sat Nov 25, 2017 10:15 am
I admit I have heard a few interesting reasons for considering taking it earlier than FRA which I will consider. 62 won't work but maybe 65 in my case. I think right now 70 is off the table for me with all the uncertainties.
The method used to compute delayed retirement credits after FRA is not actuarially correct.
In my case, FRA of 66, I do indeed get an 8% increase if I were to claim at age 67 vs age 66.
But from age 69 to 70, the increase is 1.32/1.24 = 1.064516, which is a 6.45% increase.

If the 8% increase from 66 to 67 was actuarially correct, then I should get closer to a 9% increase when delaying from 69 to 70.
So I see nothing bad about claiming after the first year or so after FRA...
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Re: Why not take Social Security at 62

Post by Independent » Sat Nov 25, 2017 12:53 pm

tampaite wrote:
Sat Nov 25, 2017 8:05 am
My 2 cents. Take it at 62. Most people don't realize they die before they turn 78(life expectancy in US)
That's a life expectancy at birth, it's irrelevant to someone who has already lived to 62. You want the a expectancy at 62.

But, there is no single answer even for that. Females live longer than males. High income people longer than low income people. People with good weight, blood pressure, and exercise habits live longer than others.

Another factor is that most tables are based on mortality rates for the general population - including people who are currently in nursing homes and hospices. Remove people with known, serious illnesses and the expectancy goes up by a couple years.

Finally, if we analyzed any private insurance based on "average loss", we'd never buy insurance. We buy because we might be in the "unusual" category. Deferring SS is a defensive strategy for some people. For them, the 90th percentile life span is more important.

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Re: Why not take Social Security at 62

Post by Independent » Sat Nov 25, 2017 1:11 pm

The Wizard wrote:
Sat Nov 25, 2017 11:30 am

The method used to compute delayed retirement credits after FRA is not actuarially correct.
In my case, FRA of 66, I do indeed get an 8% increase if I were to claim at age 67 vs age 66.
But from age 69 to 70, the increase is 1.32/1.24 = 1.064516, which is a 6.45% increase.

If the 8% increase from 66 to 67 was actuarially correct, then I should get closer to a 9% increase when delaying from 69 to 70.
So I see nothing bad about claiming after the first year or so after FRA...
Maybe the 6.45% increase is "correct" and the 8.00% increase is "too generous". How do we know what's "actuarially correct"?

Calculating the PV of a life annuity requires a mortality assumption and an interest assumption. Those are pretty personal issues. Any number that's roughly accurate for the general population isn't necessarily good for the unusual people who post here.

And, the SS administration doesn't claim their approach is "accurate" for the general population. These factors were established by law many years ago, both mortality and economic conditions have changed since then.

Fortunately, most Bogleheads have so much savings that SS is just a little bit of fun money. This issue isn't going to make or break their retirement.

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Re: Why not take Social Security at 62

Post by delamer » Sat Nov 25, 2017 1:27 pm

Independent wrote:
Sat Nov 25, 2017 1:11 pm
The Wizard wrote:
Sat Nov 25, 2017 11:30 am

The method used to compute delayed retirement credits after FRA is not actuarially correct.
In my case, FRA of 66, I do indeed get an 8% increase if I were to claim at age 67 vs age 66.
But from age 69 to 70, the increase is 1.32/1.24 = 1.064516, which is a 6.45% increase.

If the 8% increase from 66 to 67 was actuarially correct, then I should get closer to a 9% increase when delaying from 69 to 70.
So I see nothing bad about claiming after the first year or so after FRA...
Maybe the 6.45% increase is "correct" and the 8.00% increase is "too generous". How do we know what's "actuarially correct"?

Calculating the PV of a life annuity requires a mortality assumption and an interest assumption. Those are pretty personal issues. Any number that's roughly accurate for the general population isn't necessarily good for the unusual people who post here.

And, the SS administration doesn't claim their approach is "accurate" for the general population. These factors were established by law many years ago, both mortality and economic conditions have changed since then.

Fortunately, most Bogleheads have so much savings that SS is just a little bit of fun money. This issue isn't going to make or break their retirement.
It is one thing to state that Bogleheads have higher than average assets. It is another to claim that our SS is "fun money." I don't see evidence to support that. For my family, SS will make up about 1/3 of our income. That would be a significant loss.

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Re: Why not take Social Security at 62

Post by The Wizard » Sat Nov 25, 2017 2:03 pm

Independent wrote:
Sat Nov 25, 2017 1:11 pm
The Wizard wrote:
Sat Nov 25, 2017 11:30 am

The method used to compute delayed retirement credits after FRA is not actuarially correct.
In my case, FRA of 66, I do indeed get an 8% increase if I were to claim at age 67 vs age 66.
But from age 69 to 70, the increase is 1.32/1.24 = 1.064516, which is a 6.45% increase.

If the 8% increase from 66 to 67 was actuarially correct, then I should get closer to a 9% increase when delaying from 69 to 70.
So I see nothing bad about claiming after the first year or so after FRA...
Maybe the 6.45% increase is "correct" and the 8.00% increase is "too generous". How do we know what's "actuarially correct"?
I'm not an actuary, but I'm enough of a math nerd to know that we should be getting higher mortality credits the longer we delay and the SS DRC method isn't giving us that...
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Re: Why not take Social Security at 62

Post by TheTimeLord » Sat Nov 25, 2017 2:18 pm

Independent wrote:
Sat Nov 25, 2017 1:11 pm
Fortunately, most Bogleheads have so much savings that SS is just a little bit of fun money. This issue isn't going to make or break their retirement.

I doubt this is the case. Absent a large pension or having a minimum portfolio of something like $4 million or more, I would guess SS is a meaningful amount to BH, especially dual income BH.
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Re: Why not take Social Security at 62

Post by dm200 » Sat Nov 25, 2017 3:30 pm

Independent wrote:
Sat Nov 25, 2017 12:53 pm
tampaite wrote:
Sat Nov 25, 2017 8:05 am
My 2 cents. Take it at 62. Most people don't realize they die before they turn 78(life expectancy in US)
That's a life expectancy at birth, it's irrelevant to someone who has already lived to 62. You want the a expectancy at 62.
But, there is no single answer even for that. Females live longer than males. High income people longer than low income people. People with good weight, blood pressure, and exercise habits live longer than others.
Another factor is that most tables are based on mortality rates for the general population - including people who are currently in nursing homes and hospices. Remove people with known, serious illnesses and the expectancy goes up by a couple years.
Finally, if we analyzed any private insurance based on "average loss", we'd never buy insurance. We buy because we might be in the "unusual" category. Deferring SS is a defensive strategy for some people. For them, the 90th percentile life span is more important.
Right - life expectancy at age 62 is much later in age than life expectancy at birth...

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Re: Why not take Social Security at 62

Post by The Wizard » Sat Nov 25, 2017 3:52 pm

TheTimeLord wrote:
Sat Nov 25, 2017 2:18 pm
Independent wrote:
Sat Nov 25, 2017 1:11 pm
The Wizard wrote:
Sat Nov 25, 2017 11:30 am
Fortunately, most Bogleheads have so much savings that SS is just a little bit of fun money. This issue isn't going to make or break their retirement.

I doubt this is the case. Absent a large pension or having a minimum portfolio of something like $4 million or more, I would guess SS is a meaningful amount to BH, especially dual income BH.
I didn't actually say the red quote.
In my case, SS at age 70 will be 25-30% of my income.
Much of the remainder of my income will be from lifetime annuities.
So at that point, much of my remaining tax deferred portfolio will be Fun Money, in that it won't be too critical to lifestyle...
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Re: Why not take Social Security at 62

Post by TheTimeLord » Sat Nov 25, 2017 4:02 pm

The Wizard wrote:
Sat Nov 25, 2017 3:52 pm
TheTimeLord wrote:
Sat Nov 25, 2017 2:18 pm
Independent wrote:
Sat Nov 25, 2017 1:11 pm
Fortunately, most Bogleheads have so much savings that SS is just a little bit of fun money. This issue isn't going to make or break their retirement.

I doubt this is the case. Absent a large pension or having a minimum portfolio of something like $4 million or more, I would guess SS is a meaningful amount to BH, especially dual income BH.

I didn't actually say the red quote.
In my case, SS at age 70 will be 25-30% of my income.
Much of the remainder of my income will be from lifetime annuities.
So at that point, much of my remaining tax deferred portfolio will be Fun Money, in that it won't be too critical to lifestyle...
I apologize for my poor editing.
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Re: Why not take Social Security at 62

Post by technovelist » Sat Nov 25, 2017 8:00 pm

Independent wrote:
Sat Nov 25, 2017 12:53 pm
tampaite wrote:
Sat Nov 25, 2017 8:05 am
My 2 cents. Take it at 62. Most people don't realize they die before they turn 78(life expectancy in US)
That's a life expectancy at birth, it's irrelevant to someone who has already lived to 62. You want the a expectancy at 62.

But, there is no single answer even for that. Females live longer than males. High income people longer than low income people. People with good weight, blood pressure, and exercise habits live longer than others.

Another factor is that most tables are based on mortality rates for the general population - including people who are currently in nursing homes and hospices. Remove people with known, serious illnesses and the expectancy goes up by a couple years.

Finally, if we analyzed any private insurance based on "average loss", we'd never buy insurance. We buy because we might be in the "unusual" category. Deferring SS is a defensive strategy for some people. For them, the 90th percentile life span is more important.
I use the 90th percentile lifespan in my calculations.
In theory, theory and practice are identical. In practice, they often differ.

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Re: Why not take Social Security at 62

Post by technovelist » Sat Nov 25, 2017 8:01 pm

delamer wrote:
Sat Nov 25, 2017 1:27 pm
Independent wrote:
Sat Nov 25, 2017 1:11 pm
The Wizard wrote:
Sat Nov 25, 2017 11:30 am

The method used to compute delayed retirement credits after FRA is not actuarially correct.
In my case, FRA of 66, I do indeed get an 8% increase if I were to claim at age 67 vs age 66.
But from age 69 to 70, the increase is 1.32/1.24 = 1.064516, which is a 6.45% increase.

If the 8% increase from 66 to 67 was actuarially correct, then I should get closer to a 9% increase when delaying from 69 to 70.
So I see nothing bad about claiming after the first year or so after FRA...
Maybe the 6.45% increase is "correct" and the 8.00% increase is "too generous". How do we know what's "actuarially correct"?

Calculating the PV of a life annuity requires a mortality assumption and an interest assumption. Those are pretty personal issues. Any number that's roughly accurate for the general population isn't necessarily good for the unusual people who post here.

And, the SS administration doesn't claim their approach is "accurate" for the general population. These factors were established by law many years ago, both mortality and economic conditions have changed since then.

Fortunately, most Bogleheads have so much savings that SS is just a little bit of fun money. This issue isn't going to make or break their retirement.
It is one thing to state that Bogleheads have higher than average assets. It is another to claim that our SS is "fun money." I don't see evidence to support that. For my family, SS will make up about 1/3 of our income. That would be a significant loss.
It is significant in my case as well.
In theory, theory and practice are identical. In practice, they often differ.

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Re: Why not take Social Security at 62

Post by Independent » Sat Nov 25, 2017 10:03 pm

delamer wrote:
Sat Nov 25, 2017 1:27 pm
Independent wrote:
Sat Nov 25, 2017 1:11 pm




Fortunately, most Bogleheads have so much savings that SS is just a little bit of fun money. This issue isn't going to make or break their retirement.
It is one thing to state that Bogleheads have higher than average assets. It is another to claim that our SS is "fun money." I don't see evidence to support that. For my family, SS will make up about 1/3 of our income. That would be a significant loss.
I shouldn't have been so flippant.
My rough recollection was that people in their 60's who reply to net worth surveys here are generally millionaires and multi-millionaires without SS. In my world, that's enough to fund the basics of life, so SS can be viewed as adding the "nice to have" stuff. "Fun money" may have different connotations.

I should have made the weaker statement that most people here have enough that making the "wrong" decision on commencing SS isn't going to ruin their retirements. Yes, they may lose a little, but they have cushions at least that large.

I also should have looked up one of those surveys and had numbers handy.

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Re: Why not take Social Security at 62

Post by TheTimeLord » Sat Nov 25, 2017 10:08 pm

Independent wrote:
Sat Nov 25, 2017 10:03 pm
delamer wrote:
Sat Nov 25, 2017 1:27 pm
Independent wrote:
Sat Nov 25, 2017 1:11 pm




Fortunately, most Bogleheads have so much savings that SS is just a little bit of fun money. This issue isn't going to make or break their retirement.
It is one thing to state that Bogleheads have higher than average assets. It is another to claim that our SS is "fun money." I don't see evidence to support that. For my family, SS will make up about 1/3 of our income. That would be a significant loss.
I shouldn't have been so flippant.
My rough recollection was that people in their 60's who reply to net worth surveys here are generally millionaires and multi-millionaires without SS. In my world, that's enough to fund the basics of life, so SS can be viewed as adding the "nice to have" stuff. "Fun money" may have different connotations.

I should have said that most people here have enough that making the "wrong" decision on commencing SS isn't going to ruin their retirements. Yes, they may lose a little, but they have cushions at least that large.

I also should have looked up one of those surveys and had numbers handy.
Just curious but how much do you think most BH couples annual SS benefit will be? I think you may be under estimating the size of the benefit for many BH especially those who have substantial savings as they likely held well paying jobs.
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Re: Why not take Social Security at 62

Post by Independent » Sat Nov 25, 2017 10:10 pm

The Wizard wrote:
Sat Nov 25, 2017 2:03 pm

I'm not an actuary, but I'm enough of a math nerd to know that we should be getting higher mortality credits the longer we delay and the SS DRC method isn't giving us that...
This is correct. But, it's possible they err in the direction of giving too much additional benefit to deferring.

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Re: Why not take Social Security at 62

Post by Independent » Sat Nov 25, 2017 10:26 pm

TheTimeLord wrote:
Sat Nov 25, 2017 10:08 pm
Independent wrote:
Sat Nov 25, 2017 10:03 pm
delamer wrote:
Sat Nov 25, 2017 1:27 pm
Independent wrote:
Sat Nov 25, 2017 1:11 pm
Fortunately, most Bogleheads have so much savings that SS is just a little bit of fun money. This issue isn't going to make or break their retirement.
It is one thing to state that Bogleheads have higher than average assets. It is another to claim that our SS is "fun money." I don't see evidence to support that. For my family, SS will make up about 1/3 of our income. That would be a significant loss.
I shouldn't have been so flippant.
My rough recollection was that people in their 60's who reply to net worth surveys here are generally millionaires and multi-millionaires without SS. In my world, that's enough to fund the basics of life, so SS can be viewed as adding the "nice to have" stuff. "Fun money" may have different connotations.

I should have said that most people here have enough that making the "wrong" decision on commencing SS isn't going to ruin their retirements. Yes, they may lose a little, but they have cushions at least that large.

I also should have looked up one of those surveys and had numbers handy.
Just curious but how much do you think most BH couples annual SS benefit will be? I think you may be under estimating the size of the benefit for many BH especially those who have substantial savings as they likely held well paying jobs.
I think the relevant question is their non-SS assets. I'd say that $2 million for a couple generates $80k of annual income. Most BH have a paid for house by the time they hit 60. Some have pensions. In my world, $80k with no mortgage covers the necessities of life. So, SS can be viewed as paying for non-necessities, whether SS is $25k or $50k.

But, I didn't check the surveys to be sure that most had $2 million, or something a little less plus a pension.

Of course we have the endless debate on "necessities". Some people think a meal at McDonalds is a luxury, others think their country club membership is a necessity.

I can see this set off a firestorm. Note that I changed to a weaker statement "most people here have enough that making the "wrong" decision on commencing SS isn't going to ruin their retirements. Yes, they may lose a little, but they have cushions at least that large." Would you disagree with that?

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Re: Why not take Social Security at 62

Post by delamer » Sat Nov 25, 2017 11:03 pm

Independent wrote:
Sat Nov 25, 2017 10:26 pm
TheTimeLord wrote:
Sat Nov 25, 2017 10:08 pm
Independent wrote:
Sat Nov 25, 2017 10:03 pm
delamer wrote:
Sat Nov 25, 2017 1:27 pm
Independent wrote:
Sat Nov 25, 2017 1:11 pm
Fortunately, most Bogleheads have so much savings that SS is just a little bit of fun money. This issue isn't going to make or break their retirement.
It is one thing to state that Bogleheads have higher than average assets. It is another to claim that our SS is "fun money." I don't see evidence to support that. For my family, SS will make up about 1/3 of our income. That would be a significant loss.
I shouldn't have been so flippant.
My rough recollection was that people in their 60's who reply to net worth surveys here are generally millionaires and multi-millionaires without SS. In my world, that's enough to fund the basics of life, so SS can be viewed as adding the "nice to have" stuff. "Fun money" may have different connotations.

I should have said that most people here have enough that making the "wrong" decision on commencing SS isn't going to ruin their retirements. Yes, they may lose a little, but they have cushions at least that large.

I also should have looked up one of those surveys and had numbers handy.
Just curious but how much do you think most BH couples annual SS benefit will be? I think you may be under estimating the size of the benefit for many BH especially those who have substantial savings as they likely held well paying jobs.
I think the relevant question is their non-SS assets. I'd say that $2 million for a couple generates $80k of annual income. Most BH have a paid for house by the time they hit 60. Some have pensions. In my world, $80k with no mortgage covers the necessities of life. So, SS can be viewed as paying for non-necessities, whether SS is $25k or $50k.

But, I didn't check the surveys to be sure that most had $2 million, or something a little less plus a pension.

Of course we have the endless debate on "necessities". Some people think a meal at McDonalds is a luxury, others think their country club membership is a necessity.

I can see this set off a firestorm. Note that I changed to a weaker statement "most people here have enough that making the "wrong" decision on commencing SS isn't going to ruin their retirements. Yes, they may lose a little, but they have cushions at least that large." Would you disagree with that?

Change "most people" to "many people" and I will go along with you. :o

Yes, "fun money" was a bit too flippant.

My husband and I would not starve or lose our home or have to forego medical care if we had both taken SS at 62 and one (or both) of us lives to be 95. So, as you said, the "wrong" decision would not ruin our retirement.

One of my big concerns with the claiming decisions is for couples, especially those where one is a much higher earner. It needs to take into account the low earner's needs if s/he is the survivor.

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Re: Why not take Social Security at 62

Post by TG2 » Sat Nov 25, 2017 11:42 pm

TravelforFun wrote:
Fri Nov 24, 2017 10:14 pm
Real life example here:

I'm 65 and my wife is 61.

Our scheduled monthly SS benefits at 62, Full Retirement Age, and 70 for me and my wife are: $2,380, $2,684, $3,606 (mine); and $750, $1,018, $1,316 (my wife's)

Next year, my wife will file for her benefit when she turns 62 and receive $750. I will file a restricted application and receive the spousal benefit which is 1/2 of my wife's principle insurance amount (1/2 of $1,018 or $509). The reason I can do this is because I was born before January 2,1954.

Then I will file when I turn 70 and receive $3,606; and my wife will file for her spousal benefit and receive $1,074 (1/2 of my principle insurance amount minus her early filing penalty).

If I die first, my wife will receive the survivor's benefit of $3,606.

This is our game plan.

TravelforFun
Are you sure about that? My understanding is that the maximum spousal benefit is 50% of the other's PIA due to there being no delayed retirement credits for spousal benefits, but the spousal benefit can be reduced below that. If the one claiming spousal benefits claims early, their benefit percentage is reduced. But is it not also true that if the primary (for purposes of spousal benefits) claims early then the spousal benefits for the other are based on the primary's reduced benefit level? If you are at FRA when you claim spousal, would you not receive 50% of her reduced benefit, or $375? And if you were not yet at FRA it would be reduced a little more. Isn't that right? It makes no sense that you would get half of a benefit level that she had foregone by claiming early. The age of both spouses matters.

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Re: Why not take Social Security at 62

Post by technovelist » Sat Nov 25, 2017 11:51 pm

TG2 wrote:
Sat Nov 25, 2017 11:42 pm
TravelforFun wrote:
Fri Nov 24, 2017 10:14 pm
Real life example here:

I'm 65 and my wife is 61.

Our scheduled monthly SS benefits at 62, Full Retirement Age, and 70 for me and my wife are: $2,380, $2,684, $3,606 (mine); and $750, $1,018, $1,316 (my wife's)

Next year, my wife will file for her benefit when she turns 62 and receive $750. I will file a restricted application and receive the spousal benefit which is 1/2 of my wife's principle insurance amount (1/2 of $1,018 or $509). The reason I can do this is because I was born before January 2,1954.

Then I will file when I turn 70 and receive $3,606; and my wife will file for her spousal benefit and receive $1,074 (1/2 of my principle insurance amount minus her early filing penalty).

If I die first, my wife will receive the survivor's benefit of $3,606.

This is our game plan.

TravelforFun
Are you sure about that? My understanding is that the maximum spousal benefit is 50% of the other's PIA due to there being no delayed retirement credits for spousal benefits, but the spousal benefit can be reduced below that. If the one claiming spousal benefits claims early, their benefit percentage is reduced. But is it not also true that if the primary (for purposes of spousal benefits) claims early then the spousal benefits for the other are based on the primary's reduced benefit level? If you are at FRA when you claim spousal, would you not receive 50% of her reduced benefit, or $375? And if you were not yet at FRA it would be reduced a little more. Isn't that right? It makes no sense that you would get half of a benefit level that she had foregone by claiming early. The age of both spouses matters.
Let's say that A is the one whose record is being used, and B is the one claiming the spousal benefit without claiming his or her own benefit.

In that case, I think that if B at FRA, then they get 1/2 of the A's PIA. If B is below FRA, that will reduce the spousal benefit, but I don't think it matters for this situation whether A is at FRA, so long as A is actually receiving their benefit.

On the other hand, if A dies and B claims the widow's benefit, I think it does matter whether A was at FRA.
In theory, theory and practice are identical. In practice, they often differ.

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Re: Why not take Social Security at 62

Post by TG2 » Sun Nov 26, 2017 12:03 am

My plan is to claim at 62, since the rule changes took away any incentive for me to delay. Given that the break-even age is somewhere in the 79-81 range depending on who you listen to it makes little sense for me to wait. I don't necessarily expect to live that long, for one. Second, while I expect the system to be fixed at some point soon, it makes more sense to get as much as possible before benefits are cut if no fix is forthcoming. Third, everyone has different variables to take into account depending on their own situation. I am eligible on my ex-spouse's record for survivor benefits. Not only is she a bit older than I, and earned significantly more than I, but may have health issues as well. If that does happen it pushes my break-even point way out there, and anything I skipped by not claiming would be lost. And if nothing happens I am no worse off than I would have been originally. Finally, drawing SS allows me to much better manage withdrawals from my own accounts. I already have to fund four years of retirement from my own monies. I have no interest in trying to do 12. Claiming at 62+ will give me five years to do Roth conversions. Easy choice.

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Re: Why not take Social Security at 62

Post by TG2 » Sun Nov 26, 2017 12:11 am

technovelist wrote:
Sat Nov 25, 2017 11:51 pm
TG2 wrote:
Sat Nov 25, 2017 11:42 pm
TravelforFun wrote:
Fri Nov 24, 2017 10:14 pm
Real life example here:

I'm 65 and my wife is 61.

Our scheduled monthly SS benefits at 62, Full Retirement Age, and 70 for me and my wife are: $2,380, $2,684, $3,606 (mine); and $750, $1,018, $1,316 (my wife's)

Next year, my wife will file for her benefit when she turns 62 and receive $750. I will file a restricted application and receive the spousal benefit which is 1/2 of my wife's principle insurance amount (1/2 of $1,018 or $509). The reason I can do this is because I was born before January 2,1954.

Then I will file when I turn 70 and receive $3,606; and my wife will file for her spousal benefit and receive $1,074 (1/2 of my principle insurance amount minus her early filing penalty).

If I die first, my wife will receive the survivor's benefit of $3,606.

This is our game plan.

TravelforFun
Are you sure about that? My understanding is that the maximum spousal benefit is 50% of the other's PIA due to there being no delayed retirement credits for spousal benefits, but the spousal benefit can be reduced below that. If the one claiming spousal benefits claims early, their benefit percentage is reduced. But is it not also true that if the primary (for purposes of spousal benefits) claims early then the spousal benefits for the other are based on the primary's reduced benefit level? If you are at FRA when you claim spousal, would you not receive 50% of her reduced benefit, or $375? And if you were not yet at FRA it would be reduced a little more. Isn't that right? It makes no sense that you would get half of a benefit level that she had foregone by claiming early. The age of both spouses matters.
Let's say that A is the one whose record is being used, and B is the one claiming the spousal benefit without claiming his or her own benefit.

In that case, I think that if B at FRA, then they get 1/2 of the A's PIA. If B is below FRA, that will reduce the spousal benefit, but I don't think it matters for this situation whether A is at FRA, so long as A is actually receiving their benefit.

On the other hand, if A dies and B claims the widow's benefit, I think it does matter whether A was at FRA.
Again, I would check that. I didn't think the spousal could be more than half of what the other was receiving. If that is true, the spousal would be reduced because the benefit it was based on is reduced. Not my issue though, so have not looked that closely at that particular rule. Worth a look though before someone plans on it.

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Re: Why not take Social Security at 62

Post by smitcat » Sun Nov 26, 2017 8:22 am

TG2 wrote:
Sun Nov 26, 2017 12:11 am
technovelist wrote:
Sat Nov 25, 2017 11:51 pm
TG2 wrote:
Sat Nov 25, 2017 11:42 pm
TravelforFun wrote:
Fri Nov 24, 2017 10:14 pm
Real life example here:

I'm 65 and my wife is 61.

Our scheduled monthly SS benefits at 62, Full Retirement Age, and 70 for me and my wife are: $2,380, $2,684, $3,606 (mine); and $750, $1,018, $1,316 (my wife's)

Next year, my wife will file for her benefit when she turns 62 and receive $750. I will file a restricted application and receive the spousal benefit which is 1/2 of my wife's principle insurance amount (1/2 of $1,018 or $509). The reason I can do this is because I was born before January 2,1954.

Then I will file when I turn 70 and receive $3,606; and my wife will file for her spousal benefit and receive $1,074 (1/2 of my principle insurance amount minus her early filing penalty).

If I die first, my wife will receive the survivor's benefit of $3,606.

This is our game plan.

TravelforFun
Are you sure about that? My understanding is that the maximum spousal benefit is 50% of the other's PIA due to there being no delayed retirement credits for spousal benefits, but the spousal benefit can be reduced below that. If the one claiming spousal benefits claims early, their benefit percentage is reduced. But is it not also true that if the primary (for purposes of spousal benefits) claims early then the spousal benefits for the other are based on the primary's reduced benefit level? If you are at FRA when you claim spousal, would you not receive 50% of her reduced benefit, or $375? And if you were not yet at FRA it would be reduced a little more. Isn't that right? It makes no sense that you would get half of a benefit level that she had foregone by claiming early. The age of both spouses matters.
Let's say that A is the one whose record is being used, and B is the one claiming the spousal benefit without claiming his or her own benefit.

In that case, I think that if B at FRA, then they get 1/2 of the A's PIA. If B is below FRA, that will reduce the spousal benefit, but I don't think it matters for this situation whether A is at FRA, so long as A is actually receiving their benefit.

On the other hand, if A dies and B claims the widow's benefit, I think it does matter whether A was at FRA.
Again, I would check that. I didn't think the spousal could be more than half of what the other was receiving. If that is true, the spousal would be reduced because the benefit it was based on is reduced. Not my issue though, so have not looked that closely at that particular rule. Worth a look though before someone plans on it.
This calculator works pretty well if you pay attention to what is put in the discount rate and the inflation rate boxes...
http://www.bedrockcapital.com/ssanalyze/
Of course it does not take into account your taxes and potential Roth conversions so combining this with the IORP and/or RPM calculators will help define what you end up keeping not just what you have in an account - it can be eye opening.

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Re: Why not take Social Security at 62

Post by susa » Sun Nov 26, 2017 9:13 am

When you buy Insurance, do you calculate a break-even for payout of same ?

https://youtu.be/aypdW_EUXOs

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Re: Why not take Social Security at 62

Post by tampaite » Sun Nov 26, 2017 9:59 am

Deleting my messages on this forum
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Re: Why not take Social Security at 62

Post by tampaite » Sun Nov 26, 2017 10:02 am

Deleting my messages on this forum
Last edited by tampaite on Mon Jun 03, 2019 8:45 am, edited 1 time in total.

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Re: Why not take Social Security at 62

Post by dbr » Sun Nov 26, 2017 10:03 am

tampaite wrote:
Sun Nov 26, 2017 9:59 am
Independent wrote:
Sat Nov 25, 2017 12:53 pm
That's a life expectancy at birth, it's irrelevant to someone who has already lived to 62. You want the a expectancy at 62.
so how would you know expectancy at 62? I'd say, it's still the same at birth.
You look it up in one or another of the various life tables that have been compiled to contain that information.

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Re: Why not take Social Security at 62

Post by flyingaway » Sun Nov 26, 2017 10:41 am

tampaite wrote:
Sun Nov 26, 2017 9:59 am
Independent wrote:
Sat Nov 25, 2017 12:53 pm
That's a life expectancy at birth, it's irrelevant to someone who has already lived to 62. You want the a expectancy at 62.
so how would you know expectancy at 62? I'd say, it's still the same at birth.
Vanguard webpage has something to do that. You input your (& your spouse's) current age and the expected final ages, it tells you the possibility of living to that ages.

wrongfunds
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Re: Why not take Social Security at 62

Post by wrongfunds » Sun Nov 26, 2017 10:44 am

Just curious but how much do you think most BH couples annual SS benefit will be? I think you may be under estimating the size of the benefit for many BH especially those who have substantial savings as they likely held well paying jobs.
The numbers are around $35K for a professional person who has max earnings for most of her career. Assuming both have similar work history, the spouse should also get $35K. Unless there is a cap on the couple's combined SS benefit, the couple should be able to get $70K per year in SS benefits. This is not insignificant even for somebody with $4M in combined retirement/taxable account.

Somebody correct me any of the above assumptions are incorrect.

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Re: Why not take Social Security at 62

Post by TG2 » Sun Nov 26, 2017 10:45 am

tampaite wrote:
Sun Nov 26, 2017 9:59 am
Independent wrote:
Sat Nov 25, 2017 12:53 pm
That's a life expectancy at birth, it's irrelevant to someone who has already lived to 62. You want the a expectancy at 62.
so how would you know expectancy at 62? I'd say, it's still the same at birth.
No, it can't be the same as at birth. Life expectancy at birth includes everyone who dies young. Once you have already reached 62, that calculation is no longer valid since those people are no longer included. Think of it as rolling a die. If you roll a die 100 times your expected value should be around 3.5. If you then roll it 100 more times but only count the times it came up 4, 5, or 6 your expected value will be higher. It has to be. All of the lower values are already excluded. In this example the expected value would be around 5.

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Re: Why not take Social Security at 62

Post by wrongfunds » Sun Nov 26, 2017 10:47 am

tampaite wrote:
Sun Nov 26, 2017 9:59 am
Independent wrote:
Sat Nov 25, 2017 12:53 pm
That's a life expectancy at birth, it's irrelevant to someone who has already lived to 62. You want the a expectancy at 62.
so how would you know expectancy at 62? I'd say, it's still the same at birth.
You should seriously consider taking an online statistics+probability 101 course. It is important because without it you will be of the type who finds "Well, it is either going to rain or not; so probability is 50%" to be perfectly valid statement :-)

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Re: Why not take Social Security at 62

Post by flyingaway » Sun Nov 26, 2017 10:47 am

I think discussions like this (there are several threads) for anyone younger than 60 are purely academic. There are many things (social security and one's own situations) that could change in future years. My wife and I will consider this seriously at 61.5 and make our first decision at 62, and re-evaluate the situations year by year if we both do not claim at 62.

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Re: Why not take Social Security at 62

Post by dbr » Sun Nov 26, 2017 10:51 am

flyingaway wrote:
Sun Nov 26, 2017 10:47 am
I think discussions like this (there are several threads) for anyone younger than 60 are purely academic. There are many things (social security and one's own situations) that could change in future years. My wife and I will consider this seriously at 61.5 and make our first decision at 62, and re-evaluate the situations year by year if we both do not claim at 62.
It is certainly true that until you can make the decision you don't have to make the decision. But having some familiarity with the issues ahead of time can't hurt and one might even find something to think about in anticipation (Roth decisions?).

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