## Why not take Social Security at 62

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
technovelist
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### Re: Why not take Social Security at 62

wrongfunds wrote:
Wed Nov 29, 2017 6:09 pm
The actual number is \$16.32K. 8% compounded over 4 years is 36%

Now you are looking at extra \$4.3K Looking at the break even point, that would be (12x4)/4.3 = 11 years. If you plan to exit this world before 81 years old, then take the SS at FRA rather than waiting for 4 years.

Your 24 year calculation is quite wrong. With the 11 years as the correct number, may be you can evaluate your impending decision in different light.
I don't believe it is compounded. As far as I know, it is 8% of the PIA amount for each year of delay past FRA.

Yes, that's what the SSA says: "[if you start getting payments at] 70, you'll get 132% of the monthly benefit because you delayed getting benefits for 48 months." (fromhttps://www.ssa.gov/planners/retire/1943-delay.html)
In theory, theory and practice are identical. In practice, they often differ.

Independent
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### Re: Why not take Social Security at 62

wrongfunds wrote:
Wed Nov 29, 2017 6:09 pm
The actual number is \$16.32K. 8% compounded over 4 years is 36%

Now you are looking at extra \$4.3K Looking at the break even point, that would be (12x4)/4.3 = 11 years. If you plan to exit this world before 81 years old, then take the SS at FRA rather than waiting for 4 years.

Your 24 year calculation is quite wrong. With the 11 years as the correct number, may be you can evaluate your impending decision in different light.
It's actually 32% because SS does not compound the 8%. https://www.ssa.gov/OACT/ProgData/ar_drc.html

(Sorry, you beat me to it.)

But, you're still a lot closer than 24 years. People with a NRA of 66 who defer to age 70 give up 4 years of benefits to get an annual increase of 32% of one year's benefit. 4 / .32 = 12.5 So it requires 12.5 years beyond age 70 to break even at a 0% real interest rate.

I deferred to 70, but this calculation is just a part of the whole picture for us.

wrongfunds
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### Re: Why not take Social Security at 62

Thanks for correcting my misunderstanding about simple 8% instead of compound 8%

Back to OP, if his life lease is expiring at or before 82.5, he should take SS at FRA

itstoomuch
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### Re: Why not take Social Security at 62

The odds of reaching life expectancy are not that good; Only about 50% at any given age .
And if you acquire a health condition your odds really drop
But the older you get, the odds of beating the odds from the previous year, get better.
YOddsMV

My medications are now double dosed from last year
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & \$\$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

munemaker
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### Delaying SS until 70 is the best longevity insurance

Delaying SS until 70 is the best longevity insurance you can buy:
Waiting until age 70 to claim your social security benefits is the equivalent of buying greater benefits for the cost of not receiving them in the earlier years. If you can possibly afford it, this is a very good buy. You can increase the payout of the very best longevity insurance available in the USA. In essence, you are buying more insurance against outliving your money. Doing so is highly recommended.
http://www.negotiatingtruth.com/the-bes ... insurance/

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chipperd
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### Re: Why not take Social Security at 62

Thanks to all for the input, thoughts, resources, and suggestions. I am having a hard time finding a calculator that allows one to financially plan that includes social security without working until age 62 or later, or even a social security calculator that will allow a user to figure the retirement benefit if you stop working before age 62. I think I can hang it up at 57/58, so looking for one that would allow me to work with those possible ages to stop work income. I know the social security admin has one, but you need to input every year of work-related income and hoping to avoid that. Thoughts and suggestions?
Thanks
Chipperd

bighatnohorse
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### Re: Why not take Social Security at 62

If you started at age 62 with \$1,000 a month you would have received \$96,000 by age 70.
That's a loss of \$96,000 if you wait until age 70 to start collecting.
How long would it take with the "higher" benefits at age 70 to make up the \$96,000 loss?
And there's a "health depreciation" factor that needs to be considered when making that decision.

praxis
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### Re: Why not take Social Security at 62

bighatnohorse wrote:
Fri Dec 01, 2017 8:48 am
If you started at age 62 with \$1,000 a month you would have received \$96,000 by age 70.
That's a loss of \$96,000 if you wait until age 70 to start collecting.
How long would it take with the "higher" benefits at age 70 to make up the \$96,000 loss?
And there's a "health depreciation" factor that needs to be considered when making that decision.
bighat-the answer to your question is explored throughout this thread. I asked a similar question and have learned a lot by reviewing the suggestions in the many posts. The Wiki offers info about how to evaluate the tax impact your SS payments will have too. https://www.bogleheads.org/wiki/Social_ ... calculator

The "health depreciation factor" you mention is an interesting point. Will I have as many options on which to spend my disposable income when I am older? Would I rather have some of that money now?

I have been shown that it will take me 11 years to catch up to the amount I "left on the table" and start pulling ahead on SS benefits if I wait to collect until 70. But that is my case. This thread discusses how to calculate your own personal situation and evaluate your options.

This video is of a speech by Paul Solman who co-authored a book about Maxing out your SS benefits, But I believe that the loophole for filing, suspending, and collecting spousal benefits that he brags about has been closed as of 2016. Am I correct?

Most recommendations seem to say wait till 70 if you can. But 98% of eligible Americans take benefits earlier.

dbr
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### Re: Why not take Social Security at 62

praxis wrote:
Fri Dec 01, 2017 9:20 am

The "health depreciation factor" you mention is an interesting point. Will I have as many options on which to spend my disposable income when I am older? Would I rather have some of that money now?

Most recommendations seem to say wait till 70 if you can. But 98% of eligible Americans take benefits earlier.
In general the advice on this is completely different for people who feel that without SS at 62 they are giving up things that are important to them relative to people who can do what they want even while waiting for SS at 70. The one question for the first group is whether or not they are actually trying to live beyond their means. I imagine that most Americans that take SS at age 62 don't see that as much of a choice.

I know people who have chosen SS at 62 and they are people who were already unemployed before that and in difficulty due to physical and mental health problems. I would not for one second question their decision. I would not question the decision of someone who is unemployed at that age and without financial resources or under-resourced for a reasonable life style. That is what SS is for.
Last edited by dbr on Fri Dec 01, 2017 9:31 am, edited 1 time in total.

praxis
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### Re: Why not take Social Security at 62

chipperd wrote:
Fri Dec 01, 2017 5:37 am
Thanks to all for the input, thoughts, resources, and suggestions. I am having a hard time finding a calculator that allows one to financially plan that includes social security without working until age 62 or later, or even a social security calculator that will allow a user to figure the retirement benefit if you stop working before age 62. I think I can hang it up at 57/58, so looking for one that would allow me to work with those possible ages to stop work income. I know the social security admin has one, but you need to input every year of work-related income and hoping to avoid that. Thoughts and suggestions?
Thanks
Chipperd
I believe it doesn't matter the age you hang it up, SS still uses your highest 35 years of earnings to calculate your benefit. I retired at 57, and some of my 35 years were pretty skimpy.

cutehumor
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### Re: Why not take Social Security at 62

I'm anticipating the news to report the SS fund to run out by 2034 as we get closer to that date, which can be misleading. "oh no, I won't get a SS check anymore in 2034". The SS fund will have enough money to pay only 79% of benefits starting in 2034. I expect the majority of those 62 at that time will take SS. I'll be 57 in 2034. I'll be counting the SS , if there are no changes to SS.

praxis
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### Re: Why not take Social Security at 62

cutehumor wrote:
Fri Dec 01, 2017 9:35 am
I'm anticipating the news to report the SS fund to run out by 2034 as we get closer to that date, which can be misleading. "oh no, I won't get a SS check anymore in 2034". The SS fund will have enough money to pay only 79% of benefits starting in 2034. I expect the majority of those 62 at that time will take SS. I'll be 57 in 2034. I'll be counting the SS , if there are no changes to SS.
I agree that those headlines are misleading. SS has applied adjustments throughout it's existence, in payroll tax rates, age of full eligibility, benefit amounts, spousal eligibility and other aspects. I expect to see many more tweaks as we approach 2034 that will allow SS to continue to serve it's purpose without suspending altogether.

The Wizard
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### Re: Why not take Social Security at 62

bighatnohorse wrote:
Fri Dec 01, 2017 8:48 am
If you started at age 62 with \$1,000 a month you would have received \$96,000 by age 70.
That's a loss of \$96,000 if you wait until age 70 to start collecting.
How long would it take with the "higher" benefits at age 70 to make up the \$96,000 loss?
And there's a "health depreciation" factor that needs to be considered when making that decision.
This is an especially significant point if there's a good chance you might pass away close to age 70...
Attempted new signature...

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chipperd
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### Re: Why not take Social Security at 62

praxis wrote:
Fri Dec 01, 2017 9:29 am
chipperd wrote:
Fri Dec 01, 2017 5:37 am
Thanks to all for the input, thoughts, resources, and suggestions. I am having a hard time finding a calculator that allows one to financially plan that includes social security without working until age 62 or later, or even a social security calculator that will allow a user to figure the retirement benefit if you stop working before age 62. I think I can hang it up at 57/58, so looking for one that would allow me to work with those possible ages to stop work income. I know the social security admin has one, but you need to input every year of work-related income and hoping to avoid that. Thoughts and suggestions?
Thanks
Chipperd
I believe it doesn't matter the age you hang it up, SS still uses your highest 35 years of earnings to calculate your benefit. I retired at 57, and some of my 35 years were pretty skimpy.
Yes, I believe that is true as well, however the full benefit amount listed is based upon working until age 62. So if I stop working at age 57, I would give up my 5 highest years and I would think this would mean that the amount listed wouldn't be accurate, no?

smitcat
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### Re: Why not take Social Security at 62

chipperd wrote:
Fri Dec 01, 2017 5:37 am
Thanks to all for the input, thoughts, resources, and suggestions. I am having a hard time finding a calculator that allows one to financially plan that includes social security without working until age 62 or later, or even a social security calculator that will allow a user to figure the retirement benefit if you stop working before age 62. I think I can hang it up at 57/58, so looking for one that would allow me to work with those possible ages to stop work income. I know the social security admin has one, but you need to input every year of work-related income and hoping to avoid that. Thoughts and suggestions?
Thanks
Chipperd
"I know the social security admin has one, but you need to input every year of work-related income and hoping to avoid that."

- You should then see a report that shows all of your deductions and your benefits at this time
- You can use that information to populate the SS calculator on that site and then add zeros beginning at whatever year you like (cut and paste)
- Then you can print and/or save the outputs so you know what your benefits will be if you retire early.

We have done that the last few years to get our own PIA's and benefits with our early retire dates.

smitcat
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### Re: Why not take Social Security at 62

bighatnohorse wrote:
Fri Dec 01, 2017 8:48 am
If you started at age 62 with \$1,000 a month you would have received \$96,000 by age 70.
That's a loss of \$96,000 if you wait until age 70 to start collecting.
How long would it take with the "higher" benefits at age 70 to make up the \$96,000 loss?
And there's a "health depreciation" factor that needs to be considered when making that decision.
Why not use the Bedrock calculator to figure out all the possibilities and what they are worth in real dollars?
Note - this will not tell you what the advantage is for taxes, Roth converts and for various survivor totals.
For the full picture you will need to utilize IORP or the RPM and run various scenarios.

bedrock SS calculator...
http://www.bedrockcapital.com/ssanalyze/

inbox788
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### Re: Why not take Social Security at 62

stlrick wrote:
Tue Nov 21, 2017 8:47 am
There is nothing wrong with the analysis. What is wrong is the assumption that "total payout by age 85" defines the "best" social security outcome. I consider social security one component of my longevity insurance. It is part of the system I will have in place just in case I live to 95 or 100. Insurance can be costly. In setting up longevity insurance, delaying social security is one of the best trade-offs available (in terms of the cost for increasing the benefit).
+1

If you're not going to run out of money before 100, it's an actuarial benefit to wait. If your situation doesn't sustain you much past 80, then taking early SS may turn out better.

Goes along with the question about an buying an annuity in retirement.
viewtopic.php?t=169861#p2559699

delamer
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### Re: Why not take Social Security at 62

praxis wrote:
Fri Dec 01, 2017 9:44 am
cutehumor wrote:
Fri Dec 01, 2017 9:35 am
I'm anticipating the news to report the SS fund to run out by 2034 as we get closer to that date, which can be misleading. "oh no, I won't get a SS check anymore in 2034". The SS fund will have enough money to pay only 79% of benefits starting in 2034. I expect the majority of those 62 at that time will take SS. I'll be 57 in 2034. I'll be counting the SS , if there are no changes to SS.
I agree that those headlines are misleading. SS has applied adjustments throughout it's existence, in payroll tax rates, age of full eligibility, benefit amounts, spousal eligibility and other aspects. I expect to see many more tweaks as we approach 2034 that will allow SS to continue to serve it's purpose without suspending altogether.
Many of the things that you refer to as tweaks were in fact established in laws passed by Congress and signed by the President. Not to say that they can't be changed, but it would be a political process. The Social Security Administration -- as noted by its name -- administers the program, it does not determine its structure.

smitcat
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### Re: Why not take Social Security at 62

delamer wrote:
Fri Dec 01, 2017 11:23 am
praxis wrote:
Fri Dec 01, 2017 9:44 am
cutehumor wrote:
Fri Dec 01, 2017 9:35 am
I'm anticipating the news to report the SS fund to run out by 2034 as we get closer to that date, which can be misleading. "oh no, I won't get a SS check anymore in 2034". The SS fund will have enough money to pay only 79% of benefits starting in 2034. I expect the majority of those 62 at that time will take SS. I'll be 57 in 2034. I'll be counting the SS , if there are no changes to SS.
I agree that those headlines are misleading. SS has applied adjustments throughout it's existence, in payroll tax rates, age of full eligibility, benefit amounts, spousal eligibility and other aspects. I expect to see many more tweaks as we approach 2034 that will allow SS to continue to serve it's purpose without suspending altogether.
Many of the things that you refer to as tweaks were in fact established in laws passed by Congress and signed by the President. Not to say that they can't be changed, but it would be a political process. The Social Security Administration -- as noted by its name -- administers the program, it does not determine its structure.
Agreed there will be many more tweaks in a system that continues to age and continues to supply benefits. We are not the first country to be coming up on a required 'tweak' and we will not be the last. Perhaps if you researched similar countries that have faced this issue relatively recently you will get some ideas of their solutions. When I did it all seemed quite 'simple' and obvious and was not really 'painful' , but YMMV.

Independent
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### Re: Why not take Social Security at 62

bighatnohorse wrote:
Fri Dec 01, 2017 8:48 am
If you started at age 62 with \$1,000 a month you would have received \$96,000 by age 70.
That's a loss of \$96,000 if you wait until age 70 to start collecting.
How long would it take with the "higher" benefits at age 70 to make up the \$96,000 loss?
And there's a "health depreciation" factor that needs to be considered when making that decision.
I think the math has been done many times before, but here it is:
If your normal retirement age is 66, then your benefit starting at 62 is 75% of your benefit at 66 (aka PIA).
That means your PIA is \$1,000 / .75 = \$1,333.
Then, your benefit starting at 70 is 132% of your PIA, or \$1,333 * 1.32 = \$1,760.

\$96,000 / \$760 = 126 month = 10.5 years after age 70 = age 80.5

That's the breakeven assuming 0% real interest. But, note that breakeven is just a starting point for people who feel they really need longevity insurance.

That's for a single person. Note that if you're married, and your spouse has a lower PIA, the 80.5 age refers to both of you.

Diogenes
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### Re: Why not take Social Security at 62

Independent wrote:
Fri Dec 01, 2017 3:48 pm
bighatnohorse wrote:
Fri Dec 01, 2017 8:48 am
If you started at age 62 with \$1,000 a month you would have received \$96,000 by age 70.
That's a loss of \$96,000 if you wait until age 70 to start collecting.
How long would it take with the "higher" benefits at age 70 to make up the \$96,000 loss?
And there's a "health depreciation" factor that needs to be considered when making that decision.
I think the math has been done many times before, but here it is:
If your normal retirement age is 66, then your benefit starting at 62 is 75% of your benefit at 66 (aka PIA).
That means your PIA is \$1,000 / .75 = \$1,333.
Then, your benefit starting at 70 is 132% of your PIA, or \$1,333 * 1.32 = \$1,760.

\$96,000 / \$760 = 126 month = 10.5 years after age 70 = age 80.5

That's the breakeven assuming 0% real interest. But, note that breakeven is just a starting point for people who feel they really need longevity insurance.
That's for a single person. Note that if you're married, and your spouse has a lower PIA, the 80.5 age refers to both of you.
In addition to taking 10.5 years to break even when you claim at 70 versus 62, we must add the fact of the reduction in value of personal 401k assets and earnings given up (assuming the \$1333 is deducted instead each month from those accounts from age 62 to 70). Plus the reduction in your overall estate to be passed to children, and the increased reliance on uncertain future payments.
Calculations for all of that will extend the break even point at least a few more years, depending on the variables. Let’s say conservatively 3, to 83.5.
Most people need higher income in early retirement years. After 80.5 or 83.5, not so much, other than for LTC needs.
Waiting seems in all cases seems to be better for the health of the overall system, but not necessarily for the individual. However, each person's situation is different. Unless of course you truly don’t need or want the extra income. In that case, the decision is easy. Wait until 70.

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chipperd
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### Re: Why not take Social Security at 62

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### Re: Why not take Social Security at 62

Independent wrote:
Fri Dec 01, 2017 3:48 pm
\$96,000 / \$760 = 126 month = 10.5 years after age 70 = age 80.5
That's the breakeven assuming 0% real interest.
For those interested, here is a little spreadsheet to calculate the breakeven time for discount rates besides 0%. For example, instead of 10.5 years, it is 12.24 years beyond age 70 when it's assumed benefits are reinvested at a 1.5% real rate:

Code: Select all

``````Row     Col A                 Col B
1  Annual rate             1.500%
2  Early claim age             62
3  Late claim age              70
4  Early benefit              75%
5  Late benefit              132%
6  Monthly rate            0.125%
7  Month difference            96
8  Breakeven months        146.89
9  Breakeven years          12.24 <==
10  Breakeven age            82.24
11  Early claim grows to    212.69
12  Late claim grows to     212.69``````
Here are the steps to use the spreadsheet:
• Select All, Copy, and Paste the following at cell A1 of a blank Excel sheet:

Code: Select all

``````Annual rate
Early claim age
Late claim age
Early benefit
Late benefit
Monthly rate
Month difference
Breakeven months
Breakeven years
Breakeven age
Early claim grows to
Late claim grows to``````
• Select All, Copy, and Paste the following at cell B1:

Code: Select all

``````0.015
62
70
0.75
1.32
=B1/12
=12*(B3-B2)
=IF(B1=0,(B4*B7)/(B5-B4),(LN((B5-B4)/(1+B6)^B7)-LN(B5/(1+B6)^B7-B4))/LN(1+B6))
=B8/12
=B3+B9
=FV(B6,B7+B8,-B4,0,0)
=FV(B6,B8,-B5,0,0)``````
• Revise the assumptions as needed in cells: B1:B5. Refer to this SSA webpage to determine the % of PIA to enter in cells B4 & B5.
• Note: the last two rows are included just to confirm that claiming either early or late has the same result after the breakeven time. They use the Excel FV function.

The Wizard
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### Re: Why not take Social Security at 62

chipperd wrote:
Sat Dec 02, 2017 3:57 am
Why the limited hours on a website? Is this much maintenance time really needed?

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tibbitts
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### Re: Why not take Social Security at 62

delamer wrote:
Fri Dec 01, 2017 11:23 am
praxis wrote:
Fri Dec 01, 2017 9:44 am
cutehumor wrote:
Fri Dec 01, 2017 9:35 am
I'm anticipating the news to report the SS fund to run out by 2034 as we get closer to that date, which can be misleading. "oh no, I won't get a SS check anymore in 2034". The SS fund will have enough money to pay only 79% of benefits starting in 2034. I expect the majority of those 62 at that time will take SS. I'll be 57 in 2034. I'll be counting the SS , if there are no changes to SS.
I agree that those headlines are misleading. SS has applied adjustments throughout it's existence, in payroll tax rates, age of full eligibility, benefit amounts, spousal eligibility and other aspects. I expect to see many more tweaks as we approach 2034 that will allow SS to continue to serve it's purpose without suspending altogether.
Many of the things that you refer to as tweaks were in fact established in laws passed by Congress and signed by the President. Not to say that they can't be changed, but it would be a political process. The Social Security Administration -- as noted by its name -- administers the program, it does not determine its structure.
Exactly, but the best solution is to only do calculations based on current law and demographic projections, not the calculators that almost everyone uses now that assume benefits will continue at current levels, since that is almost the least probably outcome. You need a calculator that includes the coming drop in benefits and then any gradual recovery that might come depending on demographics. You can't compare 70 to some other age without taking the timing and amount of benefit reduction based on current law into account.

Cosmo
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### Re: Why not take Social Security at 62

chipperd wrote:
Tue Nov 21, 2017 6:00 am
Hi all,
Although this decision is a ways off for me, I am doing a little math and research regarding when it's "best" to take Social Security. 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, but please check my work.
Current age:50
Projected Social Security at 67: \$19,300/year or \$1608/month
Projected Social Security at 62: \$13,510/year or \$1125/month

Total lifetime Social Security collected with a life expectancy of 85 years:
Taken at age 62 earning 4%/year: \$509,784
Taken at age 67 earning 4%/year: \$509,164
or
Taken at age 62 earning 3%/year: \$447,516
Taken at age 67 earning 3%/year: \$460,941

This was done with simple interest calculators, although I suspect if done with a fairly conservative portfolio using a Monte Carlo calculator (which I will do next), the math would really point to taking Social Security at 62. Given the above and that assumption, along with the added security of a monthly check starting at age 62, why wouldn't I take the earned benefit early?
Please poke reasonable, math-based holes in this idea for me.
Thanks,
Chipperd
If you really think you are going to live until 85, not only should you not take it at 62 but you should delay it until 70.

Cosmo

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### Re: Why not take Social Security at 62

I removed an off-topic comment and reply related to what "might happen" with Social Security payouts.

Social Security is based on US law. Changes to legislation ("proposed legislation") is a political process and therefore off-topic. As a reminder, see: Politics and Religion

In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
• Common religious expressions such as sending your prayers to an ailing member.
• Usage of factual and non-derogatory political labels when necessary to the discussion at hand.
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• Proposed regulations that are directly related to investing may be discussed if and when they are published for public comments.
To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Topic Author
chipperd
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### Re: Why not take Social Security at 62

Cosmo wrote:
Sat Dec 02, 2017 2:14 pm
chipperd wrote:
Tue Nov 21, 2017 6:00 am
Hi all,
Although this decision is a ways off for me, I am doing a little math and research regarding when it's "best" to take Social Security. 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, but please check my work.
Current age:50
Projected Social Security at 67: \$19,300/year or \$1608/month
Projected Social Security at 62: \$13,510/year or \$1125/month

Total lifetime Social Security collected with a life expectancy of 85 years:
Taken at age 62 earning 4%/year: \$509,784
Taken at age 67 earning 4%/year: \$509,164
or
Taken at age 62 earning 3%/year: \$447,516
Taken at age 67 earning 3%/year: \$460,941

This was done with simple interest calculators, although I suspect if done with a fairly conservative portfolio using a Monte Carlo calculator (which I will do next), the math would really point to taking Social Security at 62. Given the above and that assumption, along with the added security of a monthly check starting at age 62, why wouldn't I take the earned benefit early?
Please poke reasonable, math-based holes in this idea for me.
Thanks,
Chipperd
If you really think you are going to live until 85, not only should you not take it at 62 but you should delay it until 70.

Cosmo
Thanks

Cosmo
Posts: 1244
Joined: Mon Mar 05, 2007 9:46 pm

### Re: Why not take Social Security at 62

chipperd wrote:
Sun Dec 03, 2017 6:18 am
Cosmo wrote:
Sat Dec 02, 2017 2:14 pm
chipperd wrote:
Tue Nov 21, 2017 6:00 am
Hi all,
Although this decision is a ways off for me, I am doing a little math and research regarding when it's "best" to take Social Security. 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, but please check my work.
Current age:50
Projected Social Security at 67: \$19,300/year or \$1608/month
Projected Social Security at 62: \$13,510/year or \$1125/month

Total lifetime Social Security collected with a life expectancy of 85 years:
Taken at age 62 earning 4%/year: \$509,784
Taken at age 67 earning 4%/year: \$509,164
or
Taken at age 62 earning 3%/year: \$447,516
Taken at age 67 earning 3%/year: \$460,941

This was done with simple interest calculators, although I suspect if done with a fairly conservative portfolio using a Monte Carlo calculator (which I will do next), the math would really point to taking Social Security at 62. Given the above and that assumption, along with the added security of a monthly check starting at age 62, why wouldn't I take the earned benefit early?
Please poke reasonable, math-based holes in this idea for me.
Thanks,
Chipperd
If you really think you are going to live until 85, not only should you not take it at 62 but you should delay it until 70.

Cosmo
Thanks

Independent
Posts: 551
Joined: Tue Sep 22, 2009 1:09 pm

### Re: Why not take Social Security at 62

Diogenes wrote:
Fri Dec 01, 2017 9:44 pm
Independent wrote:
Fri Dec 01, 2017 3:48 pm

\$96,000 / \$760 = 126 month = 10.5 years after age 70 = age 80.5

That's the breakeven assuming 0% real interest. But, note that breakeven is just a starting point for people who feel they really need longevity insurance.
That's for a single person. Note that if you're married, and your spouse has a lower PIA, the 80.5 age refers to both of you.
In addition to taking 10.5 years to break even when you claim at 70 versus 62, we must add the fact of the reduction in value of personal 401k assets and earnings given up (assuming the \$1333 is deducted instead each month from those accounts from age 62 to 70). Plus the reduction in your overall estate to be passed to children, and the increased reliance on uncertain future payments.
Calculations for all of that will extend the break even point at least a few more years, depending on the variables. Let’s say conservatively 3, to 83.5.
Most people need higher income in early retirement years. After 80.5 or 83.5, not so much, other than for LTC needs.
Waiting seems in all cases seems to be better for the health of the overall system, but not necessarily for the individual. However, each person's situation is different. Unless of course you truly don’t need or want the extra income. In that case, the decision is easy. Wait until 70.
Certainly, if you find break even age meaningful, you should use a discount/interest rate that you think is appropriate for the assets you will own. Probably, it's best to try a few rates since we don't know what yields will be in the future. Cruncher has done the math. Or, use one of the retirement calculators that use many paths.

I can agree that many people would like to spend more money earlier in retirement while they have good health. However, deferring SS does not force you to spend any less in the early years. In fact, if we follow the 4% guideline in the first year we're retired, we will actually spend a little more if we defer SS.

#Cruncher
Posts: 2869
Joined: Fri May 14, 2010 2:33 am
Location: New York City
Contact:

### Re: Why not take Social Security at 62

Cosmo wrote:
Sun Dec 03, 2017 9:17 am
chipperd wrote:
Sun Dec 03, 2017 6:18 am
Cosmo wrote:
Sat Dec 02, 2017 2:14 pm
... If you really think you are going to live until 85, not only should you not take it at 62 but you should delay it until 70. ...
Can you show me the math that supported your conclusion, please? ...
None of my three previous posts (one, two, or three) support this conclusion, Cosmo. The first table in my second post shows that the present value (PV) of benefits to age 85 discounted at 3% is maximized when one claims at age 68. The second table then shows the PV discounted at 1.5% is maximized when one claims at age 69.

Here is a table of the present values of benefits running to age 85 expanded for eleven different discount rates (0%, 0.5%, ..., 4.5%, 5%). Claiming at age 70 provides the maximum PV only for a discount rate of 0%. From 0.5% to 2.0% claiming at age 69 is best. For 2.5% or 3.0% age 68 is best. For 3.5% or 4.0% age 66 is best. For a discount rate of 4.5% or more the maximum PV occurs when one claims at age 62.

Code: Select all

``````             62       63       64       65       66       67       68       69       70   <- start age
Rate Max   70.00%   75.00%   80.00%   86.67%   93.33%  100.00%  108.00%  116.00%  124.00% <- % of PIA
0.0%  70  310,666  318,384  324,173  334,464  342,182  347,328  354,275  358,134 [358,906]
0.5%  69  293,532  300,060  304,739  313,615  320,039  324,028  329,671 {332,419] 332,293
1.0%  69  277,656  283,083  286,741  294,319  299,561  302,504  306,971 [308,725] 307,808
1.5%  69  262,933  267,340  270,060  276,447  280,612  282,607  286,013 [286,881] 285,270
2.0%  69  249,268  252,732  254,587  259,881  263,065  264,204  266,654 [266,732] 264,513
2.5%  68  236,575  239,166  240,225  244,516  246,805  247,171 [248,760] 248,137  245,389
3.0%  68  224,776  226,557  226,883  230,254  231,728  231,396 [232,212] 230,967  227,759 [*]
3.5%  66  213,799  214,828  214,479  217,005 [217,738] 216,778  216,899  215,104  211,501
4.0%  66  203,578  203,909  202,939  204,690 [204,748] 203,222  202,721  200,441  196,499
4.5%  62 [194,054] 193,736  192,193  193,233  192,677  190,644  189,585  186,880  182,651
5.0%  62 [185,170] 184,250  182,179  182,566  181,453  178,965  177,409  174,332  169,861``````
* Example of calculation for claiming at age 67 with 3% discount rate using the Excel PV function:
231,396 = PV(3% / 12, 12 * (85 - 67), -100% * 1608, 0, 1) / (1 + 3% / 12) ^ (12 * (67 - 62))
This is consistent with the age 85 future value mentioned in the original post:
460,941 = 231396 * (1 + 3% / 12) ^ (12 * (85 - 62))

visualguy
Posts: 1644
Joined: Thu Jan 30, 2014 1:32 am

### Re: Why not take Social Security at 62

Doing any elaborate math or planning concerning social security when you are 12+ years away from it is an exercise in futility in my opinion... It's almost certain that the rules will change by then, so why bother.

To be conservative/safe, I assume that the plan will be means tested, and that I will not qualify. If I get anything, it will be a pleasant surprise and a bonus. Similarly, I'm not counting on Medicaid to fund my (or my wife's) nursing home (if we end up going there). I think that assuming that these plans remain the way they are today is very unrealistic. The tricky one is Medicare - changes are very likely there as well. For my planning purposes, I assume costs similar to ACA even after the age of 65.

I think the only safe assumption for planning purposes is that Social Security and Medicare will provide much less assistance than they do today for people who have meaningful resources, and Medicaid will not be something that you will want to count on even if you run out of resources. If I'm pleasantly surprised, then great, but I wouldn't be able to sleep well relying on these things being there.

Topic Author
chipperd
Posts: 509
Joined: Sat Sep 24, 2011 5:58 am

### Re: Why not take Social Security at 62

visualguy wrote:
Mon Dec 04, 2017 4:11 am
Doing any elaborate math or planning concerning social security when you are 12+ years away from it is an exercise in futility in my opinion... It's almost certain that the rules will change by then, so why bother.

To be conservative/safe, I assume that the plan will be means tested, and that I will not qualify. If I get anything, it will be a pleasant surprise and a bonus. Similarly, I'm not counting on Medicaid to fund my (or my wife's) nursing home (if we end up going there). I think that assuming that these plans remain the way they are today is very unrealistic. The tricky one is Medicare - changes are very likely there as well. For my planning purposes, I assume costs similar to ACA even after the age of 65.

I think the only safe assumption for planning purposes is that Social Security and Medicare will provide much less assistance than they do today for people who have meaningful resources, and Medicaid will not be something that you will want to count on even if you run out of resources. If I'm pleasantly surprised, then great, but I wouldn't be able to sleep well relying on these things being there.
I respectfully disagree. Planning ahead financially is important and social security is a part of financial planning. My goal is not to leave this earth with to much or to little. If I take SS in it's current form at 67 (full benefit), my planner says I leave over 3 million, which means I left to much on the table and didn't have enough fun. If I retire now (age 50) and take SS at 62, I make it to 95 and leave a bit over 300k; to tight and won't be relaxed in retirement. Trying to find and plan out for that "Goldilocks" range is important for all based on their goals and SS is part of that equation. Those who decide to leave SS completely out of their plan have their reasons and have made a decision regarding SS, just as those who have their reasons to include SS and to what degree. Both are valid and worth significant thought and planning.

smitcat
Posts: 4651
Joined: Mon Nov 07, 2016 10:51 am

### Re: Why not take Social Security at 62

chipperd wrote:
Mon Dec 04, 2017 5:36 am
visualguy wrote:
Mon Dec 04, 2017 4:11 am
Doing any elaborate math or planning concerning social security when you are 12+ years away from it is an exercise in futility in my opinion... It's almost certain that the rules will change by then, so why bother.

To be conservative/safe, I assume that the plan will be means tested, and that I will not qualify. If I get anything, it will be a pleasant surprise and a bonus. Similarly, I'm not counting on Medicaid to fund my (or my wife's) nursing home (if we end up going there). I think that assuming that these plans remain the way they are today is very unrealistic. The tricky one is Medicare - changes are very likely there as well. For my planning purposes, I assume costs similar to ACA even after the age of 65.

I think the only safe assumption for planning purposes is that Social Security and Medicare will provide much less assistance than they do today for people who have meaningful resources, and Medicaid will not be something that you will want to count on even if you run out of resources. If I'm pleasantly surprised, then great, but I wouldn't be able to sleep well relying on these things being there.
I respectfully disagree. Planning ahead financially is important and social security is a part of financial planning. My goal is not to leave this earth with to much or to little. If I take SS in it's current form at 67 (full benefit), my planner says I leave over 3 million, which means I left to much on the table and didn't have enough fun. If I retire now (age 50) and take SS at 62, I make it to 95 and leave a bit over 300k; to tight and won't be relaxed in retirement. Trying to find and plan out for that "Goldilocks" range is important for all based on their goals and SS is part of that equation. Those who decide to leave SS completely out of their plan have their reasons and have made a decision regarding SS, just as those who have their reasons to include SS and to what degree. Both are valid and worth significant thought and planning.
Whatever you do please make sure your planner is telling you what you can spend and not what it is a set of "accounts".
The impact of funds that are taxed or will be taxed is often overlooked when doing SS planning and it does not need to be that way.

technovelist
Posts: 2918
Joined: Wed Dec 30, 2009 9:02 pm
Contact:

### Re: Why not take Social Security at 62

smitcat wrote:
Mon Dec 04, 2017 7:44 am
chipperd wrote:
Mon Dec 04, 2017 5:36 am
visualguy wrote:
Mon Dec 04, 2017 4:11 am
Doing any elaborate math or planning concerning social security when you are 12+ years away from it is an exercise in futility in my opinion... It's almost certain that the rules will change by then, so why bother.

To be conservative/safe, I assume that the plan will be means tested, and that I will not qualify. If I get anything, it will be a pleasant surprise and a bonus. Similarly, I'm not counting on Medicaid to fund my (or my wife's) nursing home (if we end up going there). I think that assuming that these plans remain the way they are today is very unrealistic. The tricky one is Medicare - changes are very likely there as well. For my planning purposes, I assume costs similar to ACA even after the age of 65.

I think the only safe assumption for planning purposes is that Social Security and Medicare will provide much less assistance than they do today for people who have meaningful resources, and Medicaid will not be something that you will want to count on even if you run out of resources. If I'm pleasantly surprised, then great, but I wouldn't be able to sleep well relying on these things being there.
I respectfully disagree. Planning ahead financially is important and social security is a part of financial planning. My goal is not to leave this earth with to much or to little. If I take SS in it's current form at 67 (full benefit), my planner says I leave over 3 million, which means I left to much on the table and didn't have enough fun. If I retire now (age 50) and take SS at 62, I make it to 95 and leave a bit over 300k; to tight and won't be relaxed in retirement. Trying to find and plan out for that "Goldilocks" range is important for all based on their goals and SS is part of that equation. Those who decide to leave SS completely out of their plan have their reasons and have made a decision regarding SS, just as those who have their reasons to include SS and to what degree. Both are valid and worth significant thought and planning.
Whatever you do please make sure your planner is telling you what you can spend and not what it is a set of "accounts".
The impact of funds that are taxed or will be taxed is often overlooked when doing SS planning and it does not need to be that way.
Of course it is important to consider the asset location of funds (e.g., taxable, tax-deferred, Roth), as well as a lot of other issues, including expected lifespan, pensions/annuities, Social Security, life insurance, and federal taxes. However, when trying to figure out how much I could spend in retirement, I couldn't find a tool that would calculate and illustrate the effects of all of these factors, so I wrote my own.
In theory, theory and practice are identical. In practice, they often differ.

smitcat
Posts: 4651
Joined: Mon Nov 07, 2016 10:51 am

### Re: Why not take Social Security at 62

technovelist wrote:
Mon Dec 04, 2017 9:07 am
smitcat wrote:
Mon Dec 04, 2017 7:44 am
chipperd wrote:
Mon Dec 04, 2017 5:36 am
visualguy wrote:
Mon Dec 04, 2017 4:11 am
Doing any elaborate math or planning concerning social security when you are 12+ years away from it is an exercise in futility in my opinion... It's almost certain that the rules will change by then, so why bother.

To be conservative/safe, I assume that the plan will be means tested, and that I will not qualify. If I get anything, it will be a pleasant surprise and a bonus. Similarly, I'm not counting on Medicaid to fund my (or my wife's) nursing home (if we end up going there). I think that assuming that these plans remain the way they are today is very unrealistic. The tricky one is Medicare - changes are very likely there as well. For my planning purposes, I assume costs similar to ACA even after the age of 65.

I think the only safe assumption for planning purposes is that Social Security and Medicare will provide much less assistance than they do today for people who have meaningful resources, and Medicaid will not be something that you will want to count on even if you run out of resources. If I'm pleasantly surprised, then great, but I wouldn't be able to sleep well relying on these things being there.
I respectfully disagree. Planning ahead financially is important and social security is a part of financial planning. My goal is not to leave this earth with to much or to little. If I take SS in it's current form at 67 (full benefit), my planner says I leave over 3 million, which means I left to much on the table and didn't have enough fun. If I retire now (age 50) and take SS at 62, I make it to 95 and leave a bit over 300k; to tight and won't be relaxed in retirement. Trying to find and plan out for that "Goldilocks" range is important for all based on their goals and SS is part of that equation. Those who decide to leave SS completely out of their plan have their reasons and have made a decision regarding SS, just as those who have their reasons to include SS and to what degree. Both are valid and worth significant thought and planning.
Whatever you do please make sure your planner is telling you what you can spend and not what it is a set of "accounts".
The impact of funds that are taxed or will be taxed is often overlooked when doing SS planning and it does not need to be that way.
Of course it is important to consider the asset location of funds (e.g., taxable, tax-deferred, Roth), as well as a lot of other issues, including expected lifespan, pensions/annuities, Social Security, life insurance, and federal taxes. However, when trying to figure out how much I could spend in retirement, I couldn't find a tool that would calculate and illustrate the effects of all of these factors, so I wrote my own.
I have had good results utilizing both IORP and the RPM calculator/spreadsheet.
Each one allows you to vary and see the affects of all of your items above.

technovelist
Posts: 2918
Joined: Wed Dec 30, 2009 9:02 pm
Contact:

### Re: Why not take Social Security at 62

smitcat wrote:
Mon Dec 04, 2017 9:20 am
technovelist wrote:
Mon Dec 04, 2017 9:07 am
smitcat wrote:
Mon Dec 04, 2017 7:44 am
chipperd wrote:
Mon Dec 04, 2017 5:36 am
visualguy wrote:
Mon Dec 04, 2017 4:11 am
Doing any elaborate math or planning concerning social security when you are 12+ years away from it is an exercise in futility in my opinion... It's almost certain that the rules will change by then, so why bother.

To be conservative/safe, I assume that the plan will be means tested, and that I will not qualify. If I get anything, it will be a pleasant surprise and a bonus. Similarly, I'm not counting on Medicaid to fund my (or my wife's) nursing home (if we end up going there). I think that assuming that these plans remain the way they are today is very unrealistic. The tricky one is Medicare - changes are very likely there as well. For my planning purposes, I assume costs similar to ACA even after the age of 65.

I think the only safe assumption for planning purposes is that Social Security and Medicare will provide much less assistance than they do today for people who have meaningful resources, and Medicaid will not be something that you will want to count on even if you run out of resources. If I'm pleasantly surprised, then great, but I wouldn't be able to sleep well relying on these things being there.
I respectfully disagree. Planning ahead financially is important and social security is a part of financial planning. My goal is not to leave this earth with to much or to little. If I take SS in it's current form at 67 (full benefit), my planner says I leave over 3 million, which means I left to much on the table and didn't have enough fun. If I retire now (age 50) and take SS at 62, I make it to 95 and leave a bit over 300k; to tight and won't be relaxed in retirement. Trying to find and plan out for that "Goldilocks" range is important for all based on their goals and SS is part of that equation. Those who decide to leave SS completely out of their plan have their reasons and have made a decision regarding SS, just as those who have their reasons to include SS and to what degree. Both are valid and worth significant thought and planning.
Whatever you do please make sure your planner is telling you what you can spend and not what it is a set of "accounts".
The impact of funds that are taxed or will be taxed is often overlooked when doing SS planning and it does not need to be that way.
Of course it is important to consider the asset location of funds (e.g., taxable, tax-deferred, Roth), as well as a lot of other issues, including expected lifespan, pensions/annuities, Social Security, life insurance, and federal taxes. However, when trying to figure out how much I could spend in retirement, I couldn't find a tool that would calculate and illustrate the effects of all of these factors, so I wrote my own.
I have had good results utilizing both IORP and the RPM calculator/spreadsheet.
Each one allows you to vary and see the affects of all of your items above.
I remember looking at i-orp but determined that it didn't meet my requirements. Looking at it again, it has some missing elements:

1. It doesn't seem to calculate what is generally the worst-case scenario of one spouse dying early and the other living a long time, but assumes that both spouses live to the end of the planning period. That can make a pretty big difference because there is only one SS payment after the first death.
2. Which probably explains why it also doesn't seem to include any consideration of the effects of term life insurance on sustainable spending, which can be considerable as well because it cuts off the left-hand tail of income loss due to early death of one spouse.
In theory, theory and practice are identical. In practice, they often differ.

dbr
Posts: 31328
Joined: Sun Mar 04, 2007 9:50 am

### Re: Why not take Social Security at 62

technovelist wrote:
Mon Dec 04, 2017 9:57 am

2. Which probably explains why it also doesn't seem to include any consideration of the effects of term life insurance on sustainable spending, which can be considerable as well because it cuts off the left-hand tail of income loss due to early death of one spouse.
Term insurance may be an overlooked tool in these discussions.

technovelist
Posts: 2918
Joined: Wed Dec 30, 2009 9:02 pm
Contact:

### Re: Why not take Social Security at 62

dbr wrote:
Mon Dec 04, 2017 9:59 am
technovelist wrote:
Mon Dec 04, 2017 9:57 am

2. Which probably explains why it also doesn't seem to include any consideration of the effects of term life insurance on sustainable spending, which can be considerable as well because it cuts off the left-hand tail of income loss due to early death of one spouse.
Term insurance may be an overlooked tool in these discussions.
That certainly seems to be true from my reading, both here and elsewhere.

I was quite surprised to find out how much it could help while working on my home-grown retirement income calculator.
In theory, theory and practice are identical. In practice, they often differ.

smitcat
Posts: 4651
Joined: Mon Nov 07, 2016 10:51 am

### Re: Why not take Social Security at 62

technovelist wrote:
Mon Dec 04, 2017 9:57 am
smitcat wrote:
Mon Dec 04, 2017 9:20 am
technovelist wrote:
Mon Dec 04, 2017 9:07 am
smitcat wrote:
Mon Dec 04, 2017 7:44 am
chipperd wrote:
Mon Dec 04, 2017 5:36 am

I respectfully disagree. Planning ahead financially is important and social security is a part of financial planning. My goal is not to leave this earth with to much or to little. If I take SS in it's current form at 67 (full benefit), my planner says I leave over 3 million, which means I left to much on the table and didn't have enough fun. If I retire now (age 50) and take SS at 62, I make it to 95 and leave a bit over 300k; to tight and won't be relaxed in retirement. Trying to find and plan out for that "Goldilocks" range is important for all based on their goals and SS is part of that equation. Those who decide to leave SS completely out of their plan have their reasons and have made a decision regarding SS, just as those who have their reasons to include SS and to what degree. Both are valid and worth significant thought and planning.
Whatever you do please make sure your planner is telling you what you can spend and not what it is a set of "accounts".
The impact of funds that are taxed or will be taxed is often overlooked when doing SS planning and it does not need to be that way.
Of course it is important to consider the asset location of funds (e.g., taxable, tax-deferred, Roth), as well as a lot of other issues, including expected lifespan, pensions/annuities, Social Security, life insurance, and federal taxes. However, when trying to figure out how much I could spend in retirement, I couldn't find a tool that would calculate and illustrate the effects of all of these factors, so I wrote my own.
I have had good results utilizing both IORP and the RPM calculator/spreadsheet.
Each one allows you to vary and see the affects of all of your items above.
I remember looking at i-orp but determined that it didn't meet my requirements. Looking at it again, it has some missing elements:

1. It doesn't seem to calculate what is generally the worst-case scenario of one spouse dying early and the other living a long time, but assumes that both spouses live to the end of the planning period. That can make a pretty big difference because there is only one SS payment after the first death.
2. Which probably explains why it also doesn't seem to include any consideration of the effects of term life insurance on sustainable spending, which can be considerable as well because it cuts off the left-hand tail of income loss due to early death of one spouse.
"1. It doesn't seem to calculate what is generally the worst-case scenario of one spouse dying early and the other living a long time, but assumes that both spouses live to the end of the planning period. That can make a pretty big difference because there is only one SS payment after the first death."

In the long version of IORP I made numerous runs varying ages of death by each spouse. I combined some of these by varying age(s) of elected SS until we narrowed down some of our variables and could make much smaller tweaks. We did save most all the runs electronically but also have printed the outputs of the runs that were more interesting to us and narrowed then down. This made for easier side by side analysis with the IORP outputs. Since IORP was so quick to help us narrow some variations down we utilized that first to get near our favorite choices - then we used RPM to get greater details and do direct comparisons of Roth Converts and various other options.

"2. Which probably explains why it also doesn't seem to include any consideration of the effects of term life insurance on sustainable spending, which can be considerable as well because it cuts off the left-hand tail of income loss due to early death of one spouse."
There are places to input both one time income events as well as alternate incomes on each tool. Each of them allows that 'unusual' event or income to have a different % increase year by year or none at all. Each of them also can account for a primary home that will or will not be dissolved as part of the potential income. Otherwise said - you can input just about any choice you like unless you leave it at the 'default' settings.

Thanks to this Bogle site we have been able to utilize tools like IORP and RPM to narrow down a set of choices and then check those more carefully with tax software etc.

visualguy
Posts: 1644
Joined: Thu Jan 30, 2014 1:32 am

### Re: Why not take Social Security at 62

chipperd wrote:
Mon Dec 04, 2017 5:36 am
visualguy wrote:
Mon Dec 04, 2017 4:11 am
Doing any elaborate math or planning concerning social security when you are 12+ years away from it is an exercise in futility in my opinion... It's almost certain that the rules will change by then, so why bother.

To be conservative/safe, I assume that the plan will be means tested, and that I will not qualify. If I get anything, it will be a pleasant surprise and a bonus. Similarly, I'm not counting on Medicaid to fund my (or my wife's) nursing home (if we end up going there). I think that assuming that these plans remain the way they are today is very unrealistic. The tricky one is Medicare - changes are very likely there as well. For my planning purposes, I assume costs similar to ACA even after the age of 65.

I think the only safe assumption for planning purposes is that Social Security and Medicare will provide much less assistance than they do today for people who have meaningful resources, and Medicaid will not be something that you will want to count on even if you run out of resources. If I'm pleasantly surprised, then great, but I wouldn't be able to sleep well relying on these things being there.
I respectfully disagree. Planning ahead financially is important and social security is a part of financial planning. My goal is not to leave this earth with to much or to little. If I take SS in it's current form at 67 (full benefit), my planner says I leave over 3 million, which means I left to much on the table and didn't have enough fun. If I retire now (age 50) and take SS at 62, I make it to 95 and leave a bit over 300k; to tight and won't be relaxed in retirement. Trying to find and plan out for that "Goldilocks" range is important for all based on their goals and SS is part of that equation. Those who decide to leave SS completely out of their plan have their reasons and have made a decision regarding SS, just as those who have their reasons to include SS and to what degree. Both are valid and worth significant thought and planning.
Making SS in its current form part of the planning is of mostly academic interest in my view. There's little chance that it will remain in its current form 12+ years from now. The current rules about ages, levels of income, lack of means testing, etc will in all likelihood change by then. Similarly, assuming that Medicare remains the same is an assumption that's unlikely to correspond to reality. This makes planning admittedly hard, but I don't see how anyone can be comfortable with planning based on today's rules when they are so likely to change significantly over this period of 12+ years.

technovelist
Posts: 2918
Joined: Wed Dec 30, 2009 9:02 pm
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### Re: Why not take Social Security at 62

visualguy wrote:
Mon Dec 04, 2017 11:12 am
chipperd wrote:
Mon Dec 04, 2017 5:36 am
visualguy wrote:
Mon Dec 04, 2017 4:11 am
Doing any elaborate math or planning concerning social security when you are 12+ years away from it is an exercise in futility in my opinion... It's almost certain that the rules will change by then, so why bother.

To be conservative/safe, I assume that the plan will be means tested, and that I will not qualify. If I get anything, it will be a pleasant surprise and a bonus. Similarly, I'm not counting on Medicaid to fund my (or my wife's) nursing home (if we end up going there). I think that assuming that these plans remain the way they are today is very unrealistic. The tricky one is Medicare - changes are very likely there as well. For my planning purposes, I assume costs similar to ACA even after the age of 65.

I think the only safe assumption for planning purposes is that Social Security and Medicare will provide much less assistance than they do today for people who have meaningful resources, and Medicaid will not be something that you will want to count on even if you run out of resources. If I'm pleasantly surprised, then great, but I wouldn't be able to sleep well relying on these things being there.
I respectfully disagree. Planning ahead financially is important and social security is a part of financial planning. My goal is not to leave this earth with to much or to little. If I take SS in it's current form at 67 (full benefit), my planner says I leave over 3 million, which means I left to much on the table and didn't have enough fun. If I retire now (age 50) and take SS at 62, I make it to 95 and leave a bit over 300k; to tight and won't be relaxed in retirement. Trying to find and plan out for that "Goldilocks" range is important for all based on their goals and SS is part of that equation. Those who decide to leave SS completely out of their plan have their reasons and have made a decision regarding SS, just as those who have their reasons to include SS and to what degree. Both are valid and worth significant thought and planning.
Making SS in its current form part of the planning is of mostly academic interest in my view. There's little chance that it will remain in its current form 12+ years from now. The current rules about ages, levels of income, lack of means testing, etc will in all likelihood change by then. Similarly, assuming that Medicare remains the same is an assumption that's unlikely to correspond to reality. This makes planning admittedly hard, but I don't see how anyone can be comfortable with planning based on today's rules when they are so likely to change significantly over this period of 12+ years.
I agree it is a problem, but what other options are there? We have to plan with the information we have now, while realizing that things will change.
In theory, theory and practice are identical. In practice, they often differ.

delamer
Posts: 9492
Joined: Tue Feb 08, 2011 6:13 pm

### Re: Why not take Social Security at 62

technovelist wrote:
Mon Dec 04, 2017 11:14 am
visualguy wrote:
Mon Dec 04, 2017 11:12 am
chipperd wrote:
Mon Dec 04, 2017 5:36 am
visualguy wrote:
Mon Dec 04, 2017 4:11 am
Doing any elaborate math or planning concerning social security when you are 12+ years away from it is an exercise in futility in my opinion... It's almost certain that the rules will change by then, so why bother.

To be conservative/safe, I assume that the plan will be means tested, and that I will not qualify. If I get anything, it will be a pleasant surprise and a bonus. Similarly, I'm not counting on Medicaid to fund my (or my wife's) nursing home (if we end up going there). I think that assuming that these plans remain the way they are today is very unrealistic. The tricky one is Medicare - changes are very likely there as well. For my planning purposes, I assume costs similar to ACA even after the age of 65.

I think the only safe assumption for planning purposes is that Social Security and Medicare will provide much less assistance than they do today for people who have meaningful resources, and Medicaid will not be something that you will want to count on even if you run out of resources. If I'm pleasantly surprised, then great, but I wouldn't be able to sleep well relying on these things being there.
I respectfully disagree. Planning ahead financially is important and social security is a part of financial planning. My goal is not to leave this earth with to much or to little. If I take SS in it's current form at 67 (full benefit), my planner says I leave over 3 million, which means I left to much on the table and didn't have enough fun. If I retire now (age 50) and take SS at 62, I make it to 95 and leave a bit over 300k; to tight and won't be relaxed in retirement. Trying to find and plan out for that "Goldilocks" range is important for all based on their goals and SS is part of that equation. Those who decide to leave SS completely out of their plan have their reasons and have made a decision regarding SS, just as those who have their reasons to include SS and to what degree. Both are valid and worth significant thought and planning.
Making SS in its current form part of the planning is of mostly academic interest in my view. There's little chance that it will remain in its current form 12+ years from now. The current rules about ages, levels of income, lack of means testing, etc will in all likelihood change by then. Similarly, assuming that Medicare remains the same is an assumption that's unlikely to correspond to reality. This makes planning admittedly hard, but I don't see how anyone can be comfortable with planning based on today's rules when they are so likely to change significantly over this period of 12+ years.
I agree it is a problem, but what other options are there? We have to plan with the information we have now, while realizing that things will change.

Everyone doing planning should be looking at a range of options. One option should be that SS and Medicare are unchanged; other options should be that there are significant changes to both. Defining those potential changes is difficult, but assuming 75%, 50%, and 25% of current SS benefits as possibilities seem reasonable.

Topic Author
chipperd
Posts: 509
Joined: Sat Sep 24, 2011 5:58 am

### Re: Why not take Social Security at 62

delamer wrote:
Mon Dec 04, 2017 8:01 pm
technovelist wrote:
Mon Dec 04, 2017 11:14 am
visualguy wrote:
Mon Dec 04, 2017 11:12 am
chipperd wrote:
Mon Dec 04, 2017 5:36 am
visualguy wrote:
Mon Dec 04, 2017 4:11 am
Doing any elaborate math or planning concerning social security when you are 12+ years away from it is an exercise in futility in my opinion... It's almost certain that the rules will change by then, so why bother.

To be conservative/safe, I assume that the plan will be means tested, and that I will not qualify. If I get anything, it will be a pleasant surprise and a bonus. Similarly, I'm not counting on Medicaid to fund my (or my wife's) nursing home (if we end up going there). I think that assuming that these plans remain the way they are today is very unrealistic. The tricky one is Medicare - changes are very likely there as well. For my planning purposes, I assume costs similar to ACA even after the age of 65.

I think the only safe assumption for planning purposes is that Social Security and Medicare will provide much less assistance than they do today for people who have meaningful resources, and Medicaid will not be something that you will want to count on even if you run out of resources. If I'm pleasantly surprised, then great, but I wouldn't be able to sleep well relying on these things being there.
I respectfully disagree. Planning ahead financially is important and social security is a part of financial planning. My goal is not to leave this earth with to much or to little. If I take SS in it's current form at 67 (full benefit), my planner says I leave over 3 million, which means I left to much on the table and didn't have enough fun. If I retire now (age 50) and take SS at 62, I make it to 95 and leave a bit over 300k; to tight and won't be relaxed in retirement. Trying to find and plan out for that "Goldilocks" range is important for all based on their goals and SS is part of that equation. Those who decide to leave SS completely out of their plan have their reasons and have made a decision regarding SS, just as those who have their reasons to include SS and to what degree. Both are valid and worth significant thought and planning.
Making SS in its current form part of the planning is of mostly academic interest in my view. There's little chance that it will remain in its current form 12+ years from now. The current rules about ages, levels of income, lack of means testing, etc will in all likelihood change by then. Similarly, assuming that Medicare remains the same is an assumption that's unlikely to correspond to reality. This makes planning admittedly hard, but I don't see how anyone can be comfortable with planning based on today's rules when they are so likely to change significantly over this period of 12+ years.
I agree it is a problem, but what other options are there? We have to plan with the information we have now, while realizing that things will change.

Everyone doing planning should be looking at a range of options. One option should be that SS and Medicare are unchanged; other options should be that there are significant changes to both. Defining those potential changes is difficult, but assuming 75%, 50%, and 25% of current SS benefits as possibilities seem reasonable.
So let's say we all planned for four scenarios, SS remains unchanged, and cuts of 75%, 50% and 25% as you suggest. It would seem, developing four very disparate action plans from those potential scenarios would leave one undecided as to what to do in the present and future.

technovelist
Posts: 2918
Joined: Wed Dec 30, 2009 9:02 pm
Contact:

### Re: Why not take Social Security at 62

chipperd wrote:
Tue Dec 05, 2017 4:42 am
delamer wrote:
Mon Dec 04, 2017 8:01 pm
technovelist wrote:
Mon Dec 04, 2017 11:14 am
visualguy wrote:
Mon Dec 04, 2017 11:12 am
chipperd wrote:
Mon Dec 04, 2017 5:36 am

I respectfully disagree. Planning ahead financially is important and social security is a part of financial planning. My goal is not to leave this earth with to much or to little. If I take SS in it's current form at 67 (full benefit), my planner says I leave over 3 million, which means I left to much on the table and didn't have enough fun. If I retire now (age 50) and take SS at 62, I make it to 95 and leave a bit over 300k; to tight and won't be relaxed in retirement. Trying to find and plan out for that "Goldilocks" range is important for all based on their goals and SS is part of that equation. Those who decide to leave SS completely out of their plan have their reasons and have made a decision regarding SS, just as those who have their reasons to include SS and to what degree. Both are valid and worth significant thought and planning.
Making SS in its current form part of the planning is of mostly academic interest in my view. There's little chance that it will remain in its current form 12+ years from now. The current rules about ages, levels of income, lack of means testing, etc will in all likelihood change by then. Similarly, assuming that Medicare remains the same is an assumption that's unlikely to correspond to reality. This makes planning admittedly hard, but I don't see how anyone can be comfortable with planning based on today's rules when they are so likely to change significantly over this period of 12+ years.
I agree it is a problem, but what other options are there? We have to plan with the information we have now, while realizing that things will change.

Everyone doing planning should be looking at a range of options. One option should be that SS and Medicare are unchanged; other options should be that there are significant changes to both. Defining those potential changes is difficult, but assuming 75%, 50%, and 25% of current SS benefits as possibilities seem reasonable.
So let's say we all planned for four scenarios, SS remains unchanged, and cuts of 75%, 50% and 25% as you suggest. It would seem, developing four very disparate action plans from those potential scenarios would leave one undecided as to what to do in the present and future.
Well, of course if what you want is safety under all those conditions, all you need is to take the worst one (75% cut) and prepare for that. In that case, it isn't necessary to calculate the others.

But it could be useful if you want to see what your lifestyle would be like if you prepared only for the prettier scenarios but an uglier one turned up. That could help you decide which of them you want to prepare for.
In theory, theory and practice are identical. In practice, they often differ.

wrongfunds
Posts: 2210
Joined: Tue Dec 21, 2010 3:55 pm

### Re: Why not take Social Security at 62

You want to prepare for 75% cut in social security and the market tanking by 75% and the inflation going up by 10% every year and the interest rates staying in low 2%, medicare going away and being in long terms care facility for 30 years; is there anything else you need to be ready for? is that worst case or not yet? do you have enough money for all that before you think of retiring?

neilpilot
Posts: 2917
Joined: Fri Dec 04, 2015 1:46 pm
Location: Memphis area

### Re: Why not take Social Security at 62

wrongfunds wrote:
Tue Dec 05, 2017 9:13 am
You want to prepare for 75% cut in social security and the market tanking by 75% and the inflation going up by 10% every year and the interest rates staying in low 2%, medicare going away and being in long terms care facility for 30 years; is there anything else you need to be ready for? is that worst case or not yet? do you have enough money for all that before you think of retiring?
One other thing to add to make this truly a worse case.......you live to 110

technovelist
Posts: 2918
Joined: Wed Dec 30, 2009 9:02 pm
Contact:

### Re: Why not take Social Security at 62

neilpilot wrote:
Tue Dec 05, 2017 9:26 am
wrongfunds wrote:
Tue Dec 05, 2017 9:13 am
You want to prepare for 75% cut in social security and the market tanking by 75% and the inflation going up by 10% every year and the interest rates staying in low 2%, medicare going away and being in long terms care facility for 30 years; is there anything else you need to be ready for? is that worst case or not yet? do you have enough money for all that before you think of retiring?
One other thing to add to make this truly a worse case.......you live to 110
I would have said "what about the giant meteorite?" but in this case that would be a good thing.
In terms of not having to worry about running out of money, that is.
In theory, theory and practice are identical. In practice, they often differ.

Ron
Posts: 6574
Joined: Fri Feb 23, 2007 7:46 pm

### Re: Why not take Social Security at 62

neilpilot wrote:
Tue Dec 05, 2017 9:26 am
wrongfunds wrote:
Tue Dec 05, 2017 9:13 am
You want to prepare for 75% cut in social security and the market tanking by 75% and the inflation going up by 10% every year and the interest rates staying in low 2%, medicare going away and being in long terms care facility for 30 years; is there anything else you need to be ready for? is that worst case or not yet? do you have enough money for all that before you think of retiring?
One other thing to add to make this truly a worse case.......you live to 110
Actually, the first person who ever received an SS check lived to the ripe old age of 100 ...

Ref: https://en.wikipedia.org/wiki/Ida_May_Fuller

Another article for consideration of the subject: https://www.cbsnews.com/news/an-almost- ... me-source/

- Ron

delamer
Posts: 9492
Joined: Tue Feb 08, 2011 6:13 pm

### Re: Why not take Social Security at 62

technovelist wrote:
Tue Dec 05, 2017 4:51 am
chipperd wrote:
Tue Dec 05, 2017 4:42 am
delamer wrote:
Mon Dec 04, 2017 8:01 pm
technovelist wrote:
Mon Dec 04, 2017 11:14 am
visualguy wrote:
Mon Dec 04, 2017 11:12 am

Making SS in its current form part of the planning is of mostly academic interest in my view. There's little chance that it will remain in its current form 12+ years from now. The current rules about ages, levels of income, lack of means testing, etc will in all likelihood change by then. Similarly, assuming that Medicare remains the same is an assumption that's unlikely to correspond to reality. This makes planning admittedly hard, but I don't see how anyone can be comfortable with planning based on today's rules when they are so likely to change significantly over this period of 12+ years.
I agree it is a problem, but what other options are there? We have to plan with the information we have now, while realizing that things will change.

Everyone doing planning should be looking at a range of options. One option should be that SS and Medicare are unchanged; other options should be that there are significant changes to both. Defining those potential changes is difficult, but assuming 75%, 50%, and 25% of current SS benefits as possibilities seem reasonable.
So let's say we all planned for four scenarios, SS remains unchanged, and cuts of 75%, 50% and 25% as you suggest. It would seem, developing four very disparate action plans from those potential scenarios would leave one undecided as to what to do in the present and future.
Well, of course if what you want is safety under all those conditions, all you need is to take the worst one (75% cut) and prepare for that. In that case, it isn't necessary to calculate the others.

But it could be useful if you want to see what your lifestyle would be like if you prepared only for the prettier scenarios but an uglier one turned up. That could help you decide which of them you want to prepare for.
Thanks, technovelist, for helping to make my point. A lot of things in life have a range of outcomes, and it is useful to understand the consequences of each. Maybe you decide to ignore the 75% cut in your planning, because it really isn't survival but you do plan for the 50% because you could handle that.