Delaying Social Security Until 70

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TinyTim
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Delaying Social Security Until 70

Post by TinyTim » Sat Sep 15, 2018 1:21 pm

I will begin taking Social Security later this year at age 70, and read some surprising statistics recently: Only about 2% of Social Security beneficiaries wait until age 70 to get the maximum benefit. I understand that there are a myriad of reasons to take it sooner, but it seems to me that more people would wait until 70. How many of you waited until 70? Doubtless Bogleheads will be statistically skewed to a higher percentage who delayed benefits. If you took benefits early, why did you do so?

Ron
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Re: Delaying Social Security Until 70

Post by Ron » Sat Sep 15, 2018 2:04 pm

"If you took benefits early, why did you do so?"

We didn't. My wife/me both took our age-70 SS benefit this year, but I'll answer your question anyway, why we did it opposite of what most do.

We were fortunate that we fell under the old rules that allowed us to do the file/suspend/restricted route, which gave my wife a total of just over $60k while she waited for her own age 70 benefit.

Most folks can't wait, due to unforeseen circumstances such as job loss, health problems, etc, and I can certainly see where external forces cause them to take SS earlier. Of course you have others that take it earlier for a variety of reasons, including "I might die tomorrow", "I can invest it on my own", or just the idea of "I deserve it". We, on the other hand, look at it as longevity insurance as do some others on this forum.

We originally planned to each take it at our respective FRA age of 66 many years ago, but circumstances changed along the way. For instance, I had no intention on the purchase of an SPIA (didn't even know about them in my mid 50's) but I did get one with joint/survivor/return of unpaid benefits if both passed before the age of 87. The reason? It replaced my pension which was eliminated in the early 80's. Unlike most folks that discuss possibly getting an SPIA in their 70-80's, we purchased it shortly after my retirement at age 59.

We didn't know about the file/suspend option until it was discussed on this forum as part of the "Senior Citizens' Freedom To Work Act Of 2000" (Ref: https://www.ssa.gov/legislation/legis_b ... 40700.html ) in which we saw the advantage of delaying our respective benefit.

Another consideration was that since we were on the "bleeding edge" of forming our own retirement resources (we started contributions to our IRA's in 1982 when we first became eligible, and with our TIRA's a few years later, when they were offered by our respective companies), the great majority of our retirement funds are tax-deferred. While we did an analysis of converting our TIRA holdings to Roth's, it made little sense when we ran the calculations years ago since we had little taxable holdings that could be used to pay the tax due on the conversions. We figured by delaying our respective SS, we could reduce our tax deferred holdings by using them to satisfy our early retirement living expenses and increase our future tax free SS (e.g. the 15% of SS we don't pay taxes on) and have less funds subject to RMD's. As it turned out in our case, our joint holdings have a value above what we started our respective retirements at due to the performance of the market over the last decade. Rather than reduce the amount subject to RMD's (started this year), we have to "cash in" and pay taxes on a larger balance than when we started retirement; but hey, we're not complaining!

Today, that tax-free 15% of SS is valued at over $10k/year, total, and will just grow in the future, as long as we're still around. Another way of accounting for longevity financial need.

Every decision related to SS is subject to a wide variety of opinions. IMHO, only decision that make sense is the one you make, for your own situation. I doubt very much that many people think that they erred in their decision related to SS, regardless of what it was when the time came to claim it. I know we don't.

- Ron

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dm200
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Re: Delaying Social Security Until 70

Post by dm200 » Sat Sep 15, 2018 2:18 pm

TinyTim wrote:
Sat Sep 15, 2018 1:21 pm
I will begin taking Social Security later this year at age 70, and read some surprising statistics recently: Only about 2% of Social Security beneficiaries wait until age 70 to get the maximum benefit. I understand that there are a myriad of reasons to take it sooner, but it seems to me that more people would wait until 70. How many of you waited until 70? Doubtless Bogleheads will be statistically skewed to a higher percentage who delayed benefits. If you took benefits early, why did you do so?
Cannot cite references, but my opinion is that there are many reasons folks do not wait:

1. Their financial condition is such that they need (or want) the cash flow as soon as possible or practical. This is a growing situation as the defined benefit pensions decline. Perhaps they need or want the funds to pay for Medicare and health/medical costs.

2. Some do the math and (with justification) conclude earlier is better

3. Some believe (wrongly in my opinion) that they will lose out by not taking it sooner because of the state of the SS fund and they will be unfairly harmed by future changes.

4. Bad advice (of all sorts)

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David Jay
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Re: Delaying Social Security Until 70

Post by David Jay » Sat Sep 15, 2018 2:22 pm

For married couples, the math can work differently.

In our case, my PIA is about 4 times my spouse’s PIA. The optimal strategy is for my spouse to file as early as possible and me to delay to age 70.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Tdubs
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Re: Delaying Social Security Until 70

Post by Tdubs » Sat Sep 15, 2018 2:38 pm

dm200 wrote:
Sat Sep 15, 2018 2:18 pm
TinyTim wrote:
Sat Sep 15, 2018 1:21 pm
I will begin taking Social Security later this year at age 70, and read some surprising statistics recently: Only about 2% of Social Security beneficiaries wait until age 70 to get the maximum benefit. I understand that there are a myriad of reasons to take it sooner, but it seems to me that more people would wait until 70. How many of you waited until 70? Doubtless Bogleheads will be statistically skewed to a higher percentage who delayed benefits. If you took benefits early, why did you do so?
Cannot cite references, but my opinion is that there are many reasons folks do not wait:

1. Their financial condition is such that they need (or want) the cash flow as soon as possible or practical. This is a growing situation as the defined benefit pensions decline. Perhaps they need or want the funds to pay for Medicare and health/medical costs.

2. Some do the math and (with justification) conclude earlier is better

3. Some believe (wrongly in my opinion) that they will lose out by not taking it sooner because of the state of the SS fund and they will be unfairly harmed by future changes.

4. Bad advice (of all sorts)
There was a very recent thread on this, and many concluded it was best to file early. I don't agree, but there are other reasons it makes sense.

1) The day after your retire the market plunges 30%, and you have some large early retirement expenses. Best to file rather than tap your accounts.

2) People make their calculations assuming they will live an average lifespan and prefer early happiness when they are healthy. Having seen folks try to live on their SS alone at the end of their lives, I'd say you should prepare to live a long life, even if you don't. Especially if you have a spouse.

3) If you run the numbers in an optimizer like I-ORP, you will find it is best to wait, but surprisingly it doesn't make a lot of difference. Just a couple percent per year--though I'd rather have that.

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dm200
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Re: Delaying Social Security Until 70

Post by dm200 » Sat Sep 15, 2018 3:16 pm

Two reasons for waiting (my opinion) include:

Less likely to run out of money with a long lifespan

Asset protection is better for SS income than almost any other income stream or asset

drawpoker
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Re: Delaying Social Security Until 70

Post by drawpoker » Sat Sep 15, 2018 3:46 pm

"How many of you waited until 70? "

___________________________________________________________
Will start drawing when I turn 70 next year. It was the 8% per year factor that convinced me. Had SSA send me a spreadsheet before I turned 65 showing the month by month breakdown of how the benefit increases if you wait. It made an impression.

I really believe many of the people who decide to draw early are the same people who got spooked in the last Great Depression of '07-'09. Sold equities at big losses, never have recovered those losses because they were too scared to get back in the market. Speaking of surprising statistics, TinyTim, there was a recent article in the paper detailing just what percentage of people are not benefitting at all from the biggest bull market, the number was shockingly high (to me)

Did you see that?

What will likely turn the tide from people drawing early is the younger generation of workers. Whose FRA is either 66 or 67. Then it won't seem like such a long wait for their 70th birthday. :beer :beer

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sometimesinvestor
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Re: Delaying Social Security Until 70

Post by sometimesinvestor » Sat Sep 15, 2018 4:07 pm

If you are single the calculations are simple :all that matters is how long you willlive My father died at 55 my mom at 75.I understood I would have to live till 78 to come out ahead if I waited till 70 so I didn't take it at 62 but took it when I retired. ifI am wrong won't go broke and taking it when I retired enabled me to invest in the last 10 years

JoeRetire
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Re: Delaying Social Security Until 70

Post by JoeRetire » Sat Sep 15, 2018 4:37 pm

Personally, I think the terms used by Social Security tend to make people think they are better off taking their benefits as soon as they can.

Terms like:
- Early Retirement
- Full Retirement Age
- Delayed Retirement Credits

I think these all lead to earlier claiming.

If instead the terms were more like:
- Reduced Benefits Age
- Basic Benefits Age
- Maximum Benefits Age

then I suspect more folks would be nudged to delay their benefits.

drawpoker
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Re: Delaying Social Security Until 70

Post by drawpoker » Sat Sep 15, 2018 4:39 pm

JoeRetire wrote:
Sat Sep 15, 2018 4:37 pm
Personally, I think the terms used by Social Security tend to make people think they are better off taking their benefits as soon as they can.

Terms like:
- Early Retirement
- Full Retirement Age
- Delayed Retirement Credits

I think these all lead to earlier claiming.

If instead the terms were more like:
- Reduced Benefits Age
- Basic Benefits Age
- Maximum Benefits Age

then I suspect more folks would be nudged to delay their benefits.
You betcha.

When I turned 65 (FRA) SSA sent me a letter telling me that, guess what, you can get a bigger monthly benefit by filing for your retirement benefits now! Really, you are "eligible" for more money!
(I had been drawing a spousal benefit since age 60, 71.5% of my husband's benefit)

The letter really sounded like a Cal Worthington car commercial instead of official gumbmint communication. :P :P :P

smectym
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Re: Delaying Social Security Until 70

Post by smectym » Sat Sep 15, 2018 4:47 pm

>"We were fortunate that we fell under the old rules that allowed us to do the file/suspend/restricted route, which gave my wife a total of just over $60k while she waited for her own age 70 benefit."

Agree with Ron, if a couple is grandfathered in to the old regime, the math for one spouse taking it at FRA, and allowing the other suspend his or her own benefit till 70 and take the spousal benefit in the meantime, can be more compelling than both spouses waiting till 70--even if they are financially able to do so.

Arguments can still be made the other way, based on longevity risk etc. But while such arguments must be considered, if file-and-suspend is in the mix, the decision for both spouses to wait till 70 and forfeit the spousal dollars is hardly the "slam dunk no brainer" wait-till-70 zealots sometimes like to pretend.

Smectym

moehoward
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Re: Delaying Social Security Until 70

Post by moehoward » Sat Sep 15, 2018 5:05 pm

This is one of the most discussed topics in my 60's circle of friends. We decided to take our SS at 66. Wife's this year and mine next year. It's different for ever couple but we based our decision first, if won't effect our taxes much either way and we are traveling a lot right now. We expect our expenses will go down in our 70s and traveling less.

inbox788
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Re: Delaying Social Security Until 70

Post by inbox788 » Sat Sep 15, 2018 7:24 pm

sometimesinvestor wrote:
Sat Sep 15, 2018 4:07 pm
If you are single the calculations are simple :all that matters is how long you willlive My father died at 55 my mom at 75.I understood I would have to live till 78 to come out ahead if I waited till 70 so I didn't take it at 62 but took it when I retired. ifI am wrong won't go broke and taking it when I retired enabled me to invest in the last 10 years
Delaying SS until 70 is another way of investing it conservatively with a high confidence and relative high return. It's fortunate the last 10 years have been good to market investors, but for less fortunate, it might be like a lost decade.

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TimeRunner
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Re: Delaying Social Security Until 70

Post by TimeRunner » Sat Sep 15, 2018 7:34 pm

PSA, Free calculator (from Boglehead Mike Piper) here:https://opensocialsecurity.com/
"...There're just so many summers, and just so many springs." -Don Henley "What'd ya expect in an opera, a happy ending?" -Bugs Bunny

TinyTim
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Re: Delaying Social Security Until 70

Post by TinyTim » Sat Sep 15, 2018 8:01 pm

@drawpoker--Yes, I saw that article about those who missed the great run-up after the Great Recession. My wife and I were working and all our investments were retirement accounts. We held the course and now are ready to the harvest the benefits.

There are a thousand and one excellent reasons why one would take Social Security before 70, but there are not enough reasons for 98% of Americans to do so. My thinking--nurtured by Jack Bogle and others--is to keep it simple. The simple fact is that at seventy SS benefits are maximized. (I agree with JoeRetire that the language Social Security uses is disingenous) I should keep that fact at the core of my thinking, and better come up with a damn good reason(s) that outweighs that simple fact before deciding to take SS before 70. In my case, it's a done deal, but I've been thinking this through for the past decade, and never found a reason to do otherwise. I also operate under the influence of my dad, who lived through the Great Depression ( my dad loved Jack Bogle's philosophy). I've always saved a portion of my earnings, from my paper-route days until now. That has made all the difference, despite many rainy days in the last 60 years.

The Wizard
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Re: Delaying Social Security Until 70

Post by The Wizard » Sat Sep 15, 2018 9:14 pm

I'm striving desperately to be in the 2%.
I retired 5-1/2 years ago and have just 18 months remaining until claiming my age 70 SS.
That same year, I plan to cease Roth conversions forevermore.
Cheers...
Attempted new signature...

AlphaLess
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Re: Delaying Social Security Until 70

Post by AlphaLess » Sat Sep 15, 2018 9:38 pm

David Jay wrote:
Sat Sep 15, 2018 2:22 pm
For married couples, the math can work differently.

In our case, my PIA is about 4 times my spouse’s PIA. The optimal strategy is for my spouse to file as early as possible and me to delay to age 70.
Upvote!

And, depending on your age, when your spouse files, you may be able to file restricted-only application once you reach FRA, right?

AlphaLess
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Re: Delaying Social Security Until 70

Post by AlphaLess » Sat Sep 15, 2018 9:39 pm

inbox788 wrote:
Sat Sep 15, 2018 7:24 pm
sometimesinvestor wrote:
Sat Sep 15, 2018 4:07 pm
If you are single the calculations are simple :all that matters is how long you willlive My father died at 55 my mom at 75.I understood I would have to live till 78 to come out ahead if I waited till 70 so I didn't take it at 62 but took it when I retired. ifI am wrong won't go broke and taking it when I retired enabled me to invest in the last 10 years
Delaying SS until 70 is another way of investing it conservatively with a high confidence and relative high return. It's fortunate the last 10 years have been good to market investors, but for less fortunate, it might be like a lost decade.
Almost.

If you are 66, with a cancer diagnosis, that math does not work out.

AlphaLess
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Re: Delaying Social Security Until 70

Post by AlphaLess » Sat Sep 15, 2018 9:42 pm

Social security plays dirty.

An elderly couple in my extended family.
Husband filed at 66 (good or bad, he did).
I told him that his wife qualified for half of his PIA by filing restricted.
He did not believe me. So he called SSA. They gave some dumb answer.
I asked him to go to the local office. The local office gave the same dumb answer:
- because she worked, and thus had her own credits, she does not qualify to file under husband's account.

Really terrible advice.

So I think they did forgo about $50K worth of income.

drawpoker
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Re: Delaying Social Security Until 70

Post by drawpoker » Sat Sep 15, 2018 9:54 pm

What was the wife's age?

AlphaLess
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Re: Delaying Social Security Until 70

Post by AlphaLess » Sat Sep 15, 2018 10:39 pm

drawpoker wrote:
Sat Sep 15, 2018 9:54 pm
What was the wife's age?
4.5 years younger than husband.

drawpoker
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Re: Delaying Social Security Until 70

Post by drawpoker » Sun Sep 16, 2018 1:14 am

That was the problem then. In order to collect a spousal benefit (on a husband who started drawing social security either as old age benefit or disability) the wife has to be at least 62. So if the husband started collecting as soon as he turned 66, she was short by six months. Right?

Probably the explanation the SS workers gave out just was not clear, there was some misunderstanding about why she was not eligible at that time, and that she had to wait until she was 62.

retired early&luv it
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Re: Delaying Social Security Until 70

Post by retired early&luv it » Sun Sep 16, 2018 5:40 am

I am not answering your question here, instead I am giving you one caution to watch for.

Apparently the social security staff often give a recipient a lump sum representing half of a year of benefits and then calculate your retirement based on an age of 69.5 instead of 70. Make sure you tell them you do not want any retroactive lump sum.

The source of my information is three years old, at this link:
https://www.cnbc.com/2015/06/22/the-lat ... ntary.html

IowaFarmBoy
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Re: Delaying Social Security Until 70

Post by IowaFarmBoy » Sun Sep 16, 2018 5:41 am

I used to be firmly in the wait till 70 camp but I learned that I was making an incorrect assumption that is making me look seriously at drawing at FRA of 66-8. I am married and my spouse will be drawing based on half my benefit rather than hers. I had incorrectly assumed that she would get half of my age 70 benefit (including the increase) but I learned that she would only get half of my PIA at FRA, even if she waits till 70. So there is no advantage for waiting on her spousal benefit, which is a third of our total payment. She does get some advantage in that her survivor benefit would be my age 70 amount. I put together a spreadsheet and if I recall correctly, it was pretty much a wash between the options of both starting at 66-8 or both having to wait till 70. I plan to revisit this decision when we get closer to claiming based on what we perceive our life expectancies to be, the value of Roth conversions and what the rules are at that time. If her PIA was enough to claim on her own record instead of a spousal benefit, I think we would still be planning to wait till 70.

pennywise
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Re: Delaying Social Security Until 70

Post by pennywise » Sun Sep 16, 2018 6:59 am

David Jay wrote:
Sat Sep 15, 2018 2:22 pm
For married couples, the math can work differently.

In our case, my PIA is about 4 times my spouse’s PIA. The optimal strategy is for my spouse to file as early as possible and me to delay to age 70.
+1

We are a similar situation--though our PIAs are almost identical and I'm 4 years younger my husband beat the deadline (born September 1953/option not available if born after Jan 1954) to file for spousal on my account and then his own benefit at 70. Not sure if we will do that but it changes the equation substantially from a blanket 'always best to wait till 70".

In our case he has the option to start receiving income early via spousal to allow his own benefit to keep growing till he takes it at 70. That strategy, for us, achieves our primary SS goal of providing the largest amount possible to the survivor from our joint social security potential benefits.

As noted, social security strategies vary enormously depending on many factors.

pennywise
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Re: Delaying Social Security Until 70

Post by pennywise » Sun Sep 16, 2018 7:03 am

drawpoker wrote:
Sat Sep 15, 2018 4:39 pm

(I had been drawing a spousal benefit since age 60, 71.5% of my husband's benefit)
I didn't think one could claim a spousal benefit before age 62, other than as a widow/widower--can you explain how you started receiving spousal benefits at 60?

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Re: Delaying Social Security Until 70

Post by Call_Me_Op » Sun Sep 16, 2018 7:36 am

dm200 wrote:
Sat Sep 15, 2018 3:16 pm
Asset protection is better for SS income than almost any other income stream or asset
Spoken like a man who has been bitten. :wink:
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

Dandy
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Re: Delaying Social Security Until 70

Post by Dandy » Sun Sep 16, 2018 8:06 am

Many people take it earlier because they need it. The lack of pensions will likely increase this group in the future unless they have access to and take advantage of their 401k type vehicle. Another large segment just can't wait either because of health reasons or not used to delaying gratification. Some also take it early to increase the income during the usually healthier part of retirement to enjoy that time e.g. travel. Also, some do the math and decide that it seems to make sense to them to take money earlier rather than risk dying and leaving money on the table.

I waited until age 70 -- this year. I always have benefited by delaying e.g. waited for both pensions until the age that they would pay the max. I wanted to have the years from 70 on to have max income and to make sure my wife had the highest inflation adjusted income from Social Security since if I die earlier the pension payments to her are halved.

I was fortunate to have saved enough that even the tough times during the 2008-9 equity plunges I had enough income and assets to still have a very nice retirement leading up to taking Social Security at age 70. My wife took her modest SS at age 62 and I took a spousal on her SS account at age 66 and she took a spousal on my SS this year. So, we did have some modest SS income during the wait for me to reach age 70.

The max Social Security along with my pension income almost equals our current expense run rate. This gives me lots of peace of mind since I don't have to rely on my portfolio for basic needs. This allows us to gift some "early inheritance" to our 2 children rather than have them wait for us to pass. I have no regrets.

annielouise
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Re: Delaying Social Security Until 70

Post by annielouise » Sun Sep 16, 2018 8:12 am

Every optimizer that we have run recommends something in the 68 age range for us. (FRA is 67 - we are the same age}. So, it really depends on your personal circumstances. Of course, we will run them again closer to that time to see what they say then, but our tentative plan at this point is around 68.5.

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dm200
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Re: Delaying Social Security Until 70

Post by dm200 » Sun Sep 16, 2018 8:34 am

Dandy wrote:
Sun Sep 16, 2018 8:06 am
Many people take it earlier because they need it. The lack of pensions will likely increase this group in the future unless they have access to and take advantage of their 401k type vehicle. Another large segment just can't wait either because of health reasons or not used to delaying gratification. Some also take it early to increase the income during the usually healthier part of retirement to enjoy that time e.g. travel. Also, some do the math and decide that it seems to make sense to them to take money earlier rather than risk dying and leaving money on the table.

I waited until age 70 -- this year. I always have benefited by delaying e.g. waited for both pensions until the age that they would pay the max. I wanted to have the years from 70 on to have max income and to make sure my wife had the highest inflation adjusted income from Social Security since if I die earlier the pension payments to her are halved.

I was fortunate to have saved enough that even the tough times during the 2008-9 equity plunges I had enough income and assets to still have a very nice retirement leading up to taking Social Security at age 70. My wife took her modest SS at age 62 and I took a spousal on her SS account at age 66 and she took a spousal on my SS this year. So, we did have some modest SS income during the wait for me to reach age 70.

The max Social Security along with my pension income almost equals our current expense run rate. This gives me lots of peace of mind since I don't have to rely on my portfolio for basic needs. This allows us to gift some "early inheritance" to our 2 children rather than have them wait for us to pass. I have no regrets.
Yes..

hulburt1
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Re: Delaying Social Security Until 70

Post by hulburt1 » Sun Sep 16, 2018 8:35 am

So as I understand that I could take my SS at 66. My wife is younger by 3 years and has a bigger ss coming. If she plan on taking at 70 but dies on the way. At my 70 I can switch to her SS that she would get at 70.

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Re: Delaying Social Security Until 70

Post by Vanguard Fan 1367 » Sun Sep 16, 2018 8:36 am

TinyTim wrote:
Sat Sep 15, 2018 1:21 pm
I will begin taking Social Security later this year at age 70, and read some surprising statistics recently: Only about 2% of Social Security beneficiaries wait until age 70 to get the maximum benefit. I understand that there are a myriad of reasons to take it sooner, but it seems to me that more people would wait until 70. How many of you waited until 70? Doubtless Bogleheads will be statistically skewed to a higher percentage who delayed benefits. If you took benefits early, why did you do so?
I agree with you. With following Bogle's advice and the raging stock market I don't need social security now. In about 4 years when I turn 70 I may. Why not have a bigger check waiting in case that nasty bear market comes along?

LITeacher
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Re: Delaying Social Security Until 70

Post by LITeacher » Sun Sep 16, 2018 8:41 am

This was the advice I told my parents...

My dad is currently 67 (will be 68 January 3rd), going to retire October 31 this year.
My mother is currently 65. She is already retired.

My mother collected at 62 approximately $1075 a month.
At 66, my father took his spousal restricted, works out to about $660 a month.

They have about 1 million in assets and it will cost my parents about $20K of their portfolio (with their social security supplementing the rest) to live the next two years while my dad's benefit grows 8% yearly.

At 70 (in 2 years), my dad will collect $3200 a month (and my mom will continue to collect $1075 a month).

The 2 years that they wait for my dad to have the 32% higher social security will most definitely not kill them financially. They will break even (and then surpass) if ONE of them lives until age 78, by my calculations. If neither lives until age 78, then their money will have outlasted them anyway, and it makes no difference (since my brother and I don't need the money from their estate). But if one or both live past 78, then they now have a $4300 a month coming in as income in retirement.

jpdion
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Re: Delaying Social Security Until 70

Post by jpdion » Sun Sep 16, 2018 8:58 am

We have decided to take SS at FRA (our SS amounts are virtually identical, DW is 2.5 years younger). We looked at the entire retirement income stream, including SS, my pension, and our TIRAs over the long haul. It made sense to take SS at FRA (in our opinion) for two reasons, 1) get a 15% tax discount (at least) on the SS amounts, and 2) it gets our combined TIRA withdrawal rates substantially under 4% (assuming excess RMDs are invested and we stick to our current lifestyle). Additionally, with breakeven point in early 80s, and the uncertainty of reaching that point, there is a "bird in the hand" feeling (time value of money) about it as well. BTW my 1st SS check arrived last month and I felt good about reducing my withdrawal from the TIRA to match it.
Last edited by jpdion on Sun Sep 16, 2018 9:14 am, edited 1 time in total.

tibbitts
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Re: Delaying Social Security Until 70

Post by tibbitts » Sun Sep 16, 2018 9:06 am

Is everybody doing their calculations based on current law and the latest available statistics, with the associated payout reduction?

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Re: Delaying Social Security Until 70

Post by jpdion » Sun Sep 16, 2018 9:09 am

tibbitts wrote:
Sun Sep 16, 2018 9:06 am
Is everybody doing their calculations based on current law and the latest available statistics, with the associated payout reduction?
Yes for me . . . using current SSA benefit estimates; not eligible for the file, suspend and wait to 70 while spouse claims spousal benefit.

dknightd
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Re: Delaying Social Security Until 70

Post by dknightd » Sun Sep 16, 2018 9:10 am

Our plan is wife claims her smaller benefit at FRA. That way her eventual spousal benefit will not be reduced. I'll claim at 70. Unfortunately we missed the restricted filing options, otherwise our strategy might have been different (and better). We both expect to have more or less average lifetimes. But if one of us lives longer they will appreciate having the money.
If things change I might claim sooner, but not likely. It is much easier to decide to claim earlier than it is to wish you had claimed later. So I plan to claim as late as possible (or when I turn 70, whichever comes first)

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Re: Delaying Social Security Until 70

Post by dknightd » Sun Sep 16, 2018 9:27 am

tibbitts wrote:
Sun Sep 16, 2018 9:06 am
Is everybody doing their calculations based on current law and the latest available statistics, with the associated payout reduction?
I'm assuming that they will find a way to "fix" the system. I'm also assuming that they will give years of advance notice.
That seems to be the pattern. When they changed FRA from 65 to 67 they did it slowly, with plenty of advance notice.
When they removed the file and suspend rules they gave years of notice. Both of these moves were made to save SS money without reducing benefits to current recipients.
I think if you are near collecting, or are collecting, you will not be affected much by whatever rules changes they decide to make. They might decide to not make COLA, or change the way they calculate it, but I would be very very surprised if they actually reduced the benefits they are paying to people who have already claimed. (they might be reduced in real dollars, but likely not in nominal dollars)
If I was 20 I might assume that SS will not exist when I was ready to retire. But if you are over 60 I suspect any changes will not be huge.
This is speculation based on past history. I hope it does not break forum rules.

chw
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Re: Delaying Social Security Until 70

Post by chw » Sun Sep 16, 2018 9:50 am

A financial advisor with AUM may tell a client to take SS at age 62 to avoid spending down savings (and thus reduce the advisors fees). I have an acquaintance that is an FA, and always advises his clients to take SS at 62. We've debated why this is a bad idea for most folks (or at least wait til FRA to take SS), but insists that SS at 62 always helps to preserve his clients savings, and that the earlier benefit almost always offsets not drawing down invested funds with him. :oops:
Last edited by chw on Sun Sep 16, 2018 10:04 am, edited 1 time in total.

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Re: Delaying Social Security Until 70

Post by Vanguard Fan 1367 » Sun Sep 16, 2018 9:58 am

chw wrote:
Sun Sep 16, 2018 9:50 am
A financial advisor with AUM tells the client to do so to avoid spending down savings (and thus reduce the advisors fees). I have an acquaintance that is an FA, and always advises his clients to take SS at 62. We've debated why this is a bad for most folks (or at least wait til FRA to take SS), but insists that SS at 62 always helps to preserve his clients savings, and that the earlier be benefit almost always offsets not drawing down invested funds with him. :oops:
I appreciate the advice of John Bogle saying in talking about financial advisors: Expenses: “The grim irony of investing is that we investors as a group not only don’t get what we pay for, we get precisely what we don’t pay for.”

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Re: Delaying Social Security Until 70

Post by GeoffD » Sun Sep 16, 2018 10:03 am

Dandy wrote:
Sun Sep 16, 2018 8:06 am
Many people take it earlier because they need it.
In my spreadsheet, I calculate my age 62 to age 70 Social Security benefit payout as $198,144. I'm career high income. 29 years with my Social Security contribution maxed and another 6 years that are strong. I'm maybe $1K per year short of the maximum possible defer-to-age-70 benefit. In 2018 dollars, my age 70 benefit would $43,524/year.

My father made it to ~85. My mother is 86. With medical advances, I have pretty high odds of making it to at least age 85. I'm 60 now. I view Social Security as very good COLA-protected insurance against outliving my retirement portfolio. If I totally run out of money other than the equity in my house, I'm still fine. I have the extra $198,144 I can spend during those 8 years between 62 and 70. Why wouldn't I do the financially conservative thing and defer to 70? If the markets defy gravity and continue to boom for another 8 years, I leave some money on the table. That's way better than being 90+, out of money, and trying to get by on an age 62 Social Security benefit of $24,768 in 2018 dollars.

[OT comments removed by admin LadyGeek]

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Re: Delaying Social Security Until 70

Post by JW-Retired » Sun Sep 16, 2018 10:29 am

hulburt1 wrote:
Sun Sep 16, 2018 8:35 am
So as I understand that I could take my SS at 66. My wife is younger by 3 years and has a bigger ss coming. If she plan on taking at 70 but dies on the way. At my 70 I can switch to her SS that she would get at 70.
I'll try. Her plans don't matter just her age at date of death, and your age only matters for widower benefits if you are less than your full retirement age (FRA). If you are 60+ but less than full retirement age, as a widower you can start receiving a reduced amount of what she would get if she had filed at FRA, if she was younger that. If she was older then FRA it would be a reduced amount of what she would receive if filing at her age at death. If she is already taking her SS it's from that amount. The reduction goes down toward zero the closer you are to FRA when you claim.

The benefits are independent. You can choose to take the widower benefit earlier and delay your own benefit and wait to switch to it at age 70. Or take yours early and wait until you are FRA then switch to widower benefit if it's higher. Just figure out what you think would produce the most favorable benefits.

But be sure to check this for yourself.......... I could have mixed something up!

https://www.ssa.gov/planners/survivors/ifyou.html#h6
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Re: Delaying Social Security Until 70

Post by heyyou » Sun Sep 16, 2018 11:20 am

About those 2% who do wait until 70 to start SS:
Morgan Housel wrote that most people are not good at saving, therefore you have to act differently than most, to be a saver. That describes we Bogleheads quite well.

I took my no-COLA pension (with its risky longevity) at age 55, spending 2-3% of the portfolio annually, to delay SS to 70, to boost her future survivor benefit.

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Re: Delaying Social Security Until 70

Post by GeoffD » Sun Sep 16, 2018 11:52 am

Turbo29 wrote:
Sun Sep 16, 2018 11:29 am
As most of us here are heavily invested in index funds, WE own the corporations too. They are us.
Sure, but hiking the employer side of payroll taxes doesn't change the fully burdened cost per employee very much. Social Security is about 75% to 80% funded depending on how pessimistic you are about economic growth. The employer side FICA payroll tax goes from 6.2% to about 7.7%. Or you do what was done for Medicare and start taxing income sources that aren't earned income where it doesn't impact the payroll tax at all.

Taxes are going up. It's a matter of when.

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Re: Delaying Social Security Until 70

Post by JW-Retired » Sun Sep 16, 2018 11:55 am

Not much notice here that SS income is more lightly taxed then most all other retirement income. It really is a huge deal if you live in a high tax state that has a 9+% income tax on everything but SS. My fairly high Fed+State marginal income tax rate on RMDs & pension is 1.46x bigger than the marginal tax rate on our SS. No kidding.

Just a no-brainer to delay our SS as much as possible. That and Prop 13 makes California plenty livable for old Bogleheads. :beer
JW
ps: I think most states are pretty similar in giving SS a pass.
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Re: Delaying Social Security Until 70

Post by dm200 » Sun Sep 16, 2018 12:02 pm

GeoffD wrote:
Sun Sep 16, 2018 11:52 am
Turbo29 wrote:
Sun Sep 16, 2018 11:29 am
As most of us here are heavily invested in index funds, WE own the corporations too. They are us.
Sure, but hiking the employer side of payroll taxes doesn't change the fully burdened cost per employee very much. Social Security is about 75% to 80% funded depending on how pessimistic you are about economic growth. The employer side FICA payroll tax goes from 6.2% to about 7.7%. Or you do what was done for Medicare and start taxing income sources that aren't earned income where it doesn't impact the payroll tax at all.

Taxes are going up. It's a matter of when.
Yes.. I agree..

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Re: Delaying Social Security Until 70

Post by drawpoker » Sun Sep 16, 2018 12:13 pm

pennywise wrote:
Sun Sep 16, 2018 7:03 am
drawpoker wrote:
Sat Sep 15, 2018 4:39 pm

(I had been drawing a spousal benefit since age 60, 71.5% of my husband's benefit)
I didn't think one could claim a spousal benefit before age 62, other than as a widow/widower--can you explain how you started receiving spousal benefits at 60?
Yes, as a widow.
I used to call it a "survivors benefit" but was corrected by ObliviousInvestor here. Evidently, to be technical, the SSA terminology does not make a distinction if the spouse is deceased or living. If the benefit is based on the husband's PIA for old age benefits it is still called a spousal benefit, not a survivor's. Survivors is correct name if the worker died before filing for old age benefit, and left a spouse and minor children eligible to collect.
Yes, it just adds to the confusion, but that's the way social security and the gumbmint does things.

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Re: Delaying Social Security Until 70

Post by oldcomputerguy » Sun Sep 16, 2018 12:28 pm

dm200 wrote:
Sat Sep 15, 2018 2:18 pm
2. Some do the math and (with justification) conclude earlier is better
I believe that we are going to be in this category. We'll be bridging the gap between punching out and filing for SS by drawing on our 401k / tIRA accounts, and my math seems to indicate that there is a "sweet spot" between spending those accounts down and filing for SS that favors filing at FRA rather than at age 70. My plan is that we will wait until FRA, re-evaluate our situation, and if things seem to support the proposition, we'll revisit the idea of delaying further. If they don't, we'll file then.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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Re: Delaying Social Security Until 70

Post by Dandy » Sun Sep 16, 2018 12:41 pm

GeoffD wrote:
Sun Sep 16, 2018 10:03 am
Dandy wrote:
Sun Sep 16, 2018 8:06 am
Many people take it earlier because they need it.
In my spreadsheet, I calculate my age 62 to age 70 Social Security benefit payout as $198,144. I'm career high income. 29 years with my Social Security contribution maxed and another 6 years that are strong. I'm maybe $1K per year short of the maximum possible defer-to-age-70 benefit. In 2018 dollars, my age 70 benefit would $43,524/year.

My father made it to ~85. My mother is 86. With medical advances, I have pretty high odds of making it to at least age 85. I'm 60 now. I view Social Security as very good COLA-protected insurance against outliving my retirement portfolio. If I totally run out of money other than the equity in my house, I'm still fine. I have the extra $198,144 I can spend during those 8 years between 62 and 70. Why wouldn't I do the financially conservative thing and defer to 70? If the markets defy gravity and continue to boom for another 8 years, I leave some money on the table. That's way better than being 90+, out of money, and trying to get by on an age 62 Social Security benefit of $24,768 in 2018 dollars.

[OT comments removed by admin LadyGeek]
I agree that waiting for age 70 is a good idea for many including me. But, many people retire without a pension and without enough savings. It isn't that they didn't try to save or squandered their income, many had low wages or health issues etc and they need to take that SS income early. No shame in that.

My dad was forced to retire at age 59 and got a terrible pension. He had to move to a mobile home community in Florida far from his family in the Northeast. I'm pretty sure he had to take Social Security as soon as he could. He ended up working in a kitchen post retirement washing dishes etc. to help make ends meet. He was lucky, he had a small pension and his house was paid for. But, I can't imagine at retirement age what it must have been like working in a hot kitchen in Fla.

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Re: Delaying Social Security Until 70

Post by GeoffD » Sun Sep 16, 2018 1:02 pm

Dandy wrote:
Sun Sep 16, 2018 12:41 pm
GeoffD wrote:
Sun Sep 16, 2018 10:03 am
Dandy wrote:
Sun Sep 16, 2018 8:06 am
Many people take it earlier because they need it.
In my spreadsheet, I calculate my age 62 to age 70 Social Security benefit payout as $198,144. I'm career high income. 29 years with my Social Security contribution maxed and another 6 years that are strong. I'm maybe $1K per year short of the maximum possible defer-to-age-70 benefit. In 2018 dollars, my age 70 benefit would $43,524/year.

My father made it to ~85. My mother is 86. With medical advances, I have pretty high odds of making it to at least age 85. I'm 60 now. I view Social Security as very good COLA-protected insurance against outliving my retirement portfolio. If I totally run out of money other than the equity in my house, I'm still fine. I have the extra $198,144 I can spend during those 8 years between 62 and 70. Why wouldn't I do the financially conservative thing and defer to 70? If the markets defy gravity and continue to boom for another 8 years, I leave some money on the table. That's way better than being 90+, out of money, and trying to get by on an age 62 Social Security benefit of $24,768 in 2018 dollars.
[OT comments removed by admin LadyGeek]
I agree that waiting for age 70 is a good idea for many including me. But, many people retire without a pension and without enough savings. It isn't that they didn't try to save or squandered their income, many had low wages or health issues etc and they need to take that SS income early. No shame in that.

My dad was forced to retire at age 59 and got a terrible pension. He had to move to a mobile home community in Florida far from his family in the Northeast. I'm pretty sure he had to take Social Security as soon as he could. He ended up working in a kitchen post retirement washing dishes etc. to help make ends meet. He was lucky, he had a small pension and his house was paid for. But, I can't imagine at retirement age what it must have been like working in a hot kitchen in Fla.
Right. So your dad took it at 62 because he needed it. No agonizing decision to be made. My net worth is right on that cusp where the decision matters. I'm at risk of out-living my savings. If I had double my net worth, it would be an academic exercise where any decision wouldn't change the outcome much. I figure I get one shot at it so I'd prefer to take the conservative path.

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