I evaluated taking SS at age 62 versus age 70

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investingdad
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I evaluated taking SS at age 62 versus age 70

Post by investingdad » Wed May 22, 2019 8:31 am

I downloaded the detailed social security calculator and used my earning history to get a proper estimate of retirement benefits and plugged results into FIREcalc.

My goal was to evaluate taking benefits at 62 versus 70 and how that changed the results.

Some starting data:
- I'm 45
- will stop working at 54
- same for my wife
- assumed a 50 year timeframe
- our combined monthly benefit is 3850 if we take it at 62
- combined benefit jumps to 6780 if we wait to 70

Without sharing all the other details, I concluded that for us, there is a very slight benefit to SS at age 62.

How slight?

With my inputs to FIREcalc, the final portfolio value has these outcomes:

- take benefit at 62, final portfolio ranges from +23,000 to +78,000,000
- take benefit at 70, final portfolio ranges from -41,000 to +78,800,000

We can debate whether the absolute values are believable, but essentially taking the benefit early slightly improves the success rate by eliminating the sole failing scenario while lowering the highest scenario.

For me, I think this suggests taking benefits at 62 makes more sense. But ultimately, SS will have only a small impact if our situation continues as is.

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FlyAF
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Re: I evaluated taking SS at age 62 versus age 70

Post by FlyAF » Wed May 22, 2019 8:34 am

With 78 million dollars, why do you give a rip?

Greenman72
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Re: I evaluated taking SS at age 62 versus age 70

Post by Greenman72 » Wed May 22, 2019 8:37 am

^+1.

Strange flex, but ok.

Actually, it's very easy to determine the optimal age to begin taking Social Security. All I need to know is what age you plan to die. If you provide that, I'll give you an exact answer.

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investingdad
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Re: I evaluated taking SS at age 62 versus age 70

Post by investingdad » Wed May 22, 2019 8:40 am

FlyAF wrote:
Wed May 22, 2019 8:34 am
With 78 million dollars, why do you give a rip?
We don't have anything close to 78 million and don't expect to, it's the high side outlier on FIREcalc.

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Re: I evaluated taking SS at age 62 versus age 70

Post by jacksonm » Wed May 22, 2019 8:52 am

FlyAF wrote:
Wed May 22, 2019 8:34 am
With 78 million dollars, why do you give a rip?
They don't have 78 million. Firecalc says that's the max they will end up with based on all factors involved in the calculations.

Still, must be a pretty decent portfolio already to be able to potentially grow to that amount.

Don't know why you wouldn't just go with the age 70 option and be done with it.

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Re: I evaluated taking SS at age 62 versus age 70

Post by jeffyscott » Wed May 22, 2019 8:55 am

Are you able to evaluate having the low earner take it at 62 and the high earner at 70?
Time is your friend; impulse is your enemy. - John C. Bogle

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Re: I evaluated taking SS at age 62 versus age 70

Post by smitcat » Wed May 22, 2019 8:58 am

investingdad wrote:
Wed May 22, 2019 8:31 am
I downloaded the detailed social security calculator and used my earning history to get a proper estimate of retirement benefits and plugged results into FIREcalc.

My goal was to evaluate taking benefits at 62 versus 70 and how that changed the results.

Some starting data:
- I'm 45
- will stop working at 54
- same for my wife
- assumed a 50 year timeframe
- our combined monthly benefit is 3850 if we take it at 62
- combined benefit jumps to 6780 if we wait to 70

Without sharing all the other details, I concluded that for us, there is a very slight benefit to SS at age 62.

How slight?

With my inputs to FIREcalc, the final portfolio value has these outcomes:

- take benefit at 62, final portfolio ranges from +23,000 to +78,000,000
- take benefit at 70, final portfolio ranges from -41,000 to +78,800,000

We can debate whether the absolute values are believable, but essentially taking the benefit early slightly improves the success rate by eliminating the sole failing scenario while lowering the highest scenario.

For me, I think this suggests taking benefits at 62 makes more sense. But ultimately, SS will have only a small impact if our situation continues as is.
In my opinion analyzing when to take SS without taking into consideration things like the ACA, Roth conversions and your overall tax situation will not optimize your plan or future position. Additionally you are too far off in time to spend much time on these calculations.
If you want to see how various SS plans affect you overall funds and you ability to spend those funds after taxes you can utilize the extended IORP and the RPM calculators to get some ideas of the variables.

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investingdad
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Re: I evaluated taking SS at age 62 versus age 70

Post by investingdad » Wed May 22, 2019 9:01 am

jeffyscott wrote:
Wed May 22, 2019 8:55 am
Are you able to evaluate having the low earner take it at 62 and the high earner at 70?
My wife and I have very similar earnings over the years, the delta in benefits is shown to be trivial.

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Re: I evaluated taking SS at age 62 versus age 70

Post by goblue100 » Wed May 22, 2019 9:02 am

investingdad wrote:
Wed May 22, 2019 8:31 am

Some starting data:
- I'm 45
- will stop working at 54
i'm all for long term planning, but I suggest looking at this in about 15 years.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns

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Re: I evaluated taking SS at age 62 versus age 70

Post by cinghiale » Wed May 22, 2019 9:04 am

smitcat wrote,
In my opinion analyzing when to take SS without taking into consideration things like the ACA, Roth conversions and your overall tax situation will not optimize your plan or future position. Additionally you are too far off in time to spend much time on these calculations.
^^^^That.

Probably not what the OP was looking for, but, with a 17-25 year wait before hitting SS qualifying ages, it will be far more guesswork than precision.
"We don't see things as they are; we see them as we are." Anais Nin | | "Sometimes the first duty of intelligent men is the restatement of the obvious." George Orwell

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investingdad
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Re: I evaluated taking SS at age 62 versus age 70

Post by investingdad » Wed May 22, 2019 9:07 am

goblue100 wrote:
Wed May 22, 2019 9:02 am
investingdad wrote:
Wed May 22, 2019 8:31 am

Some starting data:
- I'm 45
- will stop working at 54
i'm all for long term planning, but I suggest looking at this in about 15 years.
Well...I actually started thinking about this in my 20s which is what I credit to being where we are now.

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Re: I evaluated taking SS at age 62 versus age 70

Post by midareff » Wed May 22, 2019 9:14 am

When I did my (last of many) evaluation nearly a decade or so ago I concluded that the rewards flight paths seemed to cross at roughly age 78 and 8 months, +/- a couple of months. From there I observed; the money not necessarily drawn from taxable would produce (at a minimum) a 2% dividend and hopefully some growth and.... that at my 79th birthday, Oops. As it turned out, the years 2010, 2011 and 2012 produced a combined gain of > 30% to my portfolio and I started at my first full retirement year's birthday @ 65. As it also turned out I would have drawn near $90K for those three years, which would have not grown another > 45% - 50% since. AFAIC, I made the right call for me. History for you may prove far different but there is no denying the advantages of keeping your liquidity.

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Re: I evaluated taking SS at age 62 versus age 70

Post by sreynard » Wed May 22, 2019 9:50 am

I always wonder about the purpose of these posts. The OP already knows what they should do and they already know what they are going to do. So why post about it? Looking for confirmation bias?

The safest thing to do is wait until 70, but we all know you're not wanting to do that. The only reason you should take it before that is if you are in financial hardship and need the money earlier. But you, and everyone else that took it earlier, will disagree.

How many responses from people that took SS at 62 will it take to reassure you that it is the right thing to do for you? Do you have a specific level of confirmation you need?

OK, I lied. Maybe I don't wonder....

quantAndHold
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Re: I evaluated taking SS at age 62 versus age 70

Post by quantAndHold » Wed May 22, 2019 10:00 am

investingdad wrote:
Wed May 22, 2019 9:07 am
goblue100 wrote:
Wed May 22, 2019 9:02 am
investingdad wrote:
Wed May 22, 2019 8:31 am

Some starting data:
- I'm 45
- will stop working at 54
i'm all for long term planning, but I suggest looking at this in about 15 years.
Well...I actually started thinking about this in my 20s which is what I credit to being where we are now.
Making a prudent decision to save and invest is very different than trying to predict the future. You’re dealing with surprises in investment returns, your health and ability to work, changes in laws related to healthcare, social security, taxation, etc, etc, etc. Too many variables to make useful predictions. Even if you wait until age 61.5 to make decisions about Social Security, you’ll still just be making an informed guess.

Save, invest, pay attention to taxes. Live life. Check back in a few years.

And yeah, unless you’re short of cash, 70 is usually best. SS is longevity insurance, not an investment to be maximized.

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Leif
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Re: I evaluated taking SS at age 62 versus age 70

Post by Leif » Wed May 22, 2019 10:12 am

Often you see on these posts a calculation of which will provide the most benefit given some age of death. Really it is old age insurance. Do you make a calculation of the benefit of insuring your home against fire? Certainly since the chance of fire is small you will have more money if you don't insure.

Unless, of course, your home burns down. Well, perhaps you will live to 100? What will your 100 age old self want to say to your younger self about getting SS at 62. Will you think you could have waited until 70 and get 72% larger inflation adjusted check?
Last edited by Leif on Wed May 22, 2019 10:14 am, edited 1 time in total.

Pu239
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Re: I evaluated taking SS at age 62 versus age 70

Post by Pu239 » Wed May 22, 2019 10:13 am

With a $78m difference in portfolio outcomes for both ages, how accurate can any conclusion comparing the two really be?
Between the idea And the reality...Between the motion And the act...Falls the Shadow - T. S. Eliot

randomguy
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Re: I evaluated taking SS at age 62 versus age 70

Post by randomguy » Wed May 22, 2019 10:19 am

sreynard wrote:
Wed May 22, 2019 9:50 am
I always wonder about the purpose of these posts. The OP already knows what they should do and they already know what they are going to do. So why post about it? Looking for confirmation bias?

The safest thing to do is wait until 70, but we all know you're not wanting to do that. The only reason you should take it before that is if you are in financial hardship and need the money earlier. But you, and everyone else that took it earlier, will disagree.

How many responses from people that took SS at 62 will it take to reassure you that it is the right thing to do for you? Do you have a specific level of confirmation you need?

OK, I lied. Maybe I don't wonder....
Except this post shows clearly that the safest thing to do is to take SS at 62 instead of 70. If you think taking it at 70 is safer, you should be pointing out the reasons why the OP conclusion is wrong. To some extent it comes down to if you believe the worst possible 50 year period has happened. Personally I look at those differences and see noise. The errors in the assumptions (i.e. when you die, taxes,..) is going to far outweigh the differences that show up. Heck I am not sure what is a bigger risk. Lower future market performance or a 25% cut to SS before you get to 70:)

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Re: I evaluated taking SS at age 62 versus age 70

Post by laughlinlvr » Wed May 22, 2019 10:23 am

A portfolio cannot go below zero. Once it runs out, it runs out. This shows the limitations of Monte Carlo simulation. (Since a small negative amount could become a small positive amount with the next iteration, and then - possibly - a larger positive amount.) In reality, you cannot start with a negative balance and watch it grow to a positive one. The world doesn't work like that. As someone who does Monte Carlo analysis I recommend you run this again using a) a smaller percentage gain; and b) a shorter life expectancy.
For example, if I use a rate of return of 8.5% and a life expectancy of 95 years, my portfolio exceeds $36 million as a mean value. This is preposterous, particularly since I am a real person. What's the point of amassing $36 million if you never touch it? If you intend to live without ever touching your portfolio, then you could have spent your life without ever bothering to set one up.
These kind of very long life expectancies are best suited to non-profit portfolios e.g. church funds.
Also, Monte Carlo analysis precludes human behavior. For example it's possible to see a $5 million portfolio dwindle to pocket change under some particular simulation. However, the human in charge almost always will takes action before this happens.
Investing - The hardest way to make an easy living.

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Re: I evaluated taking SS at age 62 versus age 70

Post by jeffyscott » Wed May 22, 2019 10:31 am

investingdad wrote:
Wed May 22, 2019 9:01 am
jeffyscott wrote:
Wed May 22, 2019 8:55 am
Are you able to evaluate having the low earner take it at 62 and the high earner at 70?
My wife and I have very similar earnings over the years, the delta in benefits is shown to be trivial.
I think there still might be a difference. Since only one benefit will continue to be paid to the sole survivor, the value of delaying one benefit should, I think, be greater than the value of delaying the second benefit.
Time is your friend; impulse is your enemy. - John C. Bogle

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Re: I evaluated taking SS at age 62 versus age 70

Post by EHEngineer » Wed May 22, 2019 10:47 am

investingdad wrote:
Wed May 22, 2019 8:31 am

Without sharing all the other details, I concluded that for us, there is a very slight benefit to SS at age 62.


How slight?

With my inputs to FIREcalc, the final portfolio value has these outcomes:
The reason you concluded SS at 62 is better than 70 is becuase FIRECALC assumed you would invest the money and earn a substantially positive return. This assumption is highly dubious for any 8 year period. Make a different assumption and get a different result. YMMV.

IMO your assumption is bunk because getting a larger SS benefit at 70 is zero risk (even inflation adjusted), while getting a substantially positive return in the stock market is NOT guaranteed.

good luck.
Or, you can ... decline to let me, a stranger on the Internet, egg you on to an exercise in time-wasting, and you could say "I'm probably OK and I don't care about it that much." -Nisiprius

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Re: I evaluated taking SS at age 62 versus age 70

Post by wolf359 » Wed May 22, 2019 10:51 am

midareff wrote:
Wed May 22, 2019 9:14 am
When I did my (last of many) evaluation nearly a decade or so ago I concluded that the rewards flight paths seemed to cross at roughly age 78 and 8 months, +/- a couple of months. From there I observed; the money not necessarily drawn from taxable would produce (at a minimum) a 2% dividend and hopefully some growth and.... that at my 79th birthday, Oops. As it turned out, the years 2010, 2011 and 2012 produced a combined gain of > 30% to my portfolio and I started at my first full retirement year's birthday @ 65. As it also turned out I would have drawn near $90K for those three years, which would have not grown another > 45% - 50% since. AFAIC, I made the right call for me. History for you may prove far different but there is no denying the advantages of keeping your liquidity.
This is a perfect example of how market conditions change. Would someone make the same decision in 2008 as they would in 2019? Spending from a portfolio that is at or near market highs is quite different than spending from a portfolio that has just collapsed 50%, I can't find a job, and I was forced into retirement.

What will the world be like 20 years from now? What will Social Security be like? What will your life be like?

Set a general plan, and move on. No need to revisit until about 5 years or less prior to the actual decision. Extensively evaluating this so early is only good for the entertainment value.

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Re: I evaluated taking SS at age 62 versus age 70

Post by Dottie57 » Wed May 22, 2019 10:54 am

goblue100 wrote:
Wed May 22, 2019 9:02 am
investingdad wrote:
Wed May 22, 2019 8:31 am

Some starting data:
- I'm 45
- will stop working at 54
i'm all for long term planning, but I suggest looking at this in about 15 years.
:D

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Re: I evaluated taking SS at age 62 versus age 70

Post by aristotelian » Wed May 22, 2019 11:00 am

What is the rest of the portfolio invested in, Tesla stock?

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Re: I evaluated taking SS at age 62 versus age 70

Post by randomguy » Wed May 22, 2019 11:05 am

EHEngineer wrote:
Wed May 22, 2019 10:47 am
investingdad wrote:
Wed May 22, 2019 8:31 am

Without sharing all the other details, I concluded that for us, there is a very slight benefit to SS at age 62.


How slight?

With my inputs to FIREcalc, the final portfolio value has these outcomes:
The reason you concluded SS at 62 is better than 70 is becuase FIRECALC assumed you would invest the money and earn a substantially positive return. This assumption is highly dubious for any 8 year period. Make a different assumption and get a different result. YMMV.

IMO your assumption is bunk because getting a larger SS benefit at 70 is zero risk (even inflation adjusted), while getting a substantially positive return in the stock market is NOT guaranteed.

good luck.
Historically though it has been true. I don't think there are any 50 year periods where SS has a higher rate of return (though I think my SS returns end at age 100. Not sure planning for a couple to live to 104 is realistic) than investing in something like 50/50. And yes firecalc does include all the periods where the first 8 years are bad. Heck those are probably the cases where taking SS early does better as you have a larger portfolio to enjoy the bull market afterwards.

Obviously past performance is no indication of what will happen in the future. Market returns could be worse. SS could be cut by 25%. And so on. You make your bet and live with the results.

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Re: I evaluated taking SS at age 62 versus age 70

Post by rai » Wed May 22, 2019 11:06 am

Firecalc doesn’t plan or factor in the increases to SS payments or does it?
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Re: I evaluated taking SS at age 62 versus age 70

Post by Tdubs » Wed May 22, 2019 11:25 am

The low risk of failure at 70 is even less than the OP claims. The decision to be made is not one choice between filing at 62 or 70; it is 96 choices, one in every month between 62 and 70. You do not decide at 62 to wait till 70 and then cross a bone-dry desert hoping your portfolio makes it regardless of bad luck. If things go bad around age 65, pull the ripcord and file for SS. A decision to file at 62 is hard to undo, but a decision to wait can be undone every 30 days.

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Re: I evaluated taking SS at age 62 versus age 70

Post by onthecusp » Wed May 22, 2019 11:39 am

Tdubs wrote:
Wed May 22, 2019 11:25 am
The low risk of failure at 70 is even less than the OP claims. The decision to be made is not one choice between filing at 62 or 70; it is 96 choices, one in every month between 62 and 70. You do not decide at 62 to wait till 70 and then cross a bone-dry desert hoping your portfolio makes it regardless of bad luck. If things go bad around age 65, pull the ripcord and file for SS. A decision to file at 62 is hard to undo, but a decision to wait can be undone every 30 days.
+1

I've done the same analysis as OP and come to the conclusion that if I manage to retire early enough I will plan to take SS at 70 while retaining the option to take it earlier if we need to. I would also have to somehow lose my other options for part time work for me to make that decision.

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Re: I evaluated taking SS at age 62 versus age 70

Post by THY4373 » Wed May 22, 2019 11:49 am

I am not sure I really see much difference between the two scenarios. I mean I would consder +23k and -$41k to both be effectively failures in the real world. Also seems like something of a rounding error given your upside so I am assuming a significant amount of assets to begin with.

- take benefit at 62, final portfolio ranges from +23,000 to +78,000,000
- take benefit at 70, final portfolio ranges from -41,000 to +78,800,000

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Re: I evaluated taking SS at age 62 versus age 70

Post by Svensk Anga » Wed May 22, 2019 11:59 am

randomguy wrote:
Wed May 22, 2019 10:19 am

Except this post shows clearly that the safest thing to do is to take SS at 62 instead of 70. If you think taking it at 70 is safer, you should be pointing out the reasons why the OP conclusion is wrong.
The SS at 62 case likely tests better because it would have carried the retiree through the Great Depression with less draw on the portfolio and thus more capital available for the eventual recovery. If the OP experiences the Great Depression Part 2 (80+% stock decline) in his 60's, he should then abandon deferring SS and claim at once. The optimum plan barring a GD p2, is likely lower earner claiming at 62 and higher earner claiming at 70. Run the opensocialsecurity calculator to confirm.

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Re: I evaluated taking SS at age 62 versus age 70

Post by randomguy » Wed May 22, 2019 12:01 pm

Tdubs wrote:
Wed May 22, 2019 11:25 am
The low risk of failure at 70 is even less than the OP claims. The decision to be made is not one choice between filing at 62 or 70; it is 96 choices, one in every month between 62 and 70. You do not decide at 62 to wait till 70 and then cross a bone-dry desert hoping your portfolio makes it regardless of bad luck. If things go bad around age 65, pull the ripcord and file for SS. A decision to file at 62 is hard to undo, but a decision to wait can be undone every 30 days.
So when do you pull the ripcord? If say 2000-2 or 2007-9 happens again when do I pull the ripcord? Wait too long and you get a depleted portfolio and a lower SS check. Pull the cord at every market gyration (say you would have pulled the ripcord in dec 2018) and you might as well just file at 62 . And the other question is does it help? You would need to run the simulations to see if doing SS at 63-69 gives better resultllis. You might find out that 63 is still slightly worse than 63 and 64 is slightly worse than 62.

I would be somewhat curious to know what the OP assumptions are to get the results. I think you can run into some cases when you need to spend a lot of the portfolio early which causes issues latter. Imagine someone with 2 million dollars, 120k/year spending and 48k SS at 62 and ~80k at 70. If you invest 50/50, you have a big sequence of return risk (6% SWR) if the first dozen years are bad as you are sucking a lot of money out of the portfolio. Take SS early and you get some very safe number (3.6%). In the real world, if you delay you would probably hedge against the sequence of risk to some extent by shoving say 500k into a bond ladder which gets rid of the chance of withdrawing from a portfolio down 25%.

In the end for most people on this board, the insurance part is going to dominate their decision making. Unless you really believe the cuts will happen, the risk reduction from waiting. Making the worse case (i.e. portfolio goes to zero as you live to 115:)) better is more important than the marginal chances of not depleting the portfolio or higher end value.

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Re: I evaluated taking SS at age 62 versus age 70

Post by mhalley » Wed May 22, 2019 12:08 pm

SS is designed to be neutral about when you take it. The main reason to delay to 70 is to provide longevity protection, usually for the wife as they usually live longer.

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Re: I evaluated taking SS at age 62 versus age 70

Post by randomguy » Wed May 22, 2019 12:11 pm

Svensk Anga wrote:
Wed May 22, 2019 11:59 am
randomguy wrote:
Wed May 22, 2019 10:19 am

Except this post shows clearly that the safest thing to do is to take SS at 62 instead of 70. If you think taking it at 70 is safer, you should be pointing out the reasons why the OP conclusion is wrong.
The SS at 62 case likely tests better because it would have carried the retiree through the Great Depression with less draw on the portfolio and thus more capital available for the eventual recovery. If the OP experiences the Great Depression Part 2 (80+% stock decline) in his 60's, he should then abandon deferring SS and claim at once. The optimum plan barring a GD p2, is likely lower earner claiming at 62 and higher earner claiming at 70. Run the opensocialsecurity calculator to confirm.
That is my assumption. Might also help out the 1966 couple. It doesn't change that the safest thing to do has been to claim at 62 not 70. In the cases where the market does well, you don't care about your smaller SS check. And when markets do poorly, you lower the sequence of return risk by using SS to lower your SWR. Obviously that is all backwards looking.

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Re: I evaluated taking SS at age 62 versus age 70

Post by jeffyscott » Wed May 22, 2019 2:10 pm

EHEngineer wrote:
Wed May 22, 2019 10:47 am
investingdad wrote:
Wed May 22, 2019 8:31 am

Without sharing all the other details, I concluded that for us, there is a very slight benefit to SS at age 62.


How slight?

With my inputs to FIREcalc, the final portfolio value has these outcomes:
The reason you concluded SS at 62 is better than 70 is becuase FIRECALC assumed you would invest the money and earn a substantially positive return. This assumption is highly dubious for any 8 year period. Make a different assumption and get a different result. YMMV.
I think this is the problem, the fair assumption would be that the extra money from SS is invested in something low risk. I think the better way to look at it is to determine what rate of return would you need to get on early SS in order to come out ahead. In another current discussion, I came up with this:

I used an assumption of 85 and this calculator https://financialmentor.com/calculator/ ... calculator and by trial and error come up with about 3% (for single), if I am doing it correctly.

For FRA of 67, every $10 in benefits at 62 becomes $17,600 if delayed to 70. Using 3% interest, the PV of $17,600 for 15 years (age 70-85) is $210K. At that interest rate, $10,000 per year for 23 years (age 62-85) is $164K, then earning 3% on that for 8 years to age 70 increases the value to about $208K. Since SS is indexed to inflation, would the calculated 3% be a real return?


For a couple, because the higher benefit continues to the sole survivor, it would take an even higher return to break-even, while the lower benefit would require a lower return to break-even. In the current market, I would take the 3% real from SS delay.
IMO your assumption is bunk because getting a larger SS benefit at 70 is zero risk (even inflation adjusted), while getting a substantially positive return in the stock market is NOT guaranteed.
I don't think it is quite risk free as you could die before collecting. For a male age 62, there is a 12.5% chance of not even making it to 70, according to SSA's actuarial table. For a couple, the risk of losing by delaying the higher benefit is reduced as only one spouse need survive long enough to win.
Time is your friend; impulse is your enemy. - John C. Bogle

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Re: I evaluated taking SS at age 62 versus age 70

Post by JoeRetire » Wed May 22, 2019 2:53 pm

investingdad wrote:
Wed May 22, 2019 8:31 am
With my inputs to FIREcalc, the final portfolio value has these outcomes:

- take benefit at 62, final portfolio ranges from +23,000 to +78,000,000
- take benefit at 70, final portfolio ranges from -41,000 to +78,800,000

We can debate whether the absolute values are believable, but essentially taking the benefit early slightly improves the success rate by eliminating the sole failing scenario while lowering the highest scenario.

For me, I think this suggests taking benefits at 62 makes more sense. But ultimately, SS will have only a small impact if our situation continues as is.
I don't see any real difference here between the two scenarios.

I suspect listing just the portfolio ranges only exposes the outlier conditions and doesn't represent a most likely case scenario (which would be a more valuable indicator).

Thus, I don't see any way to conclude that taking the benefits at 62 makes more sense.

I do agree that if your FIREcalc scenarios are correct, there will be little impact either way.
Very Stable Genius

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Re: I evaluated taking SS at age 62 versus age 70

Post by JoeRetire » Wed May 22, 2019 3:03 pm

investingdad wrote:
Wed May 22, 2019 8:31 am
Some starting data:
- I'm 45
- will stop working at 54
- same for my wife
- assumed a 50 year timeframe
- our combined monthly benefit is 3850 if we take it at 62
- combined benefit jumps to 6780 if we wait to 70

Without sharing all the other details, I concluded that for us, there is a very slight benefit to SS at age 62.
Some other factors that could make a difference and potentially change your conclusion:
- if your individual monthly benefits are not exactly the same
- if you don't assume that you would both live exactly the same number of years

I suspect very few couples are exactly the same age, live exactly the same lifespan, and get exactly the same monthly benefits.
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Re: I evaluated taking SS at age 62 versus age 70

Post by The Wizard » Wed May 22, 2019 3:19 pm

quantAndHold wrote:
Wed May 22, 2019 10:00 am
...And yeah, unless you’re short of cash, 70 is usually best. SS is longevity insurance, not an investment to be maximized.
Well stated.
Couldn't have said it better myself...
Attempted new signature...

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Re: I evaluated taking SS at age 62 versus age 70

Post by jacksonm » Wed May 22, 2019 3:20 pm

sreynard wrote:
Wed May 22, 2019 9:50 am
I always wonder about the purpose of these posts. The OP already knows what they should do and they already know what they are going to do. So why post about it? Looking for confirmation bias?
Maybe they were just trying to start a conversation.

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Re: I evaluated taking SS at age 62 versus age 70

Post by Tdubs » Wed May 22, 2019 5:54 pm

randomguy wrote:
Wed May 22, 2019 12:01 pm
Tdubs wrote:
Wed May 22, 2019 11:25 am
The low risk of failure at 70 is even less than the OP claims. The decision to be made is not one choice between filing at 62 or 70; it is 96 choices, one in every month between 62 and 70. You do not decide at 62 to wait till 70 and then cross a bone-dry desert hoping your portfolio makes it regardless of bad luck. If things go bad around age 65, pull the ripcord and file for SS. A decision to file at 62 is hard to undo, but a decision to wait can be undone every 30 days.
So when do you pull the ripcord? If say 2000-2 or 2007-9 happens again when do I pull the ripcord? Wait too long and you get a depleted portfolio and a lower SS check. Pull the cord at every market gyration (say you would have pulled the ripcord in dec 2018) and you might as well just file at 62 . And the other question is does it help? You would need to run the simulations to see if doing SS at 63-69 gives better resultllis. You might find out that 63 is still slightly worse than 63 and 64 is slightly worse than 62.
You would need to run those simulations to get a better view of it all, but in the case the OP cited, what difference would it make? The OP said just one simulation run for age 70 resulted in portfolio failure. That one had to be a version where the you had post-1929 or post-1968 returns very early in retirement and the investor continued to withdraw from the portfolio at a brisk pace. An early pull would have saved this scenario. Suppose it is possible, but what combination would create a new version of failure?

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Re: I evaluated taking SS at age 62 versus age 70

Post by David Jay » Wed May 22, 2019 6:44 pm

jeffyscott wrote:
Wed May 22, 2019 10:31 am
investingdad wrote:
Wed May 22, 2019 9:01 am
jeffyscott wrote:
Wed May 22, 2019 8:55 am
Are you able to evaluate having the low earner take it at 62 and the high earner at 70?
My wife and I have very similar earnings over the years, the delta in benefits is shown to be trivial.
I think there still might be a difference. Since only one benefit will continue to be paid to the sole survivor, the value of delaying one benefit should, I think, be greater than the value of delaying the second benefit.
This!

Look at the implications for the surviving spouse of one claiming at 62 and the other claiming at 70.
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Re: I evaluated taking SS at age 62 versus age 70

Post by randomguy » Wed May 22, 2019 6:50 pm

Tdubs wrote:
Wed May 22, 2019 5:54 pm
randomguy wrote:
Wed May 22, 2019 12:01 pm
Tdubs wrote:
Wed May 22, 2019 11:25 am
The low risk of failure at 70 is even less than the OP claims. The decision to be made is not one choice between filing at 62 or 70; it is 96 choices, one in every month between 62 and 70. You do not decide at 62 to wait till 70 and then cross a bone-dry desert hoping your portfolio makes it regardless of bad luck. If things go bad around age 65, pull the ripcord and file for SS. A decision to file at 62 is hard to undo, but a decision to wait can be undone every 30 days.
So when do you pull the ripcord? If say 2000-2 or 2007-9 happens again when do I pull the ripcord? Wait too long and you get a depleted portfolio and a lower SS check. Pull the cord at every market gyration (say you would have pulled the ripcord in dec 2018) and you might as well just file at 62 . And the other question is does it help? You would need to run the simulations to see if doing SS at 63-69 gives better resultllis. You might find out that 63 is still slightly worse than 63 and 64 is slightly worse than 62.
You would need to run those simulations to get a better view of it all, but in the case the OP cited, what difference would it make? The OP said just one simulation run for age 70 resulted in portfolio failure. That one had to be a version where the you had post-1929 or post-1968 returns very early in retirement and the investor continued to withdraw from the portfolio at a brisk pace. An early pull would have saved this scenario. Suppose it is possible, but what combination would create a new version of failure?
Lets say it was 1929. What if it turns out that pulling the cord in 1931 caused failure. You needed to know to pull the cord in 1930. We know at some point there is a failure case (i.e 10 years failed, 0 years didn't) but we have no idea when and where you had to make that choice. I have a feeling all delays resulted in a worse outcome and since it was borderline to begin with you would learn that taking it at 62 is the safest choice. Though I also wonder if firecalc handles SS during periods of deflation properly. Not sure I would trust a system to handle that properly without double checking:)

Obviously the big thing is we are looking at a very small difference and pretending that our tool is good enough to guide our choices is questionable. Realistically you delay because even though the outcome is worse, the lack of uncertainty is worth it. Of course the elephant in the room is the uncertainty of SS payments in 15 or so years.

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Re: I evaluated taking SS at age 62 versus age 70

Post by grabiner » Wed May 22, 2019 7:10 pm

What assumptions are you making for your investments?

If you take SS this year rather than next, and invest this year's premium in the stock market, you will increase your expected wealth. However, you are also increasing your risk; delaying SS is equivalent to buying an inflation-indexed annuity. You could take that extra risk even if you do postpone SS, by selling some of your bonds to buy stock.

If you keep the risk level constant, this effect goes away. If you take SS this year rather than next, invest this year's money in bonds or annuities, and live to 95 as the OP's plan suggests, you will be guaranteed to have less money. The break-even point if you consider taking at 69 rather than 70 is age 87. Thus, if you expect to lose your benefit before age 87 (because you are in poor health, or because you are the lower-earning spouse and will switch to a widow/er's benefit if your spouse dies first), you lose expected value for waiting that last year
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Re: I evaluated taking SS at age 62 versus age 70

Post by smitcat » Wed May 22, 2019 7:17 pm

grabiner wrote:
Wed May 22, 2019 7:10 pm
What assumptions are you making for your investments?

If you take SS this year rather than next, and invest this year's premium in the stock market, you will increase your expected wealth. However, you are also increasing your risk; delaying SS is equivalent to buying an inflation-indexed annuity. You could take that extra risk even if you do postpone SS, by selling some of your bonds to buy stock.

If you keep the risk level constant, this effect goes away. If you take SS this year rather than next, invest this year's money in bonds or annuities, and live to 95 as the OP's plan suggests, you will be guaranteed to have less money. The break-even point if you consider taking at 69 rather than 70 is age 87. Thus, if you expect to lose your benefit before age 87 (because you are in poor health, or because you are the lower-earning spouse and will switch to a widow/er's benefit if your spouse dies first), you lose expected value for waiting that last year
There are no allowances in this analysis for ACA, Roth conversions, or after tax spendable dollars.
When looking at the full picture it will greatly depend on your specific portfolio and goals.

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Re: I evaluated taking SS at age 62 versus age 70

Post by McDougal » Thu May 23, 2019 6:20 am

JoeRetire wrote:
Wed May 22, 2019 3:03 pm
investingdad wrote:
Wed May 22, 2019 8:31 am
Some starting data:
- I'm 45
- will stop working at 54
- same for my wife
- assumed a 50 year timeframe
- our combined monthly benefit is 3850 if we take it at 62
- combined benefit jumps to 6780 if we wait to 70

Without sharing all the other details, I concluded that for us, there is a very slight benefit to SS at age 62.
Some other factors that could make a difference and potentially change your conclusion:
- if your individual monthly benefits are not exactly the same
- if you don't assume that you would both live exactly the same number of years

I suspect very few couples are exactly the same age, live exactly the same lifespan, and get exactly the same monthly benefits.
I've have a question about survivor benefits. I'm 63, spouse 58. According to the SSA website, at FRA each of us has almost the same monthly benefit. Does this negate one of the reasons for me waiting till 70? Technically I am the higher earner, but not by much.

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Re: I evaluated taking SS at age 62 versus age 70

Post by jeffyscott » Thu May 23, 2019 6:45 am

McDougal wrote:
Thu May 23, 2019 6:20 am
JoeRetire wrote:
Wed May 22, 2019 3:03 pm
investingdad wrote:
Wed May 22, 2019 8:31 am
Some starting data:
- I'm 45
- will stop working at 54
- same for my wife
- assumed a 50 year timeframe
- our combined monthly benefit is 3850 if we take it at 62
- combined benefit jumps to 6780 if we wait to 70

Without sharing all the other details, I concluded that for us, there is a very slight benefit to SS at age 62.
Some other factors that could make a difference and potentially change your conclusion:
- if your individual monthly benefits are not exactly the same
- if you don't assume that you would both live exactly the same number of years

I suspect very few couples are exactly the same age, live exactly the same lifespan, and get exactly the same monthly benefits.
I've have a question about survivor benefits. I'm 63, spouse 58. According to the SSA website, at FRA each of us has almost the same monthly benefit. Does this negate one of the reasons for me waiting till 70? Technically I am the higher earner, but not by much.
I had mentioned before that since only one benefit will continue to be paid to the sole survivor, the value of delaying one benefit should, I think, be greater than the value of delaying the second benefit. Since posting that ran across this, thanks to link posted in another SS discussion, which confirms that one of the two should still delay: https://opensocialsecurity.com/articles ... s-history/

Home page there also has a calculator to determine optimal claiming strategy.
Time is your friend; impulse is your enemy. - John C. Bogle

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Re: I evaluated taking SS at age 62 versus age 70

Post by ObliviousInvestor » Thu May 23, 2019 6:47 am

McDougal wrote:
Thu May 23, 2019 6:20 am
I've have a question about survivor benefits. I'm 63, spouse 58. According to the SSA website, at FRA each of us has almost the same monthly benefit. Does this negate one of the reasons for me waiting till 70? Technically I am the higher earner, but not by much.
No, it does not.

In (almost) any married couple, the math is compelling for (at least) one person to wait. In most cases, that would be the higher earner. In cases in which you have similar PIAs though, it can be the other spouse.

In your case though, it's still you, because you are older, which means:
1) Your joint life expectancy on any given date is longer than it would be on the date at which your spouse is the same age, and
2) Your spouse appears to have a later FRA than you do, which means that if your PIAs are the same, your benefit at 70 is likely larger than your spouse's benefit at 70.
Mike Piper, author/blogger

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Re: I evaluated taking SS at age 62 versus age 70

Post by McDougal » Thu May 23, 2019 7:09 am

ObliviousInvestor wrote:
Thu May 23, 2019 6:47 am
McDougal wrote:
Thu May 23, 2019 6:20 am
I've have a question about survivor benefits. I'm 63, spouse 58. According to the SSA website, at FRA each of us has almost the same monthly benefit. Does this negate one of the reasons for me waiting till 70? Technically I am the higher earner, but not by much.
No, it does not.

In (almost) any married couple, the math is compelling for (at least) one person to wait. In most cases, that would be the higher earner. In cases in which you have similar PIAs though, it can be the other spouse.

In your case though, it's still you, because you are older, which means:
1) Your joint life expectancy on any given date is longer than it would be on the date at which your spouse is the same age, and
2) Your spouse appears to have a later FRA than you do, which means that if your PIAs are the same, your benefit at 70 is likely larger than your spouse's benefit at 70.
Thanks Mike and Jeffyscott for the insight.

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Re: I evaluated taking SS at age 62 versus age 70

Post by midareff » Thu May 23, 2019 7:32 am

Sometimes its really nice to have all this behind you.... at 71 any discussion of when to take SS is purely rear view mirror.

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Re: I evaluated taking SS at age 62 versus age 70

Post by dknightd » Thu May 23, 2019 7:35 am

It does not surprise me that OP determined the difference between claiming at 62 vs 70 was very small. Especially if they assumed both had same SS benefit, and would die at the same time. This essentially assumes the OP is single (same benefit, same age at death, so essentially one life), and for a single person it does not make much difference when they claim (unless they die very young, or very old).
But since the OP is married, they have another option. The lowest earner claims sometime between 62 and FRA. The higher earner waits till 70. Even if the higher earner only makes a little more than the lower earner this is still a good strategy. This both averages out the various options, and provides a higher survivor benefit should one of them live a long time.
If we knew what our investments would return, and how long we will both live, we could pick the best SS strategy. Since we do not know those things, any choice is uncertain. When I'm uncertain I do a little of both. That way I'm both right and wrong ;)

The OP is many years away from having to make this decision. No harm in thinking about these things early. It gives you longer to change your mind :) Heck, you do not know you will be both alive when you have to decide about SS.

I am closer. In our case the lower earner is older than the higher earner. Lower earner claimed at FRA. I'll claim at 70 (unless something changes between now and then). The main reason for me to claim later is the higher survivor benefit. The back of my envelope suggests one of us needs about 75% of what both of us need. In case one of us lives a long time I want to maximize SS for the survivor.

In the OP's case it might make sense to tentatively have one claim at 62, the other at 70.
This splits the small difference they have identified now. And allows higher survivor benefit.
As previously mentioned, OP has many years before having to make the final decision.

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Re: I evaluated taking SS at age 62 versus age 70

Post by Kenkat » Thu May 23, 2019 7:39 am

Another option frequently used is that the lower earner takes the spousal benefit at age 62 while the higher earner waits until 70. This often can result in maximizing your combined benefit.

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Re: I evaluated taking SS at age 62 versus age 70

Post by protagonist » Thu May 23, 2019 7:46 am

Pu239 wrote:
Wed May 22, 2019 10:13 am
With a $78m difference in portfolio outcomes for both ages, how accurate can any conclusion comparing the two really be?
+1

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