When to Collect SS

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mbres60
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When to Collect SS

Post by mbres60 »

I have always heard on here that if one can it is best to wait til age 70 to collect SS. I just used opensocialsecurity.com and it says best time is 69 and 6 months. I'm trying to figure out why then as opposed to 6 months later at 70. Anyone know how they figure things out?

In case it matters I entered being single (dh is a retired fed with a reduced SS so he is not a factor for me as he can't collect under me). I estimated my PIA as I am not exactly sure what it is but do know a ballpark.

Thanks.
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JoeRetire
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Re: When to Collect SS

Post by JoeRetire »

mbres60 wrote: Fri Jan 03, 2020 9:01 amI estimated my PIA as I am not exactly sure what it is but do know a ballpark.
Go to https://www.ssa.gov/myaccount/
Create an account
That way you can use their estimate of your PIA

Then go to https://opensocialsecurity.com/
Check the Advanced Options checkbox
Play with different Mortality table choices, including Assumed age at death
That way you can explore what might be beneficial should you live a long time or die early
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Re: When to Collect SS

Post by Jack FFR1846 »

Once you choose the date of your death, everything else is easy to calculate.
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mbres60
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Re: When to Collect SS

Post by mbres60 »

Thanks. I already have an account but it doesn't tell me my PIA. Probably because I am currently collecting a tiny amount under my dh record. I'm letting mine grow. I have some notes that I have previously jotted down about how much I would collect depending when I applied. COLAs may have affected it though. I probably am correct within about $30-$40.

I tried using the advanced option and put in an estimated date of death. That told me to collect at 70 and I would be ahead by about $787. I am just trying to figure out how they come up with their numbers... especially the 69 and 6 months. What about delayed retirement credits? Does that factor in? If I were to take it at 69 and 6 months it would be mid calendar year.
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Re: When to Collect SS

Post by Vanguard Fan 1367 »

If you don’t need the money I would consider waiting till you turn 70.
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David Jay
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Re: When to Collect SS

Post by David Jay »

mbres60 wrote: Fri Jan 03, 2020 9:40 amIf I were to take it at 69 and 6 months it would be mid calendar year.
SS does the calculation by month. Every month you delay after FRA increases your benefit by 8/12 of 1% (i.e. 8% per year).

[edit] With regard to the calculation, the fact of the matter is that the difference for 6 months (one way or the other) is a few hundred dollars over your lifetime. So it really doesn’t make a big difference. I was in the same position, opensocialsecurity recommended age 70 for me but moving it all the way down to age 68 only made a difference of a couple of thousand dollars (out of many hundreds of thousands of dollars of total benefits). This is because - in theory - SS is supposed to be actuarily neutral.
Last edited by David Jay on Fri Jan 03, 2020 10:51 am, edited 2 times in total.
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Re: When to Collect SS

Post by smitcat »

mbres60 wrote: Fri Jan 03, 2020 9:01 am I have always heard on here that if one can it is best to wait til age 70 to collect SS. I just used opensocialsecurity.com and it says best time is 69 and 6 months. I'm trying to figure out why then as opposed to 6 months later at 70. Anyone know how they figure things out?

In case it matters I entered being single (dh is a retired fed with a reduced SS so he is not a factor for me as he can't collect under me). I estimated my PIA as I am not exactly sure what it is but do know a ballpark.

Thanks.
You can attempt tp maximize your SS based upon your best guess at this time.
Or you can attempt to maximize your total 'spendable' dollars after taxes with your best guess at this time.
Dependent upon your personal situation and goals I would tend to say maximizing total spendable dollars would be a good option.
To help maximize spendable dollars you may want to consider things like Roth conversions, withdrawal strategies and potential affects on survivors and heirs.
Tools that help with that kind of modeling are the extended IORP and for a deeper more detailed dive that takes much longer the RPM spreadsheet calculator.
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watchnerd
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Re: When to Collect SS

Post by watchnerd »

If you have average life expectancy, the money is the same amount whether you take it at 62 or 70.

If you're shorter lived than average, better to take it younger.

If you're longer lived than average, better to take it older.

If you're average, it's the same net money over the span either way.
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IowaFarmBoy
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Re: When to Collect SS

Post by IowaFarmBoy »

When I run the various calculators, I get recommendations to start between 68-69 depending on the calculators. I believe what they do is to estimate the maximum benefit based on average life expectancy and some assumed rate of return so they are saying if you live to an average life expectancy, you will maximize your benefit by starting at that age. If you have some sense of whether you think your actual life expectancy is higher or lower than average, you can factor that into your decision. I think the common recommendation of starting at 70 is based on a strategy that delaying minimizes your chance of running out of money later in life and may also be due to individuals assuming that their life expectancy being longer than average due to most most bogleheads having the financial resources to have had better health care throughout their lives.
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Re: When to Collect SS

Post by Dottie57 »

I’ll be starting at 69 to 70 simply because I want a bigger monthly amount. Not concerned about the total.
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JoeRetire
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Re: When to Collect SS

Post by JoeRetire »

mbres60 wrote: Fri Jan 03, 2020 9:40 am Thanks. I already have an account but it doesn't tell me my PIA. Probably because I am currently collecting a tiny amount under my dh record.
Yup. That's why.
I tried using the advanced option and put in an estimated date of death. That told me to collect at 70 and I would be ahead by about $787.
Total? Per year?
I am just trying to figure out how they come up with their numbers... especially the 69 and 6 months.
It's just math. I assume you read https://opensocialsecurity.com/about/ and the "How does the calculator work?" section?
What about delayed retirement credits? Does that factor in?
Yes.
If I were to take it at 69 and 6 months it would be mid calendar year.
Okay. That's pretty typical. Most people start their benefits somewhere in the middle of the year.
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watchnerd
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Re: When to Collect SS

Post by watchnerd »

Dottie57 wrote: Fri Jan 03, 2020 11:59 am I’ll be starting at 69 to 70 simply because I want a bigger monthly amount. Not concerned about the total.
Can you explain this logic?

I'm not questioning your decision, but I honestly don't grasp the reasoning.

In my mind, it's the total that matters. How it's spread over time is offset by how I withdraw from my portfolio.
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downshiftme
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Re: When to Collect SS

Post by downshiftme »

In my mind, it's the total that matters. How it's spread over time is offset by how I withdraw from my portfolio.
While there is a small argument that my heirs would prefer the maximum Social Security total, that's not true for me.

I have enough saved in retirement and other accounts that I will be able to fully fund my retirement until at least age 70 whether I maximize Social Security or not. I'm not going to inflate my lifestyle above what I already enjoy based on optimizing Social Security payments. That leaves me with analyzing which cases matter to me.
  • Claim early but die early - don't care. I'm dead but already had enough to fully fund my short retirement.
  • Claim early but live long - this I care about. I'm still alive and I could have had more if I have claimed later.
  • Claim late but die early - again don't care. I'm dead so although my heirs might wish I chose differently, I'm okay.
  • Claim late and live long - this is the case I want to optimize and the only case that matters to me. I want to get as much support from Social Security as I can in the event I might possibly live long enough for it to matter.
This makes me sure I want to claim as late as possible (unless of course they change the rules again, which is a wildcard I cannot plan for).
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watchnerd
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Re: When to Collect SS

Post by watchnerd »

downshiftme wrote: Fri Jan 03, 2020 1:10 pm
In my mind, it's the total that matters. How it's spread over time is offset by how I withdraw from my portfolio.
While there is a small argument that my heirs would prefer the maximum Social Security total, that's not true for me.

I have enough saved in retirement and other accounts that I will be able to fully fund my retirement until at least age 70 whether I maximize Social Security or not. I'm not going to inflate my lifestyle above what I already enjoy based on optimizing Social Security payments. That leaves me with analyzing which cases matter to me.
  • Claim early but die early - don't care. I'm dead but already had enough to fully fund my short retirement.
  • Claim early but live long - this I care about. I'm still alive and I could have had more if I have claimed later.
  • Claim late but die early - again don't care. I'm dead so although my heirs might wish I chose differently, I'm okay.
  • Claim late and live long - this is the case I want to optimize and the only case that matters to me. I want to get as much support from Social Security as I can in the event I might possibly live long enough for it to matter.
This makes me sure I want to claim as late as possible (unless of course they change the rules again, which is a wildcard I cannot plan for).

Do you factor in the time value of money for your portfolio?

Or just look at the SS numbers in isolation?
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JoeRetire
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Re: When to Collect SS

Post by JoeRetire »

downshiftme wrote: Fri Jan 03, 2020 1:10 pm I have enough saved in retirement and other accounts that I will be able to fully fund my retirement until at least age 70 whether I maximize Social Security or not.
Uhm, 70 is pretty young for a "fund my retirement until" age. Unless you have some specific reason, you might be better served to target something much later - perhaps 95 or so.
I'm not going to inflate my lifestyle above what I already enjoy based on optimizing Social Security payments. That leaves me with analyzing which cases matter to me.
  • Claim early but die early - don't care. I'm dead but already had enough to fully fund my short retirement.
  • Claim early but live long - this I care about. I'm still alive and I could have had more if I have claimed later.
  • Claim late but die early - again don't care. I'm dead so although my heirs might wish I chose differently, I'm okay.
  • Claim late and live long - this is the case I want to optimize and the only case that matters to me. I want to get as much support from Social Security as I can in the event I might possibly live long enough for it to matter.
I assume you are single? Otherwise the "Claim early but die early" case is worse than "don't care" for many surviving spouses.

In general (and particularly for the higher earner of a couple) I agree with your "I want to claim as late as possible" conclusion.
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deikel
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Re: When to Collect SS

Post by deikel »

watchnerd wrote: Fri Jan 03, 2020 11:26 am If you have average life expectancy, the money is the same amount whether you take it at 62 or 70.

If you're shorter lived than average, better to take it younger. But you won't miss it since you are dead, so don't take it young when you can avoid it

If you're longer lived than average, better to take it older. The longevity insurance aspect of SS is the real reason to take it late, once you go over your statistical average age, yes you win and make more money then the system intended, but the important part is that SS gives you two things - longevity insurance and the monthly option to start drawing if needed - no other retirement bucket provides these unique features, so take it carefully

If you're average, it's the same net money over the span either way. No one is average, we are all exceptional - yes just a joke. Note that the actuarial tables suggest that once you reach a certain age, its (statistically) more likely that you reach an even older age, so if you make it to average, your life span is actually likely to be longer still - pointing to taking later rather then earlier if at all possible.
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Re: When to Collect SS

Post by Peter Foley »

If it is not too difficult for you to do so, try to figure the difference in "spendable" dollars - aka dollars after taxation. It could be that taking SS a little later might push some income into a year with a more favorable tax bracket. Might you be in a bracket where there would be a high marginal tax rate when you start receiving benefits?

If you are doing Roth conversions or making withdrawals from tax deferred accounts up to a tax bracket limit or a Medicare B premium cap, the delay of a few months can be worth while. There are a lot of possible moving parts in the mix of taking SS benefits and withdrawal strategies. The ratio of taxable account balances to Roth balances and tax deferred balances is also a factor worth considering.

Example: I will turn 70 in the late fall. It may be to my benefit to delay SS until early in the next year and then request benefits retroactively to push a few months of benefits into that year. If I had a windfall that pushed me near a Medicare B premium cap, it would be worth it for me to do so. No loss of benefits, just a delay in receiving them.
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mbres60
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Re: When to Collect SS

Post by mbres60 »

JoeRetire wrote: Fri Jan 03, 2020 12:23 pm
I tried using the advanced option and put in an estimated date of death. That told me to collect at 70 and I would be ahead by about $787.
Total? Per year?
It was total.

Thanks everyone for the helpful information. Once we do our taxes this year we will see how close we come to the IRMAA. I'll probably wait til 70 as that is at the end of this year.

Thanks again.
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Re: When to Collect SS

Post by soccerrules »

downshiftme wrote: Fri Jan 03, 2020 1:10 pm
In my mind, it's the total that matters. How it's spread over time is offset by how I withdraw from my portfolio.
While there is a small argument that my heirs would prefer the maximum Social Security total, that's not true for me.
your heirs other than spouse will not get your SS benefit unless you are not spending it and saving it. The surviving spouse will likely have a reduced SS amount to use, assuming they were drawing their own SS or spousal benefit off your PIA, in which they will be left with the largest single benefit. Assume you know this, but clarifying for others.
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Re: When to Collect SS

Post by JPM »

Here is a way of looking at it apart from having to accurately predict your death date.

You can look at life expectancy calculators for a rough estimate.

You can look at a simplified unscientific set of questions that relate, though not proportionately, to life expectancy.

Are you kind of fat? Or real fat?
Do you exercise little if at all? Less than 90 minutes per week?
Do you smoke or did you quit less than 15 years ago?
Do you average 3 or more alcoholic drinks, beers, or glasses of wine per day?
Are you poor or had less than average income over your lifetime?
Do you have a HS education or less?
Do you have a serious medical problem already that is likely to limit your life span?
Do you have poorly controlled diabetes, high blood pressure, and/or cholesterol? Or not even know?
Do you avoid flu vaccines?
Did your ancestors have short lives?

If you have a lot of yeses to the above set of questions, especially #7, likely that you will be roughly better off claiming SS early. If you have a lot of no answers, you are more likely to benefit from delayed claiming.
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Re: When to Collect SS

Post by almostretired1965 »

You can use the fancy models but the most critical factor, in the end, come down to your assumptions about longevity. My rule of thumb, assuming your financial circumstances give you total flexibility as to when to start, is if you are in good health and have a history of longevity in your family, take it as late as possible. If the opposite is true, then take it as early as possible.
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Re: When to Collect SS

Post by Beehave »

At age 69 (and before) the Soc'l Sec monthly benefit goes up by a fixed amount every month. For the sake of discussion, suppose it is a $15 per month increase for each month you delay. Suppose further that your benefit at age 69 would be $3000 per month. Then if you delay until age 69 and 1 month your benefit will be $3015, and it will have cost you $3000 to get that add'l $15 per month for life.

Suppose then you delay until 69 and 2 months. Then the $15 per month increase compared to taking at age 69 and one month would $3015 and it would have cost not $6000, but $6015. So each month after age 69 that you delay costs more money than the month before to get the same increase.

I'd still wait to age 70 if possible - - - you are getting inflation protected longevity "insurance." If this diversifies your retirement assets it's in my opinion a very good diversifier.

However, if you want to absolutely maximize from some accounting perspective, it is quite possible that on average taking at 69 and six months outperforms taking at age 70 because the last months before age 70 are the most expensive ones relative to the "annuity increase" you are getting, with 69 and 11 months being the grand-daddy/grand-mommy of them from the cost perspective.
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Re: When to Collect SS

Post by Dottie57 »

watchnerd wrote: Fri Jan 03, 2020 12:24 pm
Dottie57 wrote: Fri Jan 03, 2020 11:59 am I’ll be starting at 69 to 70 simply because I want a bigger monthly amount. Not concerned about the total.
Can you explain this logic?

I'm not questioning your decision, but I honestly don't grasp the reasoning.

In my mind, it's the total that matters. How it's spread over time is offset by how I withdraw from my portfolio.
I think of SS as longevity insurance. Each month I want the biggest amount I can get for the rest of my life. I am NOT concerned with getting the max amount over my lifetime. When I am dead I won’t care. No heirs or spouse. I simply want enough to live on comfortably for the rest of my life.
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Re: When to Collect SS

Post by SteadyOne »

Dottie57 wrote: Fri Jan 03, 2020 11:59 am I’ll be starting at 69 to 70 simply because I want a bigger monthly amount. Not concerned about the total.
You may want to. Say if you 62 and have 7 years to live, then most optimal strategy is to take it now and not wait until 69. As someone noted above, know your death date and then it’s easy to calculate.
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Re: When to Collect SS

Post by Dottie57 »

SteadyOne wrote: Fri Jan 03, 2020 6:29 pm
Dottie57 wrote: Fri Jan 03, 2020 11:59 am I’ll be starting at 69 to 70 simply because I want a bigger monthly amount. Not concerned about the total.
You may want to. Say if you 62 and have 7 years to live, then most optimal strategy is to take it now and not wait until 69. As someone noted above, know your death date and then it’s easy to calculate.
I don’t know when I will die. Not a clue.

There is no expiration date stamped - at least where I can see. :twisted:
Billionaire
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Re: When to Collect SS

Post by Billionaire »

If you truly don't need the money, don't collect ever. Look at the good you'll be doing mankind. How Can a Poor Man Stand Such Times and Live.
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Re: When to Collect SS

Post by vested1 »

Let's use my parents, who filed as soon as possible to test this theory. Both died after age 90 at home, on which they still had a hefty mortgage, having been married for 72 years. SS benefits were very small for both.
JPM wrote: Fri Jan 03, 2020 3:11 pm Here is a way of looking at it apart from having to accurately predict your death date.

You can look at life expectancy calculators for a rough estimate.

You can look at a simplified unscientific set of questions that relate, though not proportionately, to life expectancy.

Are you kind of fat? Or real fat? Both overweight
Do you exercise little if at all? Less than 90 minutes per week? Both got very little exercise
Do you smoke or did you quit less than 15 years ago? Dad smoked most of his life, mom never did.
Do you average 3 or more alcoholic drinks, beers, or glasses of wine per day? Dad drank on the sly, mom rarely drank
Are you poor or had less than average income over your lifetime? Both lived their lives in poverty
Do you have a HS education or less? Neither graduated high school
Do you have a serious medical problem already that is likely to limit your life span? Both had long term serious medical problems from their mid 50's
Do you have poorly controlled diabetes, high blood pressure, and/or cholesterol? Or not even know? Yes to all for both
Do you avoid flu vaccines? Both always got flu vaccines
Did your ancestors have short lives? Most ancestors died early

If you have a lot of yeses to the above set of questions, especially #7, likely that you will be roughly better off claiming SS early. If you have a lot of no answers, you are more likely to benefit from delayed claiming.
Goes to show that the age of death can't be predicted, although I see your point and agree that it's best to play the odds. The outlier is that unfortunate individual or couple who assume they will die young yet live to a ripe old age. Since no one has a crystal ball, delaying as long as possible seems prudent, especially if you have a spouse.
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Re: When to Collect SS

Post by HoopDiddyDiddy »

I struggled with this very question of when to begin claiming for years- I played with numbers and did computations and nearly drove myself nuts.
Then I came across a quote here on Bogleheads and it really helped me calm down and look at it all in a more measured manner.
I apologize with all my heart for not being able to attribute the quote and would LOVE to be able to do so, but here it is anyway:
Social Security is intended to be "actuarially neutral." That's why I don't think there's too much point agonizing over claiming strategies, and so forth.

There probably are differences--to take the obvious one, Social Security, being unisex, favors women over men. And once you include taxes and 401(k)s and such the system has so many moving parts that academics are constantly discovering new and surprising features. I think most of the fuss about claiming strategies is people showing off their virtuosity in building models and number-crunching, and they all depend on insanely over-precise estimates of what the future holds. I won't quite say garbage in, garbage out, but insanely overprecise predictions in, insanely overprecise plans out.


If anyone knows who said this- please let me know.
I want to offer my extreme thanks as it really did help me.
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Re: When to Collect SS

Post by kmurp »

Can anyone suggest an alternative to open social security to run scenarios? I don’t mind paying some money for a calculator to get a second look.
The reason I ask is that open social security suggested that I wait till 70. That’s understandable. But it also suggested that my wife file at 62, which was unexpected.
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Re: When to Collect SS

Post by RickBoglehead »

kmurp wrote: Sat Jan 04, 2020 7:34 am Can anyone suggest an alternative to open social security to run scenarios? I don’t mind paying some money for a calculator to get a second look.
The reason I ask is that open social security suggested that I wait till 70. That’s understandable. But it also suggested that my wife file at 62, which was unexpected.
Did you look at the reason why?

My wife's benefit from Social Security will be very low as compared to mine. As such, Open Social Security recommends that she collect it very soon after 62. It delays it into the year after she has turned 62, because she's still working, and Social Security would reduce the already small benefit due to her earnings. In the next full year it recommends she files, or not, totally dependent on two factors - life expectancy and the discount rate. Click on the Advanced Options box to see those. The discount rate used can dramatically impact WHEN.

Our plan is for my wife to file in her year of retirement, where she will have earned income for only 1/2 the year. She'll file for benefits to kick in at the beginning of the year, and then I'll file at 70 and she'll get 1/2 my benefit.
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Re: When to Collect SS

Post by Billionaire »

HoopDiddyDiddy wrote: Sat Jan 04, 2020 7:26 am I struggled with this very question of when to begin claiming for years- I played with numbers and did computations and nearly drove myself nuts.
Then I came across a quote here on Bogleheads and it really helped me calm down and look at it all in a more measured manner.
I apologize with all my heart for not being able to attribute the quote and would LOVE to be able to do so, but here it is anyway:
Social Security is intended to be "actuarially neutral." That's why I don't think there's too much point agonizing over claiming strategies, and so forth.

There probably are differences--to take the obvious one, Social Security, being unisex, favors women over men. And once you include taxes and 401(k)s and such the system has so many moving parts that academics are constantly discovering new and surprising features. I think most of the fuss about claiming strategies is people showing off their virtuosity in building models and number-crunching, and they all depend on insanely over-precise estimates of what the future holds. I won't quite say garbage in, garbage out, but insanely overprecise predictions in, insanely overprecise plans out.


If anyone knows who said this- please let me know.
I want to offer my extreme thanks as it really did help me.
And nobody here will pay any attention to your post. They will continue to agonize over this. Most of the folks here can probably collect early, which will allow their invested money to continue growing.
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JoeRetire
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Re: When to Collect SS

Post by JoeRetire »

kmurp wrote: Sat Jan 04, 2020 7:34 am Can anyone suggest an alternative to open social security to run scenarios? I don’t mind paying some money for a calculator to get a second look.
The reason I ask is that open social security suggested that I wait till 70. That’s understandable. But it also suggested that my wife file at 62, which was unexpected.
https://maximizemysocialsecurity.com/ is the best, most complete, most accurate tool I have found. It costs $40/year. I used it before https://opensocialsecurity.com/ came along.

Unless you have a complex scenario though, you may not need to spend any money to solve your confusion.

Have you played with open social security's Advanced Options and explored the different mortality tables? If you set that to the "Assumed age at death" choice and enter the ages, this tool will behave more like Maximize My Social Security. In that mode, you may find that it will suggest a different age for your wife to begin collecting. By default Open Social Security uses the 2016 Social Security Period Life Table in order to calculate a person's probability of being alive at a given age. That's different than the assumption other tools make - many don't assume longevity but require you to enter it.

Also make sure you understand all the entries you make and all the defaults the tool uses. In particular, read https://opensocialsecurity.com/about/

Both terrific tools!
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Re: When to Collect SS

Post by Tdubs »

In addition to opensocialsecutiry.com, try https://ssa.tools/. Just drop in your work history spreadsheet from SSA.
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JoeRetire
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Re: When to Collect SS

Post by JoeRetire »

Billionaire wrote: Sat Jan 04, 2020 7:45 amAnd nobody here will pay any attention to your post. They will continue to agonize over this. Most of the folks here can probably collect early, which will allow their invested money to continue growing.
Everyone here can collect early.

Most will rightly conclude that they are better off financially for the high-earner in the couple to wait until 70.
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lazyday
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Re: When to Collect SS

Post by lazyday »

HoopDiddyDiddy wrote: Sat Jan 04, 2020 7:26 amIf anyone knows who said this- please let me know.
I want to offer my extreme thanks as it really did help me.
Click the up arrow to see the original post:
nisiprius wrote: Tue Apr 23, 2013 2:41 pmThere probably are differences--to take the obvious one, Social Security, being unisex, favors women over men. And once you include taxes and 401(k)s and such the system has so many moving parts that academics are constantly discovering new and surprising features. I think most of the fuss about claiming strategies is people showing off their virtuosity in building models and number-crunching, and they all depend on insanely over-precise estimates of what the future holds. I won't quite say garbage in, garbage out, but insanely overprecise predictions in, insanely overprecise plans out.
To find it, in Chrome I just highlighted some words, right clicked, and picked Search Google for...

I highlighted starting with virtuosity to include a less common word and make it easier for google.
kmurp
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Re: When to Collect SS

Post by kmurp »

RickBoglehead wrote: Sat Jan 04, 2020 7:44 am
kmurp wrote: Sat Jan 04, 2020 7:34 am Can anyone suggest an alternative to open social security to run scenarios? I don’t mind paying some money for a calculator to get a second look.
The reason I ask is that open social security suggested that I wait till 70. That’s understandable. But it also suggested that my wife file at 62, which was unexpected.
Did you look at the reason why?

My wife's benefit from Social Security will be very low as compared to mine. As such, Open Social Security recommends that she collect it very soon after 62. It delays it into the year after she has turned 62, because she's still working, and Social Security would reduce the already small benefit due to her earnings. In the next full year it recommends she files, or not, totally dependent on two factors - life expectancy and the discount rate. Click on the Advanced Options box to see those. The discount rate used can dramatically impact WHEN.

Our plan is for my wife to file in her year of retirement, where she will have earned income for only 1/2 the year. She'll file for benefits to kick in at the beginning of the year, and then I'll file at 70 and she'll get 1/2 my benefit.
I’m in a very similar situation to you (higher earner), so I’m guessing that I am getting the correct answer from the program. I’ll play around more with it and, perhaps in the near future will get a second opinion from the paid program suggested above.
ExPatKiwi
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Re: When to Collect SS

Post by ExPatKiwi »

Jack FFR1846 wrote: Fri Jan 03, 2020 9:36 am Once you choose the date of your death, everything else is easy to calculate.
So true!
Counting down to retirement on December 31st, 2024
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RickBoglehead
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Re: When to Collect SS

Post by RickBoglehead »

kmurp wrote: Sat Jan 04, 2020 10:03 am
RickBoglehead wrote: Sat Jan 04, 2020 7:44 am
kmurp wrote: Sat Jan 04, 2020 7:34 am Can anyone suggest an alternative to open social security to run scenarios? I don’t mind paying some money for a calculator to get a second look.
The reason I ask is that open social security suggested that I wait till 70. That’s understandable. But it also suggested that my wife file at 62, which was unexpected.
Did you look at the reason why?

My wife's benefit from Social Security will be very low as compared to mine. As such, Open Social Security recommends that she collect it very soon after 62. It delays it into the year after she has turned 62, because she's still working, and Social Security would reduce the already small benefit due to her earnings. In the next full year it recommends she files, or not, totally dependent on two factors - life expectancy and the discount rate. Click on the Advanced Options box to see those. The discount rate used can dramatically impact WHEN.

Our plan is for my wife to file in her year of retirement, where she will have earned income for only 1/2 the year. She'll file for benefits to kick in at the beginning of the year, and then I'll file at 70 and she'll get 1/2 my benefit.
I’m in a very similar situation to you (higher earner), so I’m guessing that I am getting the correct answer from the program. I’ll play around more with it and, perhaps in the near future will get a second opinion from the paid program suggested above.
Likely a waste of money. It's very simple - if you expect to live a long time, then it makes sense to delay benefits to allow them to grow as much as possible, which for you and I is 70 years old. For our spouses, if their benefit is small, it says "sure, take it sooner, because once your spouse files, you'll get 1/2 of that, and it doesn't matter that you filed early". For the spouse, the date moves a little based on if they're still working earning income over the limit where Social Security takes $1 for every $2 they earn, as well as the discount rate used.
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JW-Retired
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Re: When to Collect SS

Post by JW-Retired »

JoeRetire wrote: Sat Jan 04, 2020 7:51 am
Billionaire wrote: Sat Jan 04, 2020 7:45 amAnd nobody here will pay any attention to your post. They will continue to agonize over this. Most of the folks here can probably collect early, which will allow their invested money to continue growing.
Everyone here can collect early.

Most will rightly conclude that they are better off financially for the high-earner in the couple to wait until 70.
Yep, and most folks shouldn't need any agonizing over it. All they need to know is (1) SS is federal + state taxed much less than their tax deferred income (that's the reason for many here). And (2) SS income can't dry up from overspending (like happens to the nest egg of too many non-Bogleheads).
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dknightd
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Re: When to Collect SS

Post by dknightd »

watchnerd wrote: Fri Jan 03, 2020 12:24 pm
In my mind, it's the total that matters. How it's spread over time is offset by how I withdraw from my portfolio.
It is the total that matters. The problem is we do not know what that total might be. I'm delaying mostly in case my wife out lives me. I'm 62, she is 68, so actuarialy we might die at the same time. If we can afford for me not to claim till 70, then either one of us should have enough to be OK.

edit: it gets more complicated when you consider the potential benefit of investing the early payout you do not need. I look at SS as security
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Rus In Urbe
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Re: When to Collect SS

Post by Rus In Urbe »

Interesting discussion. SS timing is so individual.

I always thought I would wait until 70-----conventional wisdom and all that. We don't need the money. All the usual arguments.

Then I sat down with an independent SS expert and we looked at EVERYTHING (assets and income timing, taxes, spouse's SS, estimated longevity, etc.). Even using the most conservative forecasts as well as the most optimistic ones, it made more sense in my case to take SS now (even before FRA) and plow that extra into the market.

So----sit down with an independent SS expert. Really, really dig into every aspect of this decision. The outcome was indisputable and surprised me.

Cheers! :beer
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BL
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Re: When to Collect SS

Post by BL »

One thing not mentioned is that sometimes our older selves or spouses could be scammed or lose investments, so that hopefully this guaranteed annuity would then be very valuable.
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JoeRetire
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Re: When to Collect SS

Post by JoeRetire »

JW-Retired wrote: Sat Jan 04, 2020 10:20 am
JoeRetire wrote: Sat Jan 04, 2020 7:51 am
Billionaire wrote: Sat Jan 04, 2020 7:45 amAnd nobody here will pay any attention to your post. They will continue to agonize over this. Most of the folks here can probably collect early, which will allow their invested money to continue growing.
Everyone here can collect early.

Most will rightly conclude that they are better off financially for the high-earner in the couple to wait until 70.
Yep, and most folks shouldn't need any agonizing over it. All they need to know is (1) SS is federal + state taxed much less than their tax deferred income (that's the reason for many here). And (2) SS income can't dry up from overspending (like happens to the nest egg of too many non-Bogleheads).
I agree that there should be no agony, since pretty much everyone would want to maximize their tax-beneficial, inflation-protected, survivor-beneficial, guaranteed income stream for the rest of their lives by deferring until 70.

Don't worry, be happy!
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nguy44
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Re: When to Collect SS

Post by nguy44 »

I am just going to re-evaluate this yearly, based on our finances and health. If my pension continues and my investments grow on average at least 5%, I will keep delaying. Losing my pension, or a long market downturn might tempt me to take it earlier.

Before retirement the earliest potential age I planned to take SS was 63. At the end of 2018, I moved the earliest date to 64. After 2019, I will likely move it to 65. Health for both of us has fortunately been very good so far, and that contributes to the decision. We stay active and go for a variety of yearly and other regular checkups to monitor this. Of course we can't account for the proverbial getting hit by a bus, but no one can.

I was fortunate to have paid the max SS tax for 35 years, so I will get the maximum benefit. Whenever I choose to take it after age 64, it, along with my pension and interest/dividend income, will more than cover our living expenses. That is not including the my wife's spousal benefit. So, if I die before her, her survivor benefits and the other items will still cover her expenses. So taking it beyond that will be less a question of "do we need it to survive" vs. "do we want to sock the proceeds away for our heirs ad charity".

To be honest, after paying SS taxes for 40+ years, it is tempting to want to get my hands on the money purely for greed purposes when I turn 62 this year. Getting another monthly check for doing absolutely nothing is a temptation. But for now I'm holding the greed back. :happy
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JoeRetire
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Re: When to Collect SS

Post by JoeRetire »

Rus In Urbe wrote: Sat Jan 04, 2020 10:29 am Then I sat down with an independent SS expert and we looked at EVERYTHING (assets and income timing, taxes, spouse's SS, estimated longevity, etc.). Even using the most conservative forecasts as well as the most optimistic ones, it made more sense in my case to take SS now (even before FRA) and plow that extra into the market.
Interesting. You must have a rather unusual set of conditions or assumptions.

I'd love to know the details that lead to this unusual conclusion. Is your spouse the higher earner in the family? Or much older? What is an "independent SS expert" (I haven't heard of a professional who does only SS analysis)?
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Re: When to Collect SS

Post by watchnerd »

Rus In Urbe wrote: Sat Jan 04, 2020 10:29 am Interesting discussion. SS timing is so individual.

I always thought I would wait until 70-----conventional wisdom and all that. We don't need the money. All the usual arguments.

Then I sat down with an independent SS expert and we looked at EVERYTHING (assets and income timing, taxes, spouse's SS, estimated longevity, etc.). Even using the most conservative forecasts as well as the most optimistic ones, it made more sense in my case to take SS now (even before FRA) and plow that extra into the market.

So----sit down with an independent SS expert. Really, really dig into every aspect of this decision. The outcome was indisputable and surprised me.

Cheers! :beer
Right. I'm 12 years away from being eligible to take anything, but just doing cocktail math, I could probably drop my withdrawal rate by about 1% by taking it sooner rather than later, which in an asset allocation that is keeping ahead of inflation, should allow for greater wealth creation.

I'm a bit surprised this aspect doesn't come up more often.
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Re: When to Collect SS

Post by jhawktx »

Rus In Urbe wrote: Sat Jan 04, 2020 10:29 am Interesting discussion. SS timing is so individual.

I always thought I would wait until 70-----conventional wisdom and all that. We don't need the money. All the usual arguments.

Then I sat down with an independent SS expert and we looked at EVERYTHING (assets and income timing, taxes, spouse's SS, estimated longevity, etc.). Even using the most conservative forecasts as well as the most optimistic ones, it made more sense in my case to take SS now (even before FRA) and plow that extra into the market.

So----sit down with an independent SS expert. Really, really dig into every aspect of this decision. The outcome was indisputable and surprised me.

Cheers! :beer
Unless you have a unique situation and/or have very poor health, I doubt the outcome of the analysis was "indisputable".
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Re: When to Collect SS

Post by tennisplyr »

watchnerd wrote: Sat Jan 04, 2020 10:51 am
Rus In Urbe wrote: Sat Jan 04, 2020 10:29 am Interesting discussion. SS timing is so individual.

I always thought I would wait until 70-----conventional wisdom and all that. We don't need the money. All the usual arguments.

Then I sat down with an independent SS expert and we looked at EVERYTHING (assets and income timing, taxes, spouse's SS, estimated longevity, etc.). Even using the most conservative forecasts as well as the most optimistic ones, it made more sense in my case to take SS now (even before FRA) and plow that extra into the market.

So----sit down with an independent SS expert. Really, really dig into every aspect of this decision. The outcome was indisputable and surprised me.

Cheers! :beer
Right. I'm 12 years away from being eligible to take anything, but just doing cocktail math, I could probably drop my withdrawal rate by about 1% by taking it sooner rather than later, which in an asset allocation that is keeping ahead of inflation, should allow for greater wealth creation.

I'm a bit surprised this aspect doesn't come up more often.
Retired for 9 years and we've been taking SS since 62...kept my portfolio rolling in a bull market...life is good :sharebeer
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watchnerd
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Re: When to Collect SS

Post by watchnerd »

tennisplyr wrote: Sat Jan 04, 2020 11:07 am

Retired for 9 years and we've been taking SS since 62...kept my portfolio rolling in a bull market...life is good :sharebeer
Do you mind if I ask your stock / bond mix?

From what I can tell, even in "conservative balance" 40% stock / 60% bonds, shaving 1% off the withdrawal at 62, versus 1% off the withdrawal at 70, makes a noticeable difference in portfolio end size.
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Re: When to Collect SS

Post by tennisplyr »

watchnerd wrote: Sat Jan 04, 2020 11:21 am
tennisplyr wrote: Sat Jan 04, 2020 11:07 am

Retired for 9 years and we've been taking SS since 62...kept my portfolio rolling in a bull market...life is good :sharebeer
Do you mind if I ask your stock / bond mix?

From what I can tell, even in "conservative balance" 40% stock / 60% bonds, shaving 1% off the withdrawal at 62, versus 1% off the withdrawal at 70, makes a noticeable difference in portfolio end size.
My AA has been roughly 50/50 for years.
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