Why not take Social Security at 62

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technovelist
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Re: Why not take Social Security at 62

Post by technovelist » Tue Dec 05, 2017 11:04 am

delamer wrote:
Tue Dec 05, 2017 10:58 am
technovelist wrote:
Tue Dec 05, 2017 4:51 am
chipperd wrote:
Tue Dec 05, 2017 4:42 am
delamer wrote:
Mon Dec 04, 2017 8:01 pm
technovelist wrote:
Mon Dec 04, 2017 11:14 am


I agree it is a problem, but what other options are there? We have to plan with the information we have now, while realizing that things will change.

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

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

smitcat
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Re: Why not take Social Security at 62

Post by smitcat » Tue Dec 05, 2017 11:08 am

neilpilot wrote:
Tue Dec 05, 2017 9:26 am
wrongfunds wrote:
Tue Dec 05, 2017 9:13 am
You want to prepare for 75% cut in social security and the market tanking by 75% and the inflation going up by 10% every year and the interest rates staying in low 2%, medicare going away and being in long terms care facility for 30 years; is there anything else you need to be ready for? is that worst case or not yet? do you have enough money for all that before you think of retiring?
One other thing to add to make this truly a worse case.......you live to 110 :twisted:
Yup - that means we need like 300% of our total expected retirement funds before inflation adjustment in order to retire now.
Sounds about right....

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randomizer
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Re: Why not take Social Security at 62

Post by randomizer » Tue Dec 05, 2017 11:12 am

I assume I won't be getting SS. And if I were able to claim it I would do it ASAP. I don't think it will stick around forever.

Big Dog
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Re: Why not take Social Security at 62

Post by Big Dog » Tue Dec 05, 2017 11:15 am

so how would you know expectancy at 62? I'd say, it's still the same at birth.
Oh heck no.

Life expectancy at birth includes childhood diseases, teenage death by auto accidents and all kinds of other reasons. But, by definition, once you hit the 20's, you are 100% guaranteed to not die of a childhood disease. Similarly, once you hit 40, you are 100% guaranteed not to die of your own (or siblings) teenage driving accident.

Then of course, don't forget that the US mortality tables are uni-sex, and include everyone with bad health activities: smoking, over-eating, recreational drugs. If none of those apply to you, your longevity is likely a whole lot longer.

visualguy
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Re: Why not take Social Security at 62

Post by visualguy » Tue Dec 05, 2017 1:05 pm

randomizer wrote:
Tue Dec 05, 2017 11:12 am
I assume I won't be getting SS. And if I were able to claim it I would do it ASAP. I don't think it will stick around forever.
It will stick around in some form, but it is very unlikely to be what it is today. I also assume no SS because I expect means testing to become part of the program.

smitcat
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Re: Why not take Social Security at 62

Post by smitcat » Tue Dec 05, 2017 1:13 pm

visualguy wrote:
Tue Dec 05, 2017 1:05 pm
randomizer wrote:
Tue Dec 05, 2017 11:12 am
I assume I won't be getting SS. And if I were able to claim it I would do it ASAP. I don't think it will stick around forever.
It will stick around in some form, but it is very unlikely to be what it is today. I also assume no SS because I expect means testing to become part of the program.
Other counties have faced this same issue and it is fairly easily resolved - many possibilities and none are draconian.
Perhaps research what those solutions are to see what is possible.

wrongfunds
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Re: Why not take Social Security at 62

Post by wrongfunds » Tue Dec 05, 2017 1:29 pm

You are ready for 50% hair cut only because you have double the assets.. If you had quadruple assets, you will be ready for 75% haircut.

Once again, any and all sort of scenario can be invented, some of them could even be plausible but if you can't distinguish between rational and irrational fear, no amount of assets will allow peace of mind. Remember, you will NOT be getting regular paycheck as you were getting during your working years and if psychologically you have trouble with that as a concept, you will not voluntarily give up that source of income. In your mind, you can always justify why you do need that security blanket.

visualguy
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Re: Why not take Social Security at 62

Post by visualguy » Tue Dec 05, 2017 1:33 pm

smitcat wrote:
Tue Dec 05, 2017 1:13 pm
visualguy wrote:
Tue Dec 05, 2017 1:05 pm
randomizer wrote:
Tue Dec 05, 2017 11:12 am
I assume I won't be getting SS. And if I were able to claim it I would do it ASAP. I don't think it will stick around forever.
It will stick around in some form, but it is very unlikely to be what it is today. I also assume no SS because I expect means testing to become part of the program.
Other counties have faced this same issue and it is fairly easily resolved - many possibilities and none are draconian.
Perhaps research what those solutions are to see what is possible.
It's not easily resolved. You either have to cut benefits or raise revenues (i.e. raise or shift taxes). It is a folly to assume that the US will go with raising revenues rather than cutting benefits. Certainly not a bet I would want to make. There's a mix of solutions in other countries. For example, Australia has means testing for their Age Pension. Means testing is often mentioned in articles about reforming SS in the US, and I think it's pretty much inevitable that this will happen.

marcopolo
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Re: Why not take Social Security at 62

Post by marcopolo » Tue Dec 05, 2017 3:31 pm

visualguy wrote:
Tue Dec 05, 2017 1:33 pm
smitcat wrote:
Tue Dec 05, 2017 1:13 pm
visualguy wrote:
Tue Dec 05, 2017 1:05 pm
randomizer wrote:
Tue Dec 05, 2017 11:12 am
I assume I won't be getting SS. And if I were able to claim it I would do it ASAP. I don't think it will stick around forever.
It will stick around in some form, but it is very unlikely to be what it is today. I also assume no SS because I expect means testing to become part of the program.
Other counties have faced this same issue and it is fairly easily resolved - many possibilities and none are draconian.
Perhaps research what those solutions are to see what is possible.
It's not easily resolved. You either have to cut benefits or raise revenues (i.e. raise or shift taxes). It is a folly to assume that the US will go with raising revenues rather than cutting benefits. Certainly not a bet I would want to make. There's a mix of solutions in other countries. For example, Australia has means testing for their Age Pension. Means testing is often mentioned in articles about reforming SS in the US, and I think it's pretty much inevitable that this will happen.

I agree. It is already means tested to some degree (bend points, the way it is taxed), no reason to believe there is not some risk those will be added to in some form.

As far as looking to other countries as possible solutions, I wish i had more confidence that we in the US could do the same. Those countries also faced healthcare crisis a long time ago, and seemed to have come up with somewhat workable solutions. So far, the US, faced with similar issues, have developed a hodge podge of "solutions" that boggle the mind in their complexity.
Once in a while you get shown the light, in the strangest of places if you look at it right.

smitcat
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Re: Why not take Social Security at 62

Post by smitcat » Tue Dec 05, 2017 3:32 pm

visualguy wrote:
Tue Dec 05, 2017 1:33 pm
smitcat wrote:
Tue Dec 05, 2017 1:13 pm
visualguy wrote:
Tue Dec 05, 2017 1:05 pm
randomizer wrote:
Tue Dec 05, 2017 11:12 am
I assume I won't be getting SS. And if I were able to claim it I would do it ASAP. I don't think it will stick around forever.
It will stick around in some form, but it is very unlikely to be what it is today. I also assume no SS because I expect means testing to become part of the program.
Other counties have faced this same issue and it is fairly easily resolved - many possibilities and none are draconian.
Perhaps research what those solutions are to see what is possible.
It's not easily resolved. You either have to cut benefits or raise revenues (i.e. raise or shift taxes). It is a folly to assume that the US will go with raising revenues rather than cutting benefits. Certainly not a bet I would want to make. There's a mix of solutions in other countries. For example, Australia has means testing for their Age Pension. Means testing is often mentioned in articles about reforming SS in the US, and I think it's pretty much inevitable that this will happen.
"It's not easily resolved. You either have to cut benefits or raise revenues (i.e. raise or shift taxes). It is a folly to assume that the US will go with raising revenues rather than cutting benefits."
I would recommend a but of more research - setting back the eligibility date 1-2 years, raising or removing the limit on contributions, changing the % paid per salary would all correct the issues. There are some good articles on polls taken as to which ones of these and which combinations are favored by the public. The most common and easiest solutions do not make for good headlines so we only typically read about the "Sensationalized" solutions.
Of course everyone should do whatever they believe is right for themselves.

visualguy
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Re: Why not take Social Security at 62

Post by visualguy » Tue Dec 05, 2017 4:04 pm

smitcat wrote:
Tue Dec 05, 2017 3:32 pm
"It's not easily resolved. You either have to cut benefits or raise revenues (i.e. raise or shift taxes). It is a folly to assume that the US will go with raising revenues rather than cutting benefits."
I would recommend a but of more research - setting back the eligibility date 1-2 years, raising or removing the limit on contributions, changing the % paid per salary would all correct the issues. There are some good articles on polls taken as to which ones of these and which combinations are favored by the public. The most common and easiest solutions do not make for good headlines so we only typically read about the "Sensationalized" solutions.
Of course everyone should do whatever they believe is right for themselves.
You are listing changes that would cut benefits and/or raise revenues which was exactly my point. It's not clear what will happen exactly and when, but something will happen, and not much point in doing analysis for 12+ years from now based on how things are today.

As to what will happen, people have to figure out for themselves what is likely, and plan accordingly. I personally believe that means testing will be introduced because the alternatives won't be palatable - either hitting the workforce for more money and/or reducing benefits for people who have little or no other assets/income. Means testing for this purpose has precedent in other countries like I mentioned.

visualguy
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Re: Why not take Social Security at 62

Post by visualguy » Tue Dec 05, 2017 4:14 pm

marcopolo wrote:
Tue Dec 05, 2017 3:31 pm
As far as looking to other countries as possible solutions, I wish i had more confidence that we in the US could do the same. Those countries also faced healthcare crisis a long time ago, and seemed to have come up with somewhat workable solutions. So far, the US, faced with similar issues, have developed a hodge podge of "solutions" that boggle the mind in their complexity.
Right, the healthcare situation in the US is just insane, and there's a reluctance to adopt working models from other countries. There would need to be campaign finance reform and cultural changes before that happens. I don't think this is likely to change until things gets a lot worse, unfortunately, and I take that into account in my planning.

TN_Boy
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Re: Why not take Social Security at 62

Post by TN_Boy » Tue Dec 05, 2017 4:21 pm

smitcat wrote:
Fri Dec 01, 2017 10:56 am
chipperd wrote:
Fri Dec 01, 2017 5:37 am
Thanks to all for the input, thoughts, resources, and suggestions. I am having a hard time finding a calculator that allows one to financially plan that includes social security without working until age 62 or later, or even a social security calculator that will allow a user to figure the retirement benefit if you stop working before age 62. I think I can hang it up at 57/58, so looking for one that would allow me to work with those possible ages to stop work income. I know the social security admin has one, but you need to input every year of work-related income and hoping to avoid that. Thoughts and suggestions?
Thanks
Chipperd
"I know the social security admin has one, but you need to input every year of work-related income and hoping to avoid that."

- If you have not done so already sign into your the SS site for your own personal benefits.
- You should then see a report that shows all of your deductions and your benefits at this time
- You can use that information to populate the SS calculator on that site and then add zeros beginning at whatever year you like (cut and paste)
- Then you can print and/or save the outputs so you know what your benefits will be if you retire early.

We have done that the last few years to get our own PIA's and benefits with our early retire dates.
I found the simplest approach was to download the gov app anypia (smitcat, was that the calculator you meant? You have to actually download anypia and run it locally).

https://www.ssa.gov/oact/anypia/download.html

I think you have to feed it your earnings history (which you can get online from the ss site) but you can then give it zeros for earnings between say 57 and 62. It wasn't that hard to use. Whether you enter the earnings history manually or via cut and paste, it's not really that painful to enter 35 numbers once (anypia will remember them). I spent more time running scenarios (myself and spouse) than entering the numbers.

chipperd
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Re: Why not take Social Security at 62

Post by chipperd » Wed Dec 06, 2017 5:51 am

I find it interesting and didn't expect, the varied responses on the range of commenter concerns regarding the reliability of Social Security just 12 years out. I understand and appreciate we don't know what will be of Social Security in the future and that planning and predicting national politics is a parlor game, but some of the ranges proposed seem extreme to me (Ie: A 75% reduction in benefits within the next 12 years). My thinking is to plan for Social Security as is and adjust as issues come up as my crystal ball doesn't seem as clear as some others.

basspond
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Re: Why not take Social Security at 62

Post by basspond » Wed Dec 06, 2017 6:32 am

chipperd wrote:
Wed Dec 06, 2017 5:51 am
(Ie: A 75% reduction in benefits within the next 12 years).
I think people have reversed this number. In 12 years SS is expected to only have enough funds to pay 75% of claims. That is a 25% drop.

tibbitts
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Re: Why not take Social Security at 62

Post by tibbitts » Wed Dec 06, 2017 9:00 am

chipperd wrote:
Wed Dec 06, 2017 5:51 am
I find it interesting and didn't expect, the varied responses on the range of commenter concerns regarding the reliability of Social Security just 12 years out. I understand and appreciate we don't know what will be of Social Security in the future and that planning and predicting national politics is a parlor game, but some of the ranges proposed seem extreme to me (Ie: A 75% reduction in benefits within the next 12 years). My thinking is to plan for Social Security as is and adjust as issues come up as my crystal ball doesn't seem as clear as some others.
I don't think anyone has a clearer idea but the odds seem to favor some reduction, and that (like the taxes on SS income we have now) may impact those with other income more than those without, so the 25% reduction seems reasonable to plan for. In any case planning that isn't based on at least the current law (which already includes the coming reduction) doesn't seem to be a prudent approach, nor does using calculators that don't take any possible future reductions into account. Personally I would make a different decision based entirely on the shortfall - without it I'd hold off on taking SS, but with it I'd likely claim as soon as possible - it makes that much difference.

smitcat
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Re: Why not take Social Security at 62

Post by smitcat » Wed Dec 06, 2017 9:54 am

Some of us are old enough to have been through this exact concern in the past "SS cannot make it as is".
Its not the first time it will be a challenge requiring some changes and flexibility and it likely wont be the last.
We have been present for the adjustments taken in the past , how much notice was given and whether the directly affected groups were 'grandfathered' or not.

chipperd
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Re: Why not take Social Security at 62

Post by chipperd » Wed Dec 06, 2017 10:29 am

basspond wrote:
Wed Dec 06, 2017 6:32 am
chipperd wrote:
Wed Dec 06, 2017 5:51 am
(Ie: A 75% reduction in benefits within the next 12 years).
I think people have reversed this number. In 12 years SS is expected to only have enough funds to pay 75% of claims. That is a 25% drop.
Oh, I agree. One did suggest planning for up to 75% reduction but 25% makes more sense.
Thanks

visualguy
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Re: Why not take Social Security at 62

Post by visualguy » Wed Dec 06, 2017 6:12 pm

I wouldn't plan for an SS cut equally across the board. They're more likely to cut more for people with other means, and less for people without other means, so I would assume a cut larger than 25% for typical Bogleheads...

WhiteMaxima
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Re: Why not take Social Security at 62

Post by WhiteMaxima » Wed Dec 06, 2017 6:20 pm

Or raise SS tax rate and cap to keep it solvent.

visualguy
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Re: Why not take Social Security at 62

Post by visualguy » Wed Dec 06, 2017 7:13 pm

WhiteMaxima wrote:
Wed Dec 06, 2017 6:20 pm
Or raise SS tax rate and cap to keep it solvent.
In your planning, you have to weigh the likelihood of raising SS taxes vs cutting benefits. I think the latter is more likely than the former, so I plan with that in mind. I think it will be hard to raise SS taxes without addressing the issue of giving SS payments to people who don't "need" this money (similar to the argument against cuts across the board). Maybe there will be some combination of the two, who knows... All I know is that I can't bet on getting in 12+ years what I would get if I reached the age now.

Thesaints
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Re: Why not take Social Security at 62

Post by Thesaints » Wed Dec 06, 2017 8:11 pm

These last posts sounds dangerously close to a discussion on a "not yet enacted legislation" that the Lady of the house abhors.

Of course, reasoning on possible outcomes which depend on future modifications of the law is absolutely sound financial planning. The entire argument of Traditional vs. Roth is entirely dependent on future taxation, for instance...

chipperd
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Re: Why not take Social Security at 62

Post by chipperd » Thu Dec 07, 2017 5:10 am

"These last posts sounds dangerously close to a discussion on a "not yet enacted legislation" that the Lady of the house abhors."
Agreed and not the purpose of my original question.
Thanks for the reminder

chipperd
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Re: Why not take Social Security at 62

Post by chipperd » Thu Dec 07, 2017 5:13 am

chipperd wrote:
Thu Dec 07, 2017 5:10 am
"These last posts sounds dangerously close to a discussion on a "not yet enacted legislation" that the Lady of the house abhors."
Agreed and not the purpose of my original question.
Thanks for the reminder

This was in the admin's recent post on another topic:
"Speculation about future legislation is prohibited by forum policy, see Unacceptable Topics:"

Chipperd

Frisco Kid
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Re: Why not take Social Security at 62

Post by Frisco Kid » Thu Dec 07, 2017 8:13 am

Our main concern with delaying past FRA (66 for us) is that there is no way to know what changes in future benefits may be. If we use tax deferred funds to cover the 4 year gap that $ is gone. What if we do that and future benefits are reduced? A couple of years away from having to make that decision am leaning towards splitting the difference and claiming at 68.

protagonist
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Re: Why not take Social Security at 62

Post by protagonist » Thu Dec 07, 2017 8:26 am

A huge mistake I humbly believe that many people make on this site is equating "maximum wealth" with "happiness" and "better life"...the latter is much more correlated with peace of mind. In that context, deciding when to start benefits is easy.

Consider the fate of two retirees, Rich and Delores. Both retire at age 62....let's say they were both laid off and cannot find additional work.

At time of retirement, Rich has $1,000,000 in financial assets. Delores has $10,000. Both would receive $20K/year from SS if they started benefits at age 62 and $30K/yr if they wait to age 70.

Delores' decision is simple. She needs to start benefits at 62 for survival.

Rich's decision is also simple. He should definitely wait until 70. Rich has plenty of savings to fund his early retirement. His concern is whether, due to unexpected financial reversal or whatever, he will still have enough money to live comfortably when and if he makes it to 85 or 90 or 95. If Rich dies suddenly at 71, he loses out big time on "overall benefits" by waiting until 70, but he dies happily with a happy retirement and peace of mind. If he runs out of money before he dies, he can still live much more comfortably on $30K/year than on $20K/year. So no matter when he dies or what the "break even point" is, he has way more peace of mind by deferring and a happier retirement.

If you have enough money to fund your early retirement, defer SS as long as possible. If not, start taking it whenever you feel you really need it to avoid significant immediate lifestyle compromise. It's that simple. Forget about break even ages, maximizing benefits in an unknown world, etc. What you should care about is minimizing lifestyle compromise and worry. This is a point that I think is crucial in much financial decision-making and is lost on many people who simply rely on the math.

He who dies with the most toys does not always win. He who dies happily and in peace does.

technovelist
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Re: Why not take Social Security at 62

Post by technovelist » Thu Dec 07, 2017 8:46 am

protagonist wrote:
Thu Dec 07, 2017 8:26 am
A huge mistake I humbly believe that many people make on this site is equating "maximum wealth" with "happiness" and "better life"...the latter is much more correlated with peace of mind. In that context, deciding when to start benefits is easy.

Consider the fate of two retirees, Rich and Delores. Both retire at age 62....let's say they were both laid off and cannot find additional work.

At time of retirement, Rich has $1,000,000 in financial assets. Delores has $10,000. Both would receive $20K/year from SS if they started benefits at age 62 and $30K/yr if they wait to age 70.

Delores' decision is simple. She needs to start benefits at 62 for survival.

Rich's decision is also simple. He should definitely wait until 70. Rich has plenty of savings to fund his early retirement. His concern is whether, due to unexpected financial reversal or whatever, he will still have enough money to live comfortably when and if he makes it to 85 or 90 or 95. If Rich dies suddenly at 71, he loses out big time on "overall benefits" by waiting until 70, but he dies happily with a happy retirement and peace of mind. If he runs out of money before he dies, he can still live much more comfortably on $30K/year than on $20K/year. So no matter when he dies or what the "break even point" is, he has way more peace of mind by deferring and a happier retirement.

If you have enough money to fund your early retirement, defer SS as long as possible. If not, start taking it whenever you feel you really need it to avoid significant immediate lifestyle compromise. It's that simple. Forget about break even ages, maximizing benefits in an unknown world, etc. What you should care about is minimizing lifestyle compromise and worry. This is a point that I think is crucial in much financial decision-making and is lost on many people who simply rely on the math.

He who dies with the most toys does not always win. He who dies happily and in peace does.
Good example.

Here's another one.

At age 58, Delores is married to Sam, who is three years older than she is. He is the only breadwinner at present, but each of them will get $20K a year at age 62 if they claim then, and $30K a year if they claim at age 70. They have $20k in financial assets between them.

So what happens to Delores if Sam dies this year? She is in terrible trouble because she has only $20k to live on until the earliest time she can claim Social Security as a widow at age 60. And even after she does that, she still has at least two more years of reduced payments until the earliest time she can claim on her own record, at 62.

But what if she had $250,000 of term life insurance on Sam's life?

That could provide $20K/year until age 70, so she could postpone SS until then and have much more income for life.

This is why retirees and near-retirees who don't have a lot of assets need term life insurance.
In theory, theory and practice are identical. In practice, they often differ.

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TheTimeLord
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Re: Why not take Social Security at 62

Post by TheTimeLord » Thu Dec 07, 2017 8:58 am

protagonist wrote:
Thu Dec 07, 2017 8:26 am
He who dies with the most toys does not always win. He who dies happily and in peace does.
Thus the saying ignorance is bliss. In the past someone could easily be born in a small town or rural area, live there their whole life and have died blissfully ignorant of all the possibilities/opportunities available in the world. Cable and the internet has made this blissful ignorance much harder to achieve. One poster here is talking about being inspired/motivated by watching travel videos on Youtube. Knowledge breeds desire and desire breeds expectations and expectations breed disappointment. Thus we are back to ignorance is bliss. After all someone with a million dollar portfolio is likely very happy until finding Bogleheads.org and seeing threads telling them they are poor and their expectations for how much they need are readjusted.
Run, You Clever Boy!

reggiesimpson
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Re: Why not take Social Security at 62

Post by reggiesimpson » Thu Dec 07, 2017 8:59 am

"A bird in the hand is worth two in the bush". Take the money and run.

chipperd
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Re: Why not take Social Security at 62

Post by chipperd » Thu Dec 07, 2017 9:12 am

technovelist wrote:
Thu Dec 07, 2017 8:46 am
protagonist wrote:
Thu Dec 07, 2017 8:26 am
A huge mistake I humbly believe that many people make on this site is equating "maximum wealth" with "happiness" and "better life"...the latter is much more correlated with peace of mind. In that context, deciding when to start benefits is easy.

Consider the fate of two retirees, Rich and Delores. Both retire at age 62....let's say they were both laid off and cannot find additional work.

At time of retirement, Rich has $1,000,000 in financial assets. Delores has $10,000. Both would receive $20K/year from SS if they started benefits at age 62 and $30K/yr if they wait to age 70.

Delores' decision is simple. She needs to start benefits at 62 for survival.

Rich's decision is also simple. He should definitely wait until 70. Rich has plenty of savings to fund his early retirement. His concern is whether, due to unexpected financial reversal or whatever, he will still have enough money to live comfortably when and if he makes it to 85 or 90 or 95. If Rich dies suddenly at 71, he loses out big time on "overall benefits" by waiting until 70, but he dies happily with a happy retirement and peace of mind. If he runs out of money before he dies, he can still live much more comfortably on $30K/year than on $20K/year. So no matter when he dies or what the "break even point" is, he has way more peace of mind by deferring and a happier retirement.

If you have enough money to fund your early retirement, defer SS as long as possible. If not, start taking it whenever you feel you really need it to avoid significant immediate lifestyle compromise. It's that simple. Forget about break even ages, maximizing benefits in an unknown world, etc. What you should care about is minimizing lifestyle compromise and worry. This is a point that I think is crucial in much financial decision-making and is lost on many people who simply rely on the math.

He who dies with the most toys does not always win. He who dies happily and in peace does.
Good example.

Here's another one.

At age 58, Delores is married to Sam, who is three years older than she is. He is the only breadwinner at present, but each of them will get $20K a year at age 62 if they claim then, and $30K a year if they claim at age 70. They have $20k in financial assets between them.

So what happens to Delores if Sam dies this year? She is in terrible trouble because she has only $20k to live on until the earliest time she can claim Social Security as a widow at age 60. And even after she does that, she still has at least two more years of reduced payments until the earliest time she can claim on her own record, at 62.

But what if she had $250,000 of term life insurance on Sam's life?

That could provide $20K/year until age 70, so she could postpone SS until then and have much more income for life.

This is why retirees and near-retirees who don't have a lot of assets need term life insurance.

I see in many of your posts you discuss life insurance and have set up meetings with posters to discuss the insurance you sell and profit from.
This violates terms. Please stop.
Chipperd

technovelist
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Re: Why not take Social Security at 62

Post by technovelist » Thu Dec 07, 2017 9:19 am

chipperd wrote:
Thu Dec 07, 2017 9:12 am
technovelist wrote:
Thu Dec 07, 2017 8:46 am
protagonist wrote:
Thu Dec 07, 2017 8:26 am
A huge mistake I humbly believe that many people make on this site is equating "maximum wealth" with "happiness" and "better life"...the latter is much more correlated with peace of mind. In that context, deciding when to start benefits is easy.

Consider the fate of two retirees, Rich and Delores. Both retire at age 62....let's say they were both laid off and cannot find additional work.

At time of retirement, Rich has $1,000,000 in financial assets. Delores has $10,000. Both would receive $20K/year from SS if they started benefits at age 62 and $30K/yr if they wait to age 70.

Delores' decision is simple. She needs to start benefits at 62 for survival.

Rich's decision is also simple. He should definitely wait until 70. Rich has plenty of savings to fund his early retirement. His concern is whether, due to unexpected financial reversal or whatever, he will still have enough money to live comfortably when and if he makes it to 85 or 90 or 95. If Rich dies suddenly at 71, he loses out big time on "overall benefits" by waiting until 70, but he dies happily with a happy retirement and peace of mind. If he runs out of money before he dies, he can still live much more comfortably on $30K/year than on $20K/year. So no matter when he dies or what the "break even point" is, he has way more peace of mind by deferring and a happier retirement.

If you have enough money to fund your early retirement, defer SS as long as possible. If not, start taking it whenever you feel you really need it to avoid significant immediate lifestyle compromise. It's that simple. Forget about break even ages, maximizing benefits in an unknown world, etc. What you should care about is minimizing lifestyle compromise and worry. This is a point that I think is crucial in much financial decision-making and is lost on many people who simply rely on the math.

He who dies with the most toys does not always win. He who dies happily and in peace does.
Good example.

Here's another one.

At age 58, Delores is married to Sam, who is three years older than she is. He is the only breadwinner at present, but each of them will get $20K a year at age 62 if they claim then, and $30K a year if they claim at age 70. They have $20k in financial assets between them.

So what happens to Delores if Sam dies this year? She is in terrible trouble because she has only $20k to live on until the earliest time she can claim Social Security as a widow at age 60. And even after she does that, she still has at least two more years of reduced payments until the earliest time she can claim on her own record, at 62.

But what if she had $250,000 of term life insurance on Sam's life?

That could provide $20K/year until age 70, so she could postpone SS until then and have much more income for life.

This is why retirees and near-retirees who don't have a lot of assets need term life insurance.

I see in many of your posts you discuss life insurance and have set up meetings with posters to discuss the insurance you sell and profit from.
This violates terms. Please stop.
Chipperd
I have not tried to sell anyone on this forum any life insurance of any kind.

It is true that I have offered to help posters analyze existing life insurance and proposals made to them by others with whom I have no connection. One or two posters have taken me up on those offers and I have done so without any attempt to sell them anything. Ask them if you don't believe me.

In fact, I have not ever sold any life insurance of any kind to anyone, on or off this forum.

I don't believe discussing term life insurance is against the forum rules.
In theory, theory and practice are identical. In practice, they often differ.

Ron
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Re: Why not take Social Security at 62

Post by Ron » Thu Dec 07, 2017 9:19 am

reggiesimpson wrote:
Thu Dec 07, 2017 8:59 am
"A bird in the hand is worth two in the bush". Take the money and run.
Exactly! That's what I'm doing in just under 4 weeks (when I turn 70 :mrgreen: )....

- Ron

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Re: Why not take Social Security at 62

Post by The Wizard » Thu Dec 07, 2017 9:55 am

TheTimeLord wrote:
Thu Dec 07, 2017 8:58 am
protagonist wrote:
Thu Dec 07, 2017 8:26 am
He who dies with the most toys does not always win. He who dies happily and in peace does.
Thus the saying ignorance is bliss. In the past someone could easily be born in a small town or rural area, live there their whole life and have died blissfully ignorant of all the possibilities/opportunities available in the world. Cable and the internet has made this blissful ignorance much harder to achieve. One poster here is talking about being inspired/motivated by watching travel videos on Youtube. Knowledge breeds desire and desire breeds expectations and expectations breed disappointment. Thus we are back to ignorance is bliss. After all someone with a million dollar portfolio is likely very happy until finding Bogleheads.org and seeing threads telling them they are poor and their expectations for how much they need are readjusted.
This is being a tad cynical, I think.
There's an easy path for most soon to be retired folks to achieve some level of financial security along with expanded opportunity for activity in retirement without being upset that you don't have double the retirement income or portfolio size that someone else has...
Attempted new signature...

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Re: Why not take Social Security at 62

Post by #Cruncher » Thu Dec 07, 2017 10:23 am

technovelist wrote:
Thu Dec 07, 2017 8:46 am
protagonist wrote:
Thu Dec 07, 2017 8:26 am
Consider the fate of two retirees, ... Both would receive $20K/year from SS if they started benefits at age 62 and $30K/yr if they wait to age 70. ...
Good example. Here's another one. ... each of them will get $20K a year at age 62 if they claim then, and $30K a year if they claim at age 70.
It doesn't detract from the examples, but readers should be aware that if one is entitled to $20,000 when claiming at age 62, delaying to age 70 would increase the benefit to about $35,000 not $30,000. The following table is extracted from the SSA web page, Effect of Early or Delayed Retirement on Retirement Benefits:

Code: Select all

                          -- % of PIA ---
  Year Born        NRA     Age 62  Age 70  Ratio  X $20K
-------------   --------  ------  -------  -----  ------
1943-54         66        75      132      1.760  35,200 
1955            66  2 mo  74 1/6  130 2/3  1.762  35,200 
1956            66  4 mo  73 1/3  129 1/3  1.764  35,300 
1957            66  6 mo  72 1/2  128      1.766  35,300 
1958            66  8 mo  71 2/3  126 2/3  1.767  35,300 
1959            66 10 mo  70 5/6  125 1/3  1.769  35,400 
1960 and later  67        70      124      1.771  35,400

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TheTimeLord
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Re: Why not take Social Security at 62

Post by TheTimeLord » Thu Dec 07, 2017 10:30 am

The Wizard wrote:
Thu Dec 07, 2017 9:55 am
TheTimeLord wrote:
Thu Dec 07, 2017 8:58 am
protagonist wrote:
Thu Dec 07, 2017 8:26 am
He who dies with the most toys does not always win. He who dies happily and in peace does.
Thus the saying ignorance is bliss. In the past someone could easily be born in a small town or rural area, live there their whole life and have died blissfully ignorant of all the possibilities/opportunities available in the world. Cable and the internet has made this blissful ignorance much harder to achieve. One poster here is talking about being inspired/motivated by watching travel videos on Youtube. Knowledge breeds desire and desire breeds expectations and expectations breed disappointment. Thus we are back to ignorance is bliss. After all someone with a million dollar portfolio is likely very happy until finding Bogleheads.org and seeing threads telling them they are poor and their expectations for how much they need are readjusted.
This is being a tad cynical, I think.
There's an easy path for most soon to be retired folks to achieve some level of financial security along with expanded opportunity for activity in retirement without being upset that you don't have double the retirement income or portfolio size that someone else has...
My point may have been lost in what I was thinking was a relatable example. Which was sometimes you are happier not knowing all the options but having a simpler view of things and avoiding possibly unrealistic or hard to obtain expectations.
Run, You Clever Boy!

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