I’m Planning to Claim SS @62… Well, Why Not?

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JoeRetire
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by JoeRetire »

HomerJ wrote: Mon Sep 13, 2021 12:51 pm Give her a check for $2000 a month, every month, and she'll be okay spending it. Pull an extra $2000 out of our accounts a month, every month to spend, and she'll resist.
Hmm. Sounds like there's a possible strategy available, depending on how much you want your wife to spend.

Lot's of people behave similarly.
Just remember: it's not a lie if you believe it.
Angst
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by Angst »

Angst wrote: Mon Sep 13, 2021 9:47 am
mary1492 wrote: Mon Sep 13, 2021 4:32 am I will take it at 62 as will my spouse. No concerns, no decisions, we've known all along this would be what we do and it is the best choice for us.

We are not into gambling, especially on the amount of time we have to live or how the SS system may change in the future. Give us what we have coming ASAP. A bird in hand...
I genuinely find this fascinating:
While some of us consider delaying Social Security to be "buying insurance" (that's me), others consider it "gambling".

Imagine the arguments we'd be having if the actuaries at Social Security set things up so we could claim as early as 52 or delay as late as 80!
cowdogman wrote: Mon Sep 13, 2021 9:58 amIt's "gambling" no matter when you you decide to take SS. Ditto doing (or not) Roth conversions. Ditto investing (or not) in the stock market. Ditto buying (or not) life insurance. Ditto choosing (or not) to exercise regularly. But if every consequential decision is gambling, "gambling" loses it meaning.
vested1 wrote: Mon Sep 13, 2021 10:14 amYes. I don't know how anyone could say that either way isn't gambling based on reference to breakeven arguments, which in my opinion are meaningless. Guessing about longevity is more accurate I suppose.
Chuckles960 wrote: Mon Sep 13, 2021 12:37 pmBuying insurance IS gambling. Not buying insurance is also gambling. Getting SS at 62 vs 70 is also gambling. You are just betting on different outcomes.

Of course, when you buy (say) life insurance or home insurance, the desired outcome is to lose money by paying premiums but not having a claim. If Uncle Fred gambles that he'll live a long time, but dies before optimizing his SS, well, he probably doesn't care since nothing is very important when you're dead. That's different from gambling in Vegas, where the desired outcome is to win money. So there are some differences in details...but it's all gambling.

I suppose I'm "gambling" every time I open my mouth, or login to this forum. :D


Since words lack the precision of numbers, any discussion can get sidetracked by semantics and strict definitions. So to clarify my point of view, without having any desire to claim "correctness" or to pursue this topic much further, I'll just try to define my use of the words "gambling" and "insurance" within the context of my post:


Gambling - taking a chance on a nice, big payout where the odds are not in one's favor because "the house always wins" in the long run. Generally, an amusement at best, and a poor strategy with respect to one's finances.

Insurance - a legal contract.

:sharebeer
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HomerJ
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by HomerJ »

JoeRetire wrote: Mon Sep 13, 2021 1:03 pm
HomerJ wrote: Mon Sep 13, 2021 12:51 pm Give her a check for $2000 a month, every month, and she'll be okay spending it. Pull an extra $2000 out of our accounts a month, every month to spend, and she'll resist.
Hmm. Sounds like there's a possible strategy available, depending on how much you want your wife to spend.

Lot's of people behave similarly.
I don't decide how much she spends. She decides. And she's frugal. If we had $1 million in our account or $10 million, it wouldn't matter. She won't want to "waste" money. It's not like I would be able to trick her by moving money each month from the retirement accounts into a checking account.

Nor could I buy a SPIA, because that would first entail pulling out a huge chunk of the portfolio.

But if SS sends her a check for $2000, she'll be far more likely to spend it, since that will feel like "income" to her, instead of spending down savings.

Heck, I'm mostly the same way to be honest. I won't like spending down savings either. I anchor to our portfolio value, and only want it to go up.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by AlohaBill »

Very few people take social security @70.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by Chuckles960 »

Angst wrote: Mon Sep 13, 2021 1:24 pm Gambling - taking a chance on a nice, big payout where the odds are not in one's favor because "the house always wins" in the long run. Generally, an amusement at best, and a poor strategy with respect to one's finances.

Insurance - a legal contract.

:sharebeer
My definitions:

Gambling: taking a chance

Insurance: taking a chance that involves signing a legal contract where the odds are not in one's favor because "the house always wins" in the long run.
Last edited by Chuckles960 on Mon Sep 13, 2021 2:07 pm, edited 1 time in total.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by loghound »

It sounds like the OP doesn't think the timing of SS it will much affect his life outcomes so in that case, it seems sort of impossible to give him good input.. He should do what he wants.

From my point of view (and as others have pointed out) I am treating SS as a sort of 'old age insurance that I want to maximize as much as possible in the event I live to 110. this is because

1) I really don't need it earlier.. I can get by with other assets.
2) I like the idea of an income stream that is independent of markets and indexed to inflation... I want it to be as big as possible (and to take as much advantage of the CPI increases as possible)
3) I like the flexibility delaying gives me. If I take it early I'm sort of stuck. If I delay I can take it at 70, or re-think it at 67,etc.
4) Delaying it helps my spouse after I'm gone (assuming she outlives me)

If I knew when I would die, or what markets are doing in the future, I suppose I could try to 'maximize NPV' or some other silliness but since I don't know when I'll die the most rational choice for me is to try to maximize the monthly benefit in the event I live a long time.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by fyre4ce »

Maybe I missed it (just skimmed the thread, sorry) but I'm not seeing an explicit reason TO take SS early. Okay, it's -$65k in net present value compared to taking at 69.5, and that's not significant compared to your net worth. But, if I offered you the choice of two checks, one for $500k and one for $435k, would you take the smaller check because, well, why not? No, not without some independent reason. My concern is that you may be over-spending compared to your assets, and wanting to take SS early to facilitate that consumption. But by taking an NPV hit by doing so, you may be entering or accelerating a downward spiral.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by iceport »

loghound wrote: Mon Sep 13, 2021 1:39 pm It sounds like the OP doesn't think the timing of SS it will much affect his life outcomes so in that case, it seems sort of impossible to give him good input.. He should do what he wants.
Actually, loghound, I've found a great deal of value in the thoughtful comments I've received. And I am now considering delaying for a few years.
loghound wrote: Mon Sep 13, 2021 1:39 pm 3) I like the flexibility delaying gives me. If I take it early I'm sort of stuck. If I delay I can take it at 70, or re-think it at 67,etc.
Just because I think in a similar way ("is this decision reversible?"), I am intrigued by the option to claim early, but then suspend benefits from 67 to 70. From Mike Piper's website:
Suspend Benefits at Full Retirement Age

If you’ve been receiving benefits for 12 months or more, it’s not possible to pay back your benefits and start over. You can, however, suspend benefits once you reach full retirement age and choose not to start them again until age 70.

Example: Greg begins claiming benefits at age 62. Three years later, he changes his mind and wishes he had waited. Once he reaches his full retirement age of 66, he can ask for his benefits to be suspended. If he waits until age 70 to start them again, he’ll earn 4 years’ worth of “delayed retirement credits,” which will help offset the fact that he originally claimed benefits prior to full retirement age.
"Discipline matters more than allocation.” ─William Bernstein
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by iceport »

fyre4ce wrote: Mon Sep 13, 2021 1:47 pm Maybe I missed it (just skimmed the thread, sorry) but I'm not seeing an explicit reason TO take SS early. Okay, it's -$65k in net present value compared to taking at 69.5, and that's not significant compared to your net worth. But, if I offered you the choice of two checks, one for $500k and one for $435k, would you take the smaller check because, well, why not? No, not without some independent reason. My concern is that you may be over-spending compared to your assets, and wanting to take SS early to facilitate that consumption. But by taking an NPV hit by doing so, you may be entering or accelerating a downward spiral.
fyre4ce,

It's not so much about wanting to spend more, as it is about preserving, or actually continuing to contribute to, retirement savings. It's about favoring the hard assets over the income stream. Kind of like what HomerJ has been talking about, I really have an aversion to spending down the portfolio.

Think about the decision to take a pension as either a lump sum or an annuity. The annuity almost always results in the highest payout, usually by a mile. But there are some individual circumstances, most notably if there is a perceived need to leave assets to heirs, in which taking the lump sum has its advantages.

This isn't the same question, and I don't specifically have an issue with heirs, but it is somewhat analogous.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by fyre4ce »

iceport wrote: Mon Sep 13, 2021 1:59 pm
fyre4ce wrote: Mon Sep 13, 2021 1:47 pm Maybe I missed it (just skimmed the thread, sorry) but I'm not seeing an explicit reason TO take SS early. Okay, it's -$65k in net present value compared to taking at 69.5, and that's not significant compared to your net worth. But, if I offered you the choice of two checks, one for $500k and one for $435k, would you take the smaller check because, well, why not? No, not without some independent reason. My concern is that you may be over-spending compared to your assets, and wanting to take SS early to facilitate that consumption. But by taking an NPV hit by doing so, you may be entering or accelerating a downward spiral.
fyre4ce,

It's not so much about wanting to spend more, as it is about preserving, or actually continuing to contribute to, retirement savings. It's about favoring the hard assets over the income stream. Kind of like what HomerJ has been talking about, I really have an aversion to spending down the portfolio.

Think about the decision to take a pension as either a lump sum or an annuity. The annuity almost always results in the highest payout, usually by a mile. But there are some individual circumstances, most notably if there is a perceived need to leave assets to heirs, in which taking the lump sum has its advantages.

This isn't the same question, and I don't specifically have an issue with heirs, but it is somewhat analogous.
I agree it is somewhat analogous. The NPV calculations are done using a risk-free discount rate, because the "return" (in the form of larger payments for delaying SS) is "guaranteed". If you run the numbers assuming that early SS payments are invested in higher-return assets, the results will favor taking SS early. But I don't like this approach, because unless you are already 100% stocks, you can compensate for the larger SS payments by increasing your equity allocation. If your guaranteed payments are enough to cover your basic needs in retirement, it could be reasonable to go 100% stocks in your portfolio.

The SPIA comparison is worth doing, but SS has a couple big advantages over a SPIA. For one, it's inflation-adjusted, so by delaying you are buying yourself more insurance against high inflation. SS is also variably taxed, and in a worst-case scenario where most/all your other assets are exhausted, SS payments become tax-free, which helps partially offset the shortfall. These two forms of "insurance" are hard to quantify, but are surely worth something.

The standard advice is to take SS early only if you have health issues that shorten your life expectancy, or if you have financial needs that can't be reasonably met another way. I don't think either apply to you, so I would suggest delaying, despite what you've said here.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by fsrph »

AlohaBill wrote: Mon Sep 13, 2021 1:26 pm Very few people take social security @70.
I think you're right. A U.S. News and World Report article stated, "Only 6% of women and 4% of men held out until age 70 or older in 2018, according to Social Security Administration data."

https://money.usnews.com/money/retireme ... l-security

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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by Godot »

iceport wrote: Mon Sep 13, 2021 1:50 pm
loghound wrote: Mon Sep 13, 2021 1:39 pm It sounds like the OP doesn't think the timing of SS it will much affect his life outcomes so in that case, it seems sort of impossible to give him good input.. He should do what he wants.
Actually, loghound, I've found a great deal of value in the thoughtful comments I've received. And I am now considering delaying for a few years.
loghound wrote: Mon Sep 13, 2021 1:39 pm 3) I like the flexibility delaying gives me. If I take it early I'm sort of stuck. If I delay I can take it at 70, or re-think it at 67,etc.
Just because I think in a similar way ("is this decision reversible?"), I am intrigued by the option to claim early, but then suspend benefits from 67 to 70. From Mike Piper's website:
Suspend Benefits at Full Retirement Age

If you’ve been receiving benefits for 12 months or more, it’s not possible to pay back your benefits and start over. You can, however, suspend benefits once you reach full retirement age and choose not to start them again until age 70.

Example: Greg begins claiming benefits at age 62. Three years later, he changes his mind and wishes he had waited. Once he reaches his full retirement age of 66, he can ask for his benefits to be suspended. If he waits until age 70 to start them again, he’ll earn 4 years’ worth of “delayed retirement credits,” which will help offset the fact that he originally claimed benefits prior to full retirement age.
It would be interesting to hear from any Bogleheads that have done this.
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JoeRetire
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by JoeRetire »

HomerJ wrote: Mon Sep 13, 2021 1:25 pm Heck, I'm mostly the same way to be honest. I won't like spending down savings either. I anchor to our portfolio value, and only want it to go up.
I understand.

Your heirs will be very happy.
Just remember: it's not a lie if you believe it.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by wrongfunds »

HomerJ wrote: Mon Sep 13, 2021 1:25 pm
JoeRetire wrote: Mon Sep 13, 2021 1:03 pm
HomerJ wrote: Mon Sep 13, 2021 12:51 pm Give her a check for $2000 a month, every month, and she'll be okay spending it. Pull an extra $2000 out of our accounts a month, every month to spend, and she'll resist.
Hmm. Sounds like there's a possible strategy available, depending on how much you want your wife to spend.

Lot's of people behave similarly.
I don't decide how much she spends. She decides. And she's frugal. If we had $1 million in our account or $10 million, it wouldn't matter. She won't want to "waste" money. It's not like I would be able to trick her by moving money each month from the retirement accounts into a checking account.

Nor could I buy a SPIA, because that would first entail pulling out a huge chunk of the portfolio.

But if SS sends her a check for $2000, she'll be far more likely to spend it, since that will feel like "income" to her, instead of spending down savings.

Heck, I'm mostly the same way to be honest. I won't like spending down savings either. I anchor to our portfolio value, and only want it to go up.
If that is the case, then you are only kicking the can down the road. If you are always going to resist spending down the portfolio, then all the discussions that we had over the 4% SWR issue have been useless as they all *assume/allow* the portfolio depletion.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by HomerJ »

JoeRetire wrote: Mon Sep 13, 2021 2:55 pm
HomerJ wrote: Mon Sep 13, 2021 1:25 pm Heck, I'm mostly the same way to be honest. I won't like spending down savings either. I anchor to our portfolio value, and only want it to go up.
I understand.

Your heirs will be very happy.
Good thing they are some of my favorite people on the planet. :)
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by HomerJ »

wrongfunds wrote: Mon Sep 13, 2021 3:06 pm
HomerJ wrote: Mon Sep 13, 2021 1:25 pm
JoeRetire wrote: Mon Sep 13, 2021 1:03 pm
HomerJ wrote: Mon Sep 13, 2021 12:51 pm Give her a check for $2000 a month, every month, and she'll be okay spending it. Pull an extra $2000 out of our accounts a month, every month to spend, and she'll resist.
Hmm. Sounds like there's a possible strategy available, depending on how much you want your wife to spend.

Lot's of people behave similarly.
I don't decide how much she spends. She decides. And she's frugal. If we had $1 million in our account or $10 million, it wouldn't matter. She won't want to "waste" money. It's not like I would be able to trick her by moving money each month from the retirement accounts into a checking account.

Nor could I buy a SPIA, because that would first entail pulling out a huge chunk of the portfolio.

But if SS sends her a check for $2000, she'll be far more likely to spend it, since that will feel like "income" to her, instead of spending down savings.

Heck, I'm mostly the same way to be honest. I won't like spending down savings either. I anchor to our portfolio value, and only want it to go up.
If that is the case, then you are only kicking the can down the road. If you are always going to resist spending down the portfolio, then all the discussions that we had over the 4% SWR issue have been useless as they all *assume/allow* the portfolio depletion.
Well, I assume it will become easier the older we get. At least for me. Once I hit 70, I'll probably stop worrying about living longer than the 30 years implicit in the 4% SWR.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by iceport »

fyre4ce wrote: Mon Sep 13, 2021 2:28 pm The standard advice is to take SS early only if you have health issues that shorten your life expectancy, or if you have financial needs that can't be reasonably met another way. I don't think either apply to you, so I would suggest delaying, despite what you've said here.
Yes, the preponderance of the standard advice is what gave me pause. However, what I don't see discussed much — if ever — is how the analysis might appropriately change if the person already has a significant, reliable income stream. That's the factor that, I believe, could change the analysis.

There are extreme cases, and I'm not one of them. But I do know plenty of former colleagues who retired with pensions in the ballpark of $125,000/year. For those folks, is it still so very important to wait until 70 to wring every last dollar out of their SS benefits? (Of course, their PIAs are probably much bigger than mine, also, so there's that...)

My case is in between. The pension cannot sustain my modest lifestyle all by itself, but it goes almost all of the way there. Add in even the greatly discounted age 62 SS, and I'm pretty sure I'm there.

The elephant in the room here is the security of the pension. And that is, indeed, a valid question. And one that has, in sometimes inadvertent ways, been highlighted here.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by wrongfunds »

iceport wrote: Mon Sep 13, 2021 3:14 pm
fyre4ce wrote: Mon Sep 13, 2021 2:28 pm The standard advice is to take SS early only if you have health issues that shorten your life expectancy, or if you have financial needs that can't be reasonably met another way. I don't think either apply to you, so I would suggest delaying, despite what you've said here.
...
There are extreme cases, and I'm not one of them. But I do know plenty of former colleagues who retired with pensions in the ballpark of $125,000/year. For those folks, is it still so very important to wait until 70 to wring every last dollar out of their SS benefits? (Of course, their PIAs are probably much bigger than mine, also, so there's that...)
...
The ironic part of the quoted text is that "extract the last dollars" is usually associated with "I want mine now" aka get it at 62 and NOT to the waiting until 70 cohorts. You are probably the 1st person here who has ascribed that motive to wait until 70 crowd.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by JoeRetire »

iceport wrote: Mon Sep 13, 2021 3:14 pmFor those folks, is it still so very important to wait until 70 to wring every last dollar out of their SS benefits?
Everyone gets to decide if they want to get the most from their benefits or if they don't care about the extra money.

How much would you be willing to give away in benefits over your lifetime?
Just remember: it's not a lie if you believe it.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by iceport »

wrongfunds wrote: Mon Sep 13, 2021 3:20 pm
iceport wrote: Mon Sep 13, 2021 3:14 pm
fyre4ce wrote: Mon Sep 13, 2021 2:28 pm The standard advice is to take SS early only if you have health issues that shorten your life expectancy, or if you have financial needs that can't be reasonably met another way. I don't think either apply to you, so I would suggest delaying, despite what you've said here.
...
There are extreme cases, and I'm not one of them. But I do know plenty of former colleagues who retired with pensions in the ballpark of $125,000/year. For those folks, is it still so very important to wait until 70 to wring every last dollar out of their SS benefits? (Of course, their PIAs are probably much bigger than mine, also, so there's that...)
...
The ironic part of the quoted text is that "extract the last dollars" is usually associated with "I want mine now" aka get it at 62 and NOT to the waiting until 70 cohorts. You are probably the 1st person here who has ascribed that motive to wait until 70 crowd.
LOL!! Yeah, I see what you mean. That was probably poor wording, because I was actually trying to describe the goal of wringing every last dollar of guaranteed lifetime income out of their benefit, possibly at the expense of the overall lifetime payout if they don't live as long as expected.

For the record, I don't share the "get it while the gettin's good" perspective.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by howard71 »

I was in no shape to retire @62 and ended up working until 67. At that point, delaying until 70 to get the max seemed like a no-brainer because my wife was 17 years younger than me and still working, I was in good health with parents living well into their 90's, and we didn't really need the money.

If I was able to retire @62 however I'd probably be thinking a bird in the hand is worth two in the bush and would consider taking it - especially since nobody knows what's going to happen when the trust fund runs out and benefits are set to be cut. I could be wrong but I don't think any of the SS calculators take that into account.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by HomerJ »

JoeRetire wrote: Mon Sep 13, 2021 3:20 pm
iceport wrote: Mon Sep 13, 2021 3:14 pmFor those folks, is it still so very important to wait until 70 to wring every last dollar out of their SS benefits?
Everyone gets to decide if they want to get the most from their benefits or if they don't care about the extra money.

How much would you be willing to give away in benefits over your lifetime?
There is no guaranteed "extra" money, Joe for waiting. If you die before 80-81, waiting gets you less. You might get more by waiting, or you might not. Half of people will get less, half will get more.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by HomerJ »

My problem is that Social Security is not guaranteed.

The benefits can be changed. The risk may be small, but it is not zero.

I don't plan on spending down the money in my accounts from 62-70, assuming that Social Security will not change and the math calculations people are making today will not change.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by tj »

Godot wrote: Mon Sep 13, 2021 2:43 pm
iceport wrote: Mon Sep 13, 2021 1:50 pm
loghound wrote: Mon Sep 13, 2021 1:39 pm It sounds like the OP doesn't think the timing of SS it will much affect his life outcomes so in that case, it seems sort of impossible to give him good input.. He should do what he wants.
Actually, loghound, I've found a great deal of value in the thoughtful comments I've received. And I am now considering delaying for a few years.
loghound wrote: Mon Sep 13, 2021 1:39 pm 3) I like the flexibility delaying gives me. If I take it early I'm sort of stuck. If I delay I can take it at 70, or re-think it at 67,etc.
Just because I think in a similar way ("is this decision reversible?"), I am intrigued by the option to claim early, but then suspend benefits from 67 to 70. From Mike Piper's website:
Suspend Benefits at Full Retirement Age

If you’ve been receiving benefits for 12 months or more, it’s not possible to pay back your benefits and start over. You can, however, suspend benefits once you reach full retirement age and choose not to start them again until age 70.

Example: Greg begins claiming benefits at age 62. Three years later, he changes his mind and wishes he had waited. Once he reaches his full retirement age of 66, he can ask for his benefits to be suspended. If he waits until age 70 to start them again, he’ll earn 4 years’ worth of “delayed retirement credits,” which will help offset the fact that he originally claimed benefits prior to full retirement age.
It would be interesting to hear from any Bogleheads that have done this.
Mike has addressed this before:

viewtopic.php?p=5550225#p5550225
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by radiowave »

iceport wrote: Sun Sep 12, 2021 2:39 pm Hi all,

I could use a better-informed second opinion on this topic. As noted, I am planning to claim Social Security at 62. Now that I’m only about 2½ years away, though, and in the face of nearly universal advice to the contrary, I wonder if I’m looking at the question wrong. Is there something I haven’t considered?

I’ve gone to the Social Security Calculator to accurately compute the PIA. Then I’ve gone to Open Social Security, Mike Piper’s free, open-source Social Security strategy calculator.

From the net present value analysis using the program defaults, the recommended age to claim SS is 69 years, 7 months, based on expected longevity. That’s for a single male my age.

However, when I test the age 62 alternative, the present value of the benefit — again, based on expected longevity — is only about $65k less. (A few years ago it was only ~$22k, so I’m assuming the discrepancy is from a lowering of the discount rate since 2018.) While that’s nothing to sneeze at, in the big picture, given the inherent uncertainties, it seems more or less negligible. So I’m not really concerned at all with leaving an estimated $65k on the table by claiming early. Being single really simplifies the SS questions!

The only other factor I’ve considered is longevity risk. I believe that’s why most people advocate waiting: to address the risk of living longer — and possibly much longer — than expected.

My answer to that is a modest but meaningful government pension that supplies enough income for daily living. I’ve been living on only that pension for 4½ years now. It won’t cover large foreseen and unforeseen expenses all by itself, but it’s a lifeline. It’s got a fixed-rate 2% COLA (actually, it’s a 2% floor, but the potential to exceed that is fairly limited, so I ignore it), so it won’t completely keep up with inflation, but it won’t lose ground too rapidly, I hope. It does virtually guarantee that 85% of all my SS income will be taxed, always. But it also makes it relatively easy to delay claiming SS.

Now if I claim SS early, it will boost my annuitized income stream by 50%. The total, I believe, is plenty to fund all the expenses I ever envision having. And that’s before ever considering tapping the portfolio, which after this strong market surge is theoretically capable of sustaining an income stream in the same ballpark as the pension alone.

The bottom line is that I think I have enough guaranteed income for life, even if I live longer than expected. So I don’t see a huge downside in claiming at the earliest possible date, favoring growth in the portfolio, and the flexibility it provides. (I might have an irrational aversion to spending down the portfolio if I don't need to...)

Is this situation one in which it would be reasonable to claim SS at 62, 70, or anything in between?

Or am I missing something?

(Long term care considerations, maybe? I don't know how to factor this in.)

Thanks for any insight you could offer.

OP, there is a limit to how much income you can make if drawing social security before full retirement age before SS starts reducing your monthly benefit:

https://money.usnews.com/money/retireme ... security

I do not know if pensions count as income.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by LilyFleur »

iceport wrote: Mon Sep 13, 2021 12:51 pm
HomerJ wrote: Mon Sep 13, 2021 12:42 pm
iceport wrote: Sun Sep 12, 2021 3:24 pm
MJS wrote: Sun Sep 12, 2021 3:12 pm 3. What are your plans for long-term care? Higher Social Security can smooth out LTC costs. However, selling home/property or using [T-IRAs & 401/403s plus medical tax deductions] lessens the value of high SS for LTC.
Yes, I started thinking about this. Back in 2012-2013 my mom was in a place that was no frills (but with excellent care and lots of familiar faces) and it cost ~$9k/mo. That's kind of scary. The plan so far, and tentative as it is, would be to have enough of the portfolio left over to cover the costs that exceed the income.
Do you have a paid off house? As a single person, you can always sell the house if you have to go to an assisted living place.
Yes, it's paid off, but I never "bought into" a McMansion just because I could possibly afford one. So it's a very modest place, representing a relatively minor portion of my net worth. This is a very valid point, and one which accomplishes a very necessary step should I find myself needing LTC, but I would probably need to reserve more than the house's value in retirement savings to cover LTC expenses.
My mom bought into a very nice continuing care retirement community (CCRC) when she went into independent living. We used the proceeds of the sale of her house for this. The agreement was that if she ran out of money she would be able to continue to live there. (Of course they would take her social security each month if that happened.)

I think if you could become aware of what that cost might be in addition to the equity from your home, set that aside. Also, if you start at full-pay in a nursing home, many Bogleheads have shared here that their parent was able to continue as a Medicaid patient after beginning as a full-pay and then running out of funds. The key is to get into a nice facility and start as a full-pay resident.

We don't know the future. At your age, I thought I would start SS at 62 (that is in just four months). My pension situation is similar to yours. However, in the meantime, I got a part-time job that I enjoy and work only about 16 hours a week. I have had assessments on my condo this year for $45,000 (part of that is due to California's new balcony law, because of the students that died in Berkeley from a balcony that failed a few years ago), so I think I will keep keeping working at least a year or two more, and then start my SS when I'm not working. As a single, I like the social interaction from my job which I do from home.

So, a tentative plan is good, but the market and your personal situation could change between now and 62.

P.S. I am extremely reluctant to remarry, as the potential financial liabilities at my age simply seem too risky for me, and I want my children to inherit any assets that would be remaining at the time of my death.

Is your pension a government pension that could reduce the amount of your social security?
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by iceport »

radiowave wrote: Mon Sep 13, 2021 5:55 pm OP, there is a limit to how much income you can make if drawing social security before full retirement age before SS starts reducing your monthly benefit:

https://money.usnews.com/money/retireme ... security

I do not know if pensions count as income.
Thanks radiowave. I don't believe this applies to pensions, however. I think it only applies to earned income.

What the pension does is increase overall income to the point where the maximum 85% of SS benefits will be taxed, but nothing will be (temporarily?) withheld.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by radiowave »

OK, just wanted to be sure you knew about that.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by iceport »

LilyFleur wrote: Mon Sep 13, 2021 6:01 pm I think if you could become aware of what that cost might be in addition to the equity from your home, set that aside. Also, if you start at full-pay in a nursing home, many Bogleheads have shared here that their parent was able to continue as a Medicaid patient after beginning as a full-pay and then running out of funds. The key is to get into a nice facility and start as a full-pay resident.
Yes, that's exactly what happened with my mom. It killed me to no end to see her life savings depleted like that, knowing what she must have sacrificed to build them. I just know she would have been aghast to see it burned through so quickly. She had a sum most here would consider tiny, but given her income, I found it astounding. The only saving grace was that she was distracted with lots of other stuff by the time she went into the facility, and we never discussed money with her, and she never brought it up. So I can only hope she was not aware of the costs and the spending. Either that, or she knew and just accepted it with the same stoicism that she had in accepting her physical condition. :| :(

The place was no-frills, but the caregivers were very kind and attentive. And this was in the small town where she grew up, so she probably saw half a dozen visitors a day or more (visiting others, too, not just her) that she knew from childhood.
LilyFleur wrote: Mon Sep 13, 2021 6:01 pm Is your pension a government pension that could reduce the amount of your social security?
No, WEP doesn't apply.

Thanks though!
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by iceport »

tj wrote: Mon Sep 13, 2021 5:28 pm
Godot wrote: Mon Sep 13, 2021 2:43 pm
Suspend Benefits at Full Retirement Age

If you’ve been receiving benefits for 12 months or more, it’s not possible to pay back your benefits and start over. You can, however, suspend benefits once you reach full retirement age and choose not to start them again until age 70.

Example: Greg begins claiming benefits at age 62. Three years later, he changes his mind and wishes he had waited. Once he reaches his full retirement age of 66, he can ask for his benefits to be suspended. If he waits until age 70 to start them again, he’ll earn 4 years’ worth of “delayed retirement credits,” which will help offset the fact that he originally claimed benefits prior to full retirement age.

It would be interesting to hear from any Bogleheads that have done this.
Mike has addressed this before:

viewtopic.php?p=5550225#p5550225
Wow, this subject really has been discussed a lot... I never bothered reading them before!

Skimming that thread led to this one from Cut-Throat: Delay Social Security to age 70 and Spend more money at 62

So that gave me the bright idea to run the simulation over at cFIREsim (because it's more convenient there than at FIRECalc to test alternatives) to test Cut-Throat's analysis using the historic data. So I ran the same numbers I've been running for years, first claiming SS at 62, and then waiting until 70.

Sure enough, waiting until 70 produced the higher theoretical spending rate, but the difference wasn't nearly as large as in Cut-Throat's example. It amounted to a 1.67% increase in spending over 30 years.

Now I'm sure BobK will come around with his hand out when I say this, but seriously, that's just rounding error. Isn't it?
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by JoeRetire »

HomerJ wrote: Mon Sep 13, 2021 5:16 pm
JoeRetire wrote: Mon Sep 13, 2021 3:20 pm
iceport wrote: Mon Sep 13, 2021 3:14 pmFor those folks, is it still so very important to wait until 70 to wring every last dollar out of their SS benefits?
Everyone gets to decide if they want to get the most from their benefits or if they don't care about the extra money.

How much would you be willing to give away in benefits over your lifetime?
There is no guaranteed "extra" money, Joe for waiting. If you die before 80-81, waiting gets you less. You might get more by waiting, or you might not. Half of people will get less, half will get more.
I don't think I used the word "guaranteed". Let me check.... nope.

There's no guaranteed "extra" money by starting early. If you die at 62, starting at 62 gets you nothing. And it potentially gets your survivor less.

In general (check life expectancy tables for 62 year olds, or for any age after 62), the higher earner would get more over their lifetime by delaying until 70. Even more so, if they have a spouse. Even more so if their spouse is younger. Even more so if their spouse is female.
Just remember: it's not a lie if you believe it.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by randomguy »

iceport wrote: Mon Sep 13, 2021 6:46 pm
Wow, this subject really has been discussed a lot... I never bothered reading them before!

Skimming that thread led to this one from Cut-Throat: Delay Social Security to age 70 and Spend more money at 62

So that gave me the bright idea to run the simulation over at cFIREsim (because it's more convenient there than at FIRECalc to test alternatives) to test Cut-Throat's analysis using the historic data. So I ran the same numbers I've been running for years, first claiming SS at 62, and then waiting until 70.

Sure enough, waiting until 70 produced the higher theoretical spending rate, but the difference wasn't nearly as large as in Cut-Throat's example. It amounted to a 1.67% increase in spending over 30 years.

Now I'm sure BobK will come around with his hand out when I say this, but seriously, that's just rounding error. Isn't it?
And it is important to remember that the reason the person with SS can spend more is because the other person has normally has a much larger estate. On average the person who takes SS early is going to end up with a 2 million dollar estate (i.e. on average you normally about double your money in real terms over 30 yers) while the person who delays is going to be more like 1.2 million (only 22 years of returns from a portfolio that is 25% smaller because they spend it down over 8 years). You got to spend a 120k more at the expense of having 800k less when you die. Depending on your priorities, that might be a pretty unappealing tradeoff. And obviously you could choose to spend that money when you are alive. Like if you enter the nursing home at 90.... And obviously you are taking on risk to get the higher returns. You need to decide if you can handle it.

Depending how you frame the problem, you can make either scheme workout. If you want to live off SS+pension (versus maximizing spend), I would feel very comfortable taking SS early. Odds are you end up with a bigger pile of money when your 80+ with those added 8 years of returns versus spending down the account and reaccumulating by saving more of your SS check after 70. I am guessing if you run this using historical data, you rarely get many cases where delaying SS pays off.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by goblue100 »

HomerJ wrote: Mon Sep 13, 2021 5:16 pm
JoeRetire wrote: Mon Sep 13, 2021 3:20 pm
iceport wrote: Mon Sep 13, 2021 3:14 pmFor those folks, is it still so very important to wait until 70 to wring every last dollar out of their SS benefits?
Everyone gets to decide if they want to get the most from their benefits or if they don't care about the extra money.

How much would you be willing to give away in benefits over your lifetime?
There is no guaranteed "extra" money, Joe for waiting. If you die before 80-81, waiting gets you less. You might get more by waiting, or you might not. Half of people will get less, half will get more.
It is actuarily neutral for the pool of population as a whole. I suspect in a self selecting pool of the population that knows they are healthier than the average it is far greater than a 50/50 preposition.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by SGM »

The majority of the men I talk to have waited until age 70 to collect SS. They were the higher earners. Several with medical issues and family history of early MIs have taken SS earlier.

We delayed SS until age 70. I was able to file and suspend and DW took half my SS amount at age 66 until she filed her own at 70. The law changed in 2016. I expect at least one of us will be long lived. So I looked at the SS claiming decision as one of additional insurance of having higher income at a later date. I also made Roth conversions prior to taking SS. This has been one of my better decisions as the Roth accounts have gone up greatly in value since the conversions.

We have more income now than when I started working part time at 62 and when I retired at 66.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by Watty »

iceport wrote: Mon Sep 13, 2021 12:51 pm
HomerJ wrote: Mon Sep 13, 2021 12:42 pm
iceport wrote: Sun Sep 12, 2021 3:24 pm
MJS wrote: Sun Sep 12, 2021 3:12 pm 3. What are your plans for long-term care? Higher Social Security can smooth out LTC costs. However, selling home/property or using [T-IRAs & 401/403s plus medical tax deductions] lessens the value of high SS for LTC.
Yes, I started thinking about this. Back in 2012-2013 my mom was in a place that was no frills (but with excellent care and lots of familiar faces) and it cost ~$9k/mo. That's kind of scary. The plan so far, and tentative as it is, would be to have enough of the portfolio left over to cover the costs that exceed the income.
Do you have a paid off house? As a single person, you can always sell the house if you have to go to an assisted living place.
Yes, it's paid off, but I never "bought into" a McMansion just because I could possibly afford one. So it's a very modest place, representing a relatively minor portion of my net worth. This is a very valid point, and one which accomplishes a very necessary step should I find myself needing LTC, but I would probably need to reserve more than the house's value in retirement savings to cover LTC expenses.
You also need to consider that if you go into LTC then most of your other expenses will stop.

That may mean that if you go into LTC you mainly need to be concerned about the gap between the LTC costs and your normal budget. Your home equity may be able to cover that gap for a long time even if you own a relatively modest house. For example if a nursing home costs $90K a year where you live but your normal retirement budget was $60K then the amount you need to be concerned about would be more like $30K a year

The term Long Term Care is also very misleading and can mean a lot of different things like;
1) Assisted living
2) A skilled nursing facility(nursing home)
3) A memory care facility

All these have very different expenses and assisted living is a lot less expensive than the other levels of care.

You can get an idea of what the different levels of care might cost where you live on this web site.

https://www.genworth.com/aging-and-you/ ... -care.html

If you live in a lower cost of living area and you have an ample retirement budget it is even possible that your expenses could even go down if you move into assisted living which costs less than other levels of LTC.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by iceport »

Watty wrote: Mon Sep 13, 2021 9:10 pm
iceport wrote: Mon Sep 13, 2021 12:51 pm
HomerJ wrote: Mon Sep 13, 2021 12:42 pm
iceport wrote: Sun Sep 12, 2021 3:24 pm
MJS wrote: Sun Sep 12, 2021 3:12 pm 3. What are your plans for long-term care? Higher Social Security can smooth out LTC costs. However, selling home/property or using [T-IRAs & 401/403s plus medical tax deductions] lessens the value of high SS for LTC.
Yes, I started thinking about this. Back in 2012-2013 my mom was in a place that was no frills (but with excellent care and lots of familiar faces) and it cost ~$9k/mo. That's kind of scary. The plan so far, and tentative as it is, would be to have enough of the portfolio left over to cover the costs that exceed the income.
Do you have a paid off house? As a single person, you can always sell the house if you have to go to an assisted living place.
Yes, it's paid off, but I never "bought into" a McMansion just because I could possibly afford one. So it's a very modest place, representing a relatively minor portion of my net worth. This is a very valid point, and one which accomplishes a very necessary step should I find myself needing LTC, but I would probably need to reserve more than the house's value in retirement savings to cover LTC expenses.
You also need to consider that if you go into LTC then most of your other expenses will stop.

That may mean that if you go into LTC you mainly need to be concerned about the gap between the LTC costs and your normal budget. Your home equity may be able to cover that gap for a long time even if you own a relatively modest house. For example if a nursing home costs $90K a year where you live but your normal retirement budget was $60K then the amount you need to be concerned about would be more like $30K a year

The term Long Term Care is also very misleading and can mean a lot of different things like;
1) Assisted living
2) A skilled nursing facility(nursing home)
3) A memory care facility

All these have very different expenses and assisted living is a lot less expensive than the other levels of care.

You can get an idea of what the different levels of care might cost where you live on this web site.

https://www.genworth.com/aging-and-you/ ... -care.html

If you live in a lower cost of living area and you have an ample retirement budget it is even possible that your expenses could even go down if you move into assisted living which costs less than other levels of LTC.
Thank you, Watty, for your perspective and the link. That looks like a valuable resource.

I went to the Genworth site and looked up my mom's hometown area. They list the monthly cost of a semi-private nursing home room at ~$11k/mo. That tracks extremely well with our experience with our mom of ~$9k/month in 2012/13. In the area where I live now, it's ~$13k/mo., or $156,000/year!!! And they project the costs will be more than *double that* in ~27 years. It's a very scary price tag, and about 50% more than my theoretical long term spending capacity. Of course, the difference is, by the time I'd be in a place like that (though I certainly will make every effort I can possibly muster to avoid it!) there really is no truly "long term" left. So the hope would be to have enough of a balance left in the portfolio to sustain maybe a few years of a mind-blowing spending level. Then I'd be in the same spot as my mom, watching the nest egg I've spent my entire life building and carefully tending vaporized in a relative instant.

I suspect a lot of Bogleheads are in a similar place: way too much to *reasonably* entertain any sort of Medicaid option, not nearly enough for peace of mind...

Maybe at some point there will be a decent, stable LTC insurance option. There really is a need.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by iceport »

randomguy wrote: Mon Sep 13, 2021 8:05 pm
iceport wrote: Mon Sep 13, 2021 6:46 pm
Wow, this subject really has been discussed a lot... I never bothered reading them before!

Skimming that thread led to this one from Cut-Throat: Delay Social Security to age 70 and Spend more money at 62

So that gave me the bright idea to run the simulation over at cFIREsim (because it's more convenient there than at FIRECalc to test alternatives) to test Cut-Throat's analysis using the historic data. So I ran the same numbers I've been running for years, first claiming SS at 62, and then waiting until 70.

Sure enough, waiting until 70 produced the higher theoretical spending rate, but the difference wasn't nearly as large as in Cut-Throat's example. It amounted to a 1.67% increase in spending over 30 years.

Now I'm sure BobK will come around with his hand out when I say this, but seriously, that's just rounding error. Isn't it?
And it is important to remember that the reason the person with SS can spend more is because the other person has normally has a much larger estate. On average the person who takes SS early is going to end up with a 2 million dollar estate (i.e. on average you normally about double your money in real terms over 30 yers) while the person who delays is going to be more like 1.2 million (only 22 years of returns from a portfolio that is 25% smaller because they spend it down over 8 years). You got to spend a 120k more at the expense of having 800k less when you die. Depending on your priorities, that might be a pretty unappealing tradeoff. And obviously you could choose to spend that money when you are alive. Like if you enter the nursing home at 90.... And obviously you are taking on risk to get the higher returns. You need to decide if you can handle it.
Yes, your comment and running these numbers through what Otar describes as "aft-casting" really hones in on exactly the trade-off I am grappling with!

Seeing some of the numbers generated through this imperfect but still vary valuable analysis illustrates exactly what I've been thinking about. The thing is, my numbers don't show nearly the stark differences in ending portfolio balances as what you are describing. I suspect a big part of that is that so much more of my spending is covered by the pension and SS, so the effect on the portfolio balance is more muted than if it were *mostly* portfolio withdrawals supplemented by SS alone.

27 year horizon, claim SS @62 vs. claim SS @ 70:

1.81% more annual spending capacity w/SS @70 than @62
6.0% larger average ending portfolio balance w/SS @62 than @70
11.8% larger median ending portfolio balance w/SS @62 than @70
(smaller numbers in all denominators)

Those ending portfolio balance differences are not earth-shattering, but they are more meaningful to me than the tiny difference in annual spending capacity.

This really does illustrate exactly the effect I intuitively expected. But at least they bring some reasonable numerical approximations to the table.

Honestly, all signs point to the decision being relatively inconsequential financially, at least for me.


randomguy wrote: Mon Sep 13, 2021 8:05 pm Depending how you frame the problem, you can make either scheme workout. If you want to live off SS+pension (versus maximizing spend), I would feel very comfortable taking SS early. Odds are you end up with a bigger pile of money when your 80+ with those added 8 years of returns versus spending down the account and reaccumulating by saving more of your SS check after 70. I am guessing if you run this using historical data, you rarely get many cases where delaying SS pays off.
Thanks. I appreciate your perspective.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by iceport »

SGM wrote: Mon Sep 13, 2021 9:06 pm The majority of the men I talk to have waited until age 70 to collect SS. They were the higher earners. Several with medical issues and family history of early MIs have taken SS earlier.

We delayed SS until age 70. I was able to file and suspend and DW took half my SS amount at age 66 until she filed her own at 70. The law changed in 2016. I expect at least one of us will be long lived. So I looked at the SS claiming decision as one of additional insurance of having higher income at a later date. I also made Roth conversions prior to taking SS. This has been one of my better decisions as the Roth accounts have gone up greatly in value since the conversions.

We have more income now than when I started working part time at 62 and when I retired at 66.
Thanks SGM. I remember you helped me when I was starting Roth conversions, also. And I am also very pleased with how that is going.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by loghound »

iceport wrote: Mon Sep 13, 2021 1:50 pm
loghound wrote: Mon Sep 13, 2021 1:39 pm It sounds like the OP doesn't think the timing of SS it will much affect his life outcomes so in that case, it seems sort of impossible to give him good input.. He should do what he wants.
Actually, loghound, I've found a great deal of value in the thoughtful comments I've received. And I am now considering delaying for a few years.
I re-read my post and that first sentence came out overly harsh -- I'm glad you interpreted it correctly (literally, I was trying to say "It sounds like you have options so it's OK to do what you want and not worry about if it's a 'perfect' answer or not).

I do 100% agree that there is a lot of wisdom and thoughtful dialog on this forum... It's one of my happy places on the internet (in part because the moderators do a good job keeping nonsense off of it)
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by randomguy »

iceport wrote: Tue Sep 14, 2021 12:52 pm Yes, your comment and running these numbers through what Otar describes as "aft-casting" really hones in on exactly the trade-off I am grappling with!

Seeing some of the numbers generated through this imperfect but still vary valuable analysis illustrates exactly what I've been thinking about. The thing is, my numbers don't show nearly the stark differences in ending portfolio balances as what you are describing. I suspect a big part of that is that so much more of my spending is covered by the pension and SS, so the effect on the portfolio balance is more muted than if it were *mostly* portfolio withdrawals supplemented by SS alone.
. Return assumptions and portfolio spend down matter but the big one in the example is spending 4k more per year for 30 years. it is the old 4k invested instead of spent will be worth 20k in 30 years. The main point is that just looking at income ignores a good chunk of what most people care about.

i think you are (feel feee to correct me) doing more of I am spending 100k/year either way and which one results in more money when I die. In that case the choice matters a lot less. You can either just let the portfolio grow or you can spend it down for 8 years and then start saving the excess SS money in the future. Run the problem like that and the gaps will shrink.
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by #Cruncher »

iceport wrote: Sun Sep 12, 2021 2:39 pm(I might have an irrational aversion to spending down the portfolio if I don't need to...)
HomerJ wrote: Mon Sep 13, 2021 1:25 pmHeck, I'm mostly the same way to be honest. I won't like spending down savings either. I anchor to our portfolio value, and only want it to go up.
iceport wrote: Mon Sep 13, 2021 1:59 pmKind of like what HomerJ has been talking about, I really have an aversion to spending down the portfolio.
This is the only reason I could see that you give, iceport, for wanting to start SS early. You are correct, of course, that if one delays, the forsaken SS benefit must be taken out of the portfolio -- or at least it prevents the portfolio from growing as much. But you should also look at the other side of the coin. By delaying, one increases the probable value of the future SS benefits. This can be more than the amount the portfolio is reduced.

To illustrate: For someone born in 1960 or later with a Primary Insurance Amount (PIA) of $2,500, the annual benefit is $21,000 if SS starts at age 62 and $22,500 if it starts at age 63. The 2017 SSA Period Life Table [1] shows a man's life expectancy at age 63 is 19.35 years. Therefore, a one-year delay to age 63 will produce, for a man, a probable increase in SS benefits of $29,000 (19.35 X 1500) for a man, in exchange for giving up $21,000.

The following table show the increase in present value of likely future SS benefits for each one year delay all the way up to age 70. It also shows the likely increase using the life expectancy for a woman and for a man/woman couple of the same age. [2] Instead of simply multiplying the increase in benefits by the life expectancy, it uses the Excel PV function to calculate the present value using a discount rate of -0.57% [3]. For example, the higher earner delaying from age 69 to 70 increases the probable present value (PV) of future benefits to the couple by $50,800; in exchange for giving up the $34,800 age 69 benefit.

Code: Select all

Row  ColA     Col B   Col C   Col D   Col E     Col F   Col G   Col H   Col I
  1  Born      1962
  2   NRA        67
  3   PIA     2,500
  4  Rate    -0.57%
                      -- Life Expectancy --    Annual  ---- Change in PV ----
  5   Age     % PIA    Man    Woman  Either   Benefit    Man    Woman  Either

Code: Select all

  6    62    70.00%   20.08   22.90   26.91    21,000
  7    63    75.00%   19.35   22.07   26.02    22,500  30,800  35,400  42,200
  8    64    80.00%   18.62   21.26   25.13    24,000  29,500  34,000  40,700
  9    65    86.67%   17.89   20.45   24.25    26,000  37,800  43,500  52,200
 10    66    93.33%   17.18   19.65   23.37    28,000  36,200  41,700  50,100

 11    67   100.00%   16.47   18.86   22.50    30,000  34,600  39,900  48,200
 12    68   108.00%   15.77   18.07   21.64    32,400  39,700  45,800  55,400
 13    69   116.00%   15.07   17.30   20.78    34,800  37,900  43,800  53,100
 14    70   124.00%   14.39   16.54   19.93    37,200  36,100  41,700  50,800
Here are key formulas used above:

Code: Select all

B2:    67  = MIN(67,66+MAX(0,B1-1954)/6)
B6:    70% = IF($A7<$B$2,1-(5/900)*MIN(36,($B$2-$A7)*12)-(5/1200)*MAX(0,($B$2-$A7)*12-36),1+(8/1200)*($A7-$B$2)*12)
G7: 30,800 =-ROUND(PV($B$4,C8,$F8-$F7,0,0),-2)
  1. This is the default mortality table used by Open Social Security.
  2. The life expectancy for a man/woman couple are taken from cell I8 on the Alive sheet of my Longevity Estimator Excel workbook.
  3. This is the current discount rate used by OSS. It is the 20-year TIPS yield on 9/13/2021 as shown here.
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JoeRetire
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by JoeRetire »

SGM wrote: Mon Sep 13, 2021 9:06 pm The majority of the men I talk to have waited until age 70 to collect SS.
That's surprising. According to the SSA, only 5% of men delay until 70.

Sounds like your majority represents a small minority.
Just remember: it's not a lie if you believe it.
59Gibson
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by 59Gibson »

JoeRetire wrote: Wed Sep 15, 2021 5:33 am
SGM wrote: Mon Sep 13, 2021 9:06 pm The majority of the men I talk to have waited until age 70 to collect SS.
That's surprising. According to the SSA, only 5% of men delay until 70.

Sounds like your majority represents a small minority.
Indeed surprising! The vast vast majority I know or heard of, 62-65 seems to be the chosen age.
smitcat
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by smitcat »

59Gibson wrote: Wed Sep 15, 2021 5:46 am
JoeRetire wrote: Wed Sep 15, 2021 5:33 am
SGM wrote: Mon Sep 13, 2021 9:06 pm The majority of the men I talk to have waited until age 70 to collect SS.
That's surprising. According to the SSA, only 5% of men delay until 70.

Sounds like your majority represents a small minority.
Indeed surprising! The vast vast majority I know or heard of, 62-65 seems to be the chosen age.
34% take it as soon as possible at 62 ....
https://www.usatoday.com/story/money/pe ... /35928543/
namajones
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by namajones »

phxjcc wrote: Mon Sep 13, 2021 1:57 am take it at 62.

May you live to regret that decision for at least a decade after you pass the break even age.. :beer
Well said.

Way too many variables in this decision to make a standard call for everyone. Someone up thread put "feelings" in quotation marks, as though those don't count. Oh, but they do. They do.

I'm in the camp of "there is no wrong answer to this question."

If you end up with less money down the road, so what? People learn to live with what they earn. If they don't, well, they don't. There's always booze.

Hey, did you hear the joke about SS running into money problems?

https://www.ssa.gov/policy/docs/ssb/v70 ... 3p111.html

What? It's not a joke?

Ah, rats. Pour me another.

:sharebeer
Last edited by namajones on Wed Sep 15, 2021 6:33 am, edited 3 times in total.
Tom_T
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by Tom_T »

59Gibson wrote: Wed Sep 15, 2021 5:46 am
JoeRetire wrote: Wed Sep 15, 2021 5:33 am
SGM wrote: Mon Sep 13, 2021 9:06 pm The majority of the men I talk to have waited until age 70 to collect SS.
That's surprising. According to the SSA, only 5% of men delay until 70.

Sounds like your majority represents a small minority.
Indeed surprising! The vast vast majority I know or heard of, 62-65 seems to be the chosen age.
The "lots of people I know" argument is always misleading. Everyone's in a bubble and it's hard to look outside it. If you and your friends are very successful financially, then you can all wait until 70 and it's strictly a mathematical decision because you don't need the money. That is a small minority of Americans, unfortunately. If you and your friends are like average Americans, then not only can't you wait until 70, you don't even have enough money to retire. And there are millions of people in between those extremes. My point is that let's stop using "the people I know" argument.
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Sandtrap
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by Sandtrap »

Helpful example:

In our case, and only our case, I am taking SS as late as possible and at what point it will be as large as possible.
Why?
1. We don't need the income stream from SS.
2. If I "kick the bucket", DW can take the larger of the SS benefits (me). And, in that case, it will be worthwhile to optimize it.
3. The odds are high that I will "kick the bucket" before DW, although, who knows these things.

j :D
dis-laimer: zillions of ways to do zillions of things with zillions of opinions.
Last edited by Sandtrap on Wed Sep 15, 2021 8:56 am, edited 1 time in total.
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wrongfunds
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by wrongfunds »

Using probabilistic models we actually CAN answer all these type of questions but in the end, even couched in mathematics and with pretty spreadsheets, it does NOT have the foundation of the physical laws like Newton's law of motion.

Some of us get to so wrapped in the analysis that they forget this basic principle.
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Toons
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by Toons »

I just checked my bank
SS monies deposited,
Third Wed every month
Since I turned 62
Age 70 now.
Have enjoyed every penny
one way or another,(investing) :wink:
I never considered
"waiting"

:wink:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
59Gibson
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Re: I’m Planning to Claim SS @62… Well, Why Not?

Post by 59Gibson »

Tom_T wrote: Wed Sep 15, 2021 6:30 am
59Gibson wrote: Wed Sep 15, 2021 5:46 am
JoeRetire wrote: Wed Sep 15, 2021 5:33 am
SGM wrote: Mon Sep 13, 2021 9:06 pm The majority of the men I talk to have waited until age 70 to collect SS.
That's surprising. According to the SSA, only 5% of men delay until 70.

Sounds like your majority represents a small minority.
Indeed surprising! The vast vast majority I know or heard of, 62-65 seems to be the chosen age.
The "lots of people I know" argument is always misleading. Everyone's in a bubble and it's hard to look outside it. If you and your friends are very successful financially, then you can all wait until 70 and it's strictly a mathematical decision because you don't need the money. That is a small minority of Americans, unfortunately. If you and your friends are like average Americans, then not only can't you wait until 70, you don't even have enough money to retire. And there are millions of people in between those extremes. My point is that let's stop using "the people I know" argument.
Why take such offense, I'm a faceless poster sharing my experience. I'm not making an "argument " for anything. Btw you missed the part where I mentioned people I've heard of, not just "know". The fact is simple the vast majority don't wait til 70.
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