My dad was a physician/surgeon as well. Loved his job and put off retiring as long as he could.
In the beginning SS was designed that most people would likely not get much. I believe the original retirement age was 65 but the life expectancy in the 1930ās was around 62.
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@FallGirl our financial advisor also told us to take DHās SS as soon as he retired. We just donāt like that cash flow situation. Now he is only 11 months away from reaching full SS age. There is no change with our current life standards; we just have taken out necessary household operating funds from our pot of 401k money.
Many people donāt give a thought to the limitation on their future monthly payments - they just look at what they will gain now. You have given thought and had a decision you are happy with.
Our Sister In Law started drawing at 62 and had retired with a pension from a school system. Her H is younger and still working - and will work until age 65; he may end up also taking out his SS at his retirement time. Their older brother is working until his younger wife has MC next Feb and he will retire and draw his SS after his managerial bonus after first quarter next year. So he will gain some of the 8% by drawing SS later.
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Again, everyoneās situation is different. Itās an individual decision. We happen to have plenty in our 401Kās as well as a pension H has. I canāt say what most people do/donāt do but we are happy with the choices we have made,
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SS/Medicare was also designed for disability, and with death the SS monthly benefits for minor children and non-employed spouse.
There was not the foresight that there may be less people paying in and the growth of beneficiaries as mortality rates went up. For a long time, the federal government āborrowedā out of these funds too.
They did have the decision to delay full SS - having a phased in time period based on year someone is born, up to having 70 as full SS.
I cannot see eligibility of Medicare going up from age 65. Even in good health, one slows down ā and some people in their 50ās are having a difficult time having a job with health insurance benefits.
Iāve used that opensocialsecurity.com website and it says that I should take it at 62 and my husband at 70 for maximum lifetime payout. I donāt quite understand why my waiting wouldnāt make it go up, but Iām guessing it has something to do with average lifespans? I wish the site gave more detail as to why it recommends what it does. Or that I understood it more! I also think this has something to do with my spouse and I having very similar FRA payments.
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Thanks for sharing that link!
I should be receiving my first SS check tomorrow (in Nov for Oct) - it is our way of having money coming in and since I qualified for a smaller check (stopped out and re-entered work in time to actually qualify for more than half of DHās) and the smaller payout meant less of an āouchā with the penalty of early (for me before 66 and 4 months; I am taking right at 65).
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This is somewhat misleading as life expectancy at birth is not really relevant, itās life expectancy when you hit adulthood or retirement age that drives the economics of SS.
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But itās not a 8% guaranteed return. Itās an 8% increase in payments, having foregone earlier payments. For example, if you die 2 years after you could have started $1000 monthly payments, you will receive $24000 if you start at the beginning of the first year. If you wait until the second year, you will receive $1000 x 1.08 x 12 = $12960. Youāll receive 85% more by not waiting.
The break even point is around age 82. By the time Iām 82, Iām not going to need much money, so Iām taking it earlier.
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My logic is that by the time Iām 82, inflation will have made a higher payment much more worthwhile. In any event, I waited until 70. Iām going to be 73 in 10 days and I have absolutely no regrets. I anticipate living well beyond age 82.
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yes, the breakeven is early 80ās, but that is an incomplete financial analysis.
Yes, if you die two years after you start SSā¦but that too, is an incomplete financial analysis.
The correct analysis is the NPV of future cash flows using a mortality table, with odds of death increasing every year. (And donāt forget the Survivor benefit; the odds are pretty good that one of a healthy 65-year old couple will make it to 90.) And then after one has the adjusted cash flows, the question becomes the discount rate. (Hint: for most, itās not what you can earn on the equity portion of your portfolio, although no one would ever hear that from a financial advisor.)
btw: donāt also forget the opportunity for additional Roth conversions by delaying.
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The people that have full SS retirement at age 70 wonāt have the increases on ādelayed SSā unless the government moves the needle higher to have a delay incentive. IDK if these later folks will have the same āearlyā penalty that people have now between age 62 and full SS.
My dad took SS at age 62 due to his health status, and died 2 days before he turned 64. He paid high premiums for his health care once he closed his company, while my mom had pretty reasonable premiums - and she continued her health plan as secondary to Medicare once she qualified, and got on a prescription plan based on Medicare research/web information.
You are right in how more physically limited individuals are in upper years of age, and using more money earlier for travel and other activities.
Taking SS early guarantees you get something. That cash flow isnāt inheritable by your over 18 kids whereas your other assets are.
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Right. And by taking the SS at age 70 and having it be a relatively big amount, youāre using up fewer assets than you would be otherwise. So, more to leave to heirs.
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ASI am still working, I waited until 70, as it pushes my taxes up. I donāt expect to,live much past 82, the marker number. So, it should be okay
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thatās where the mortality table and discount rate comes into play.
If you knew with certainty, you (and spouse?) would not make it to age 80, then claiming early is a no-brainer, as it maximizes your estate. OTOH, thereās a ~18% chance that one of a 65-year old couple will make it to 95; and even higher chance for healthy educated folks. And in such cases, estate maximization suggests delaying SS to 70.
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I tend to believe that in general you can look at family history and, outside of specific lifestyle choices or just good/bad luck, can get a general idea of your personal life expectancy. One of my brother in lawās family has genetics where it seems they live well into their 90s. It would certainly make sense to delay SS in his situation. On my fatherās side, people also tend to live to ripe old ages. Again, perhaps a vote for delaying SS. In some families people tend to die younger. Maybe they would be better off taking SS earlier. In the end itās all a guessing game with some educated guessing going on at times.
Currently Iām leaning towards taking SS early while hopefully itās still available and Iām not shut out because of having other means. I have no doubt that SS as we know it will morph in the coming years/decades. It wonāt surprise me when those that have saved get socked with high taxes and reduced benefits otherwise to help offset and pay for everyone else. Perhaps the rules regarding Roth withdrawals will even be modified. Itās hard to say.
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There are so many different scenarios - so interesting.
Iām wondering about the idea of needing less money in the early-mid 80s. In my experience, one of my parents at age 85 needed round the clock aide care ($25 an hour) plus a place to live (with us at that time, so not an expense but otherwise would have been a cost), plus medical supplies and special food. It was actually quite a bit of money! Iām thinking of all that when calculating when to take SS (a ways off for me, but still trying to plan).
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My FA did a financial calculation and concluded that I should start taking SS at age 68, I believe. ShawWife would start then as well, though she primarily gets the spousal benefit, I believe.
My dad died at 80 and my mom is still going strong at 97, though short-term memory is diminished. But she goes to exercise five days a week and when asked about the class, she says it is ānot too vigorous.ā She could do a one minute plank at 94, I believe. I can do a one-minute plank, but at 94, that is really impressive, especially since she never exercised at all until age 78. Her old gym had a large-scale Polaroid poster of her on a treadmill on the wall.
Since age 96, when her short-term memory started to go, she has needed help ensuring that she take her morning and evening pills. She is living in a senior independent living facility and is mobile (with a walker) but often someone will escort her to exercise class. She goes to movies and a few other social things on her own. So the cost of extra assistance is probably about $1000 per month but she does not travel and does not buy a lot of clothes or things. But, she does not need 24 hour care and is not bed-ridden. So her care expenses are a lot lower than @Jolynne_Smythās parent.
In our renovation, we are planning for the days in which we need one-floor living and in which we need a lot more help, so that we can stay at home as long as we can. We are consciously setting it up so that one of our kids and family could move into the main house while we mostly live in the master suite (has its own small kitchen and two bathrooms). The town is one of the nicer ones in the Northeast in regional proximity to an urban center and the schools are very good. The lot is extraordinary. So, it might actually be enticing ā ShawD joked when we were buying the house that she and BF would move in when they had kids. Who knows? There is definitely room for live-in help if that is what we need.
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