My 91yo mom is the same. She took SS as soon as she could and about 10 years later started to regret it. I always hear her in my head when I even consider taking it early.
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Iâm waiting until FRA but oh, it sucks. Hubby took early retirement three years ago and I have 7+ years to go. Sigh.
IMHO if SS plays into retirement planning for the cash stream, most likely wait to get full SS while continuing to work, or need to continue working until you draw SS later. Spending down other assets after stopping work to wait until 70 typically will not make financial sense.
We spent down some cash we had built up in our checking account as I was still working, and DH had delayed filing for his SS until we set up our âretirement cash streamâ months after I retired at 65 and drew my own SS at that time. We had cash stream also off of annuities w/o penalty.
The extra months for DH got him closer to full SS retirement amount (he retired at 65 and 8 months, while full SS for him would have been 66 and 4 months). Those 8 months was $24,624 total from SS; if we waited to full SS for him, he would have been drawing in $143/month more. Yes, the compounding of that $143/mo with future monthsâ payments â but the opportunity cost of our investments with the money not drawn down from our investments.
@Youdon_tsay I understand your 91 YO mom obviously missed the extra SS money with waiting, as she has lived beyond average life expectancy by quite a bit. Did she have plenty of assets, or did she have to really watch her finances/live on a close budget?
MIL had a lot of siblings that lived into their 90âs - some were financially better set than others. One particular aunt had been widowed twice, both husbands were farmers who were very middle income/small estate folks. The sale of the farm after second husbandâs death was her investment fund. She had a small house in a small town, and only lived on her SS and the income off of the investment - so she lived very frugally. She died in her late 80âs after a series of heart attacks. I was surprised to learn, after her daughterâs death, that this daughter had gone to a private 4 year college for nursing and worked in a nursing career until retirement. The aunt was very giving to have this daughter have the opportunity she didnât have. This daughter did look after her mom too, didnât live too far away.
My actuarials arenât good for exceeding the break-even point. However, if I took my SS at 62, it reduces my spousal benefit permanently. If H goes before I do (and heâs not in great health), Iâd regret taking it early, esp since his benefit will be generous.
Heâs still working FT and I would just throw my SS in to savings anyway, and at the moment, my benefit grows more if I donât take SS than what I would earn by sticking in a savings account.
OTOH, throwing it in a savings account means no RMDs or 10-year distribution timelines when I leave it for kids/potential grandkids. Iâd rather leave them assets that arenât taxable.
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If you have planned to do this, I donât see why it doesnât make sense.
It can make sense in that you are locking in a higher SS payment by using other funds that might not give you a better return.
It can make less sense if your other funds are gaining bigger returns or if you donât end up living so long and you are looking to pass on a higher inheritance.
Itâs really a gamble what it right either way in my opinion.
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Well yes⊠but you will have about 5 years more of payments (for simple example of a single retiree; many various scenarios for couples.). And those are payments more definite than the ones in later life - it all depends on that unknown end date. Having said that, it often does make sense to take the gamble and wait. Hubby is 7 years older than me and will start drawing when he is age 70,
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I donât get this 30% return on SS if you wait until full retirement age. Letâs say you get $100 at FRA, 67. If you take it starting at 62, you get $70. 30% less. I get that but if we assume life expectancy to be 85, you were getting 70/mo for 23 years for $19,320 total by the time it stops. Taking it at 67, you get 100/mo for 18 years. Total of $21,600. So the total gain is only a little over 10% more not 30% more. Spread over about 20 year years. About 0.5%/year? In addition, you have to consider the appreciation. The smaller $19,320 would appreciate more with more time, the first 5 years and beyond to the break-even point. Hard to know how much appreciation but it would be safe to say $19,320 is more than it looks. I took it at 62. I was simplifying our finances about that time and didnât want to revisit the issue when I get older. Looking at the average return of my portfolio, Iâd say the appreciation more than compensated the reduced amount.
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I always though 8%, butâŠ
AndâŠ
" If you start receiving retirement benefits at age 70, youâll get 124 percent of the monthly benefit because you delayed getting benefits for 36 months."
Ahh, so it is 8% for each year you delay.
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Then factor in the possible benefit reduction slated for 2034, and claiming at 62 (assuming 62 is at least five years prior to 2034), and your calculation skews more toward claiming early.
Fully admitting that no one knows if benefits will be cut back.
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Iâd say a more significant advantage of postponing SS until later is the security of it than the monetary boost. Good money is guaranteed to come until you pass. Having a decent steady income without bother in an old age is highly valuable if hard to put a price on it.
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If you have a 401k that, I presume, can be passed down to heirs, wouldnât it make sense to take SS and delay taking the 401k until you absolutely have to, and then just take the RMD?
I have very little to work with; thatâs the only thing I thought I had figured out for sure.
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I have a questionâŠ. If I take SS at age 64, and DH waits to take it until age 70, if he predeceases me, I can receive the greater of my retirement benefit or his retirement benefit. (In this case, his will be much greater than mine.). The benefit will not be reduced because I took mine earlyâŠ
Am I interpreting the rules correctly?
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It appears you are correct. Your filing early should have no effect on survival benefits later on.
Yes and no. It depends on the individual situation. We have moved into a more conservative position in retirement, so a guaranteed 8% gain from holding off on SS (and it lasts as long as we live) is appealing. We donât have a pension, so guaranteed is good.
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I ran a couple of calculators including https://opensocialsecurity.com/ and the consensus was I should take it at 62 and my husband at 70. Heâs about 5 years older and our benefits at FRA were very close. So we did that. Iâm still not sure why thatâs what worked out to be best for us but I figure we are hedging the drawbacks of each strategy.
On both sides of my family Iâve got ancestors who lived to their mid-90s and others who died at 75. The ones who appeared healthier are the ones who died earlier, so who knows what my future holds.
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Your post made me run my numbers, and it also recommends 62 for me and 70 for dh. Our birthdays are less than two weeks apart. Interesting. We both planned to wait to 70.
Question: At what age does this calculation have us dying?
If you look at the annual details, I think youâll see them adjusting for death at average death age (higher for women) ?
Thatâs what makes sense, but I just donât see that anywhere.
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why? Cash if fungible. If you take SS, 85% of it is taxable at your marginal income rate. If you take money of the 401k, it is also taxable at your income rate.