Good article. The point we’ve discussed here that was not mentioned is that even if feasible… it may not make sense for both spouses to defer til 70.
2 Likes
I may have mentioned up thread that H and I started claiming SS when we retired at age 63. This was based on multiple talks with our FA who is the only person who knows our finances.
5 Likes
I’m 13 years away so it might change, but I’m seriously considering having my wife and I both take Social Security at 62. Assuming a normal-ish next decade or so, my retirement accounts should be enough to cover our living expenses super comfortably, and allow decent travel and spoiling grand children, and have a very comfortable buffer as well and cover inflation for 30+ years. Nothing extravagant, but pretty nice. Taking SS at 62 would allow us to splurge without risking our principle.
Sure, it doesn’t quite maximize total return, but it would maximize freedom during my hopefully healthy 60’s when I anticipate being active and wanting to do adventurous travel.
7 Likes
It’s all a risk - because no one knows how long they will live.
On average, it’s best to wait but there’s a breakeven - late 70s or 80s. Die b4 then and you’d wish you hadn’t delayed as long.
2 Likes
I think the key thing is there is no right plan that fits circumstances of all people/couples. It’s just important to analyze the variables and plan a strategy based on personal factors and priorities.
8 Likes
Some people have decisions with Social Security tied with other decisions - like not retiring until age 65 for health care benefits prior to getting on Medicare.
The article does point out by percentage not waiting for SS - but the penalty deduction is a percent per month before age 65. I’m not really clear from age 65 to full SS retirement age for those born after the time when it escalated up to 67 for full retirement SS. DH and I born in 1956 had full SS retirement at 66 and 4 months – I took SS right at age 65 (less earnings amounts so taking early was fine for also less ‘loss’ from not waiting the extra months); DH took SS at 65 and 8 months so as to not spend down our retirement savings. FA advised us to take SS right when we retire – we delayed some with DH because we had saved up cash and had it available to spend down. DH retired almost a year before I did but our expenses had been such that our checking account built up cash reserves. We then set up our annuity cash stream.
It does take a little time to move forward on various things in retirement.
I very much disliked the ‘penalty’ between age 62 and 65 with SS - but people do need to figure out what is right for them.
The one couple in the article that retired early and lived on a boat made some very big adjustments in life, and they got that time in while they were healthy and could enjoy those activities.
3 Likes
We had a whole thread discussing When and Why Did You Decide to Take Social Security.
When to take SS depends on how long you need it to last and how significantly it figures into your retirement income stream. DH and I took it at 65/64 on the advice of both our FP and CPA. We didn’t figure it into our retirement planning, so it’s all gravy. Maximizing it was never a goal, and taking it early means drawing less than 2% from our portfolio. It can go away and we’ll still be fine.
6 Likes
This was the key factor for us. We needed low income to get subsidized state health insurance. We are both waiting for full retirement age (but not past that).
3 Likes
Post retirement cashflow (ins and outs) should be the biggest consideration. However, if there is a large age gap and benefits spread, survivor benefits become a significant factor. The obvious case is the higher benefit spouse is also older where it is likely the other spouse will have the benefit of high survivor benefits. In that case, the younger spouse should take at 62 and the older wait until 70.
2 Likes
I’d guess that claiming <70 is the rec by most Financial Advisors, as it is in their financial interest to do so. It’s a really easy recommendation to make and show financially, as it comes down to the discount rate chosen. Finance 101 says use something like TIPS, but nearly every FA I have run across will use their ‘expected portfolio gain’. By definition, a higher discount rate will always result In claiming SS earlier. (It doesn’t matter what the person’s finances are; it’s simple algebra.)
Our fee-based FA highly encouraged my husband (7 years older) to defer SS to age 70 if feasible, and we were able to do so by depleting assets. He did endorse my proposal, as suggested by SS calculators, to claim at age 62 during our “go go” years. Whichever spouse lives longer will eventually benefit from the higher/age70 benefit. More background on this strategy is in the above referenced SS thread.
4 Likes
Our FA said dh should take at 70 and that I should take at 67, although he’s fine if I take at 65.
2 Likes
Again,our FA is the only person other than me who knows the specifics of our (now my) financial situation. There is a major piece of it (which I will not disclose here) which is a less common circumstance. So I stand by his advice.
6 Likes
Ugh. I get so confused on the timing of when to take SS. I thought there was some sort of, “penalty,” if the lower earning spouse took it at 62? I understand my benefit is reduced the earlier I take it. It’s the spousal component I get confused about.
Our scenario:
DH: much higher earner - turning 63 in February, still working full-time, but he’s in a lower earning role now. His peak earning years were much higher. Maxed out for probably over 25 years - maybe more.
Me: much lower earner - turning 62 in January, kept woman - I haven’t worked in 22 years. Never made more than about $48k in a year.
We don’t need the money. Dh plans to wait until 70. Toss up as to who will live longer. We’ve kind of always assumed I would.
I’d like to optimize, but since we don’t need the money right now, what’s the right thing to do?
I collected SS at age 62… but this was WAYYYY before the social security fairness act passed. My benefit was about $150 a month between WEP and GPO. If it had known or even thought that the SS Fairness act would ever pass, I might have waited at least until I was 65. Which was my FRA.
But what is done…is done. I can’t wind the clock back. And I know there are others who did what I did as well. Oh well.
2 Likes
I’m in the same boat. I plan on waiting until full retirement age. Why, I’m not sure.
We don’t need the money now, my husband will draw at his full retirement age. He won’t wait until 70.
Maybe I’ll draw at 65 when I go on Medicare. That way it can be taken out of that paycheck. My husband gets a stipend from his employer to pay for his Medicare so his is taken care of.
My costs will go substantially down once I go on Medicare as now I’m on an ACA plan.
2 Likes
All I’ve heard/read/seen is that when there is one much-higher earner, that person should wait until 70. If you don’t need the money, the other person could wait as well, but, for me, it depends on whether you would draw down on other investments, etc.
The reason I am considering 65 is because that’s when dh is scheduled to quit his PT job. My SS would replace his lost income, and we still could avoid touching investments. But the truth is when I run the Monte Carlo analysis for me, 70 or 67 or 65 or 62 barely moves the needle. We are lucky that we both have SS and pensions and those will fund our retirement.
1 Like
Medicare is one reason that I am considering taking at 65. Just seems easier, though I don’t really know about that.
for those still deciding on when to take SS, I highly recommend OpenSocialSecurity, which runs a mortality-adjusted NPV of the cash flows. Click on the box in the top middle, and add your details. You can even change mortality tables, if you feel lucky.
3 Likes
I ran the open social security in the past.
It says for me to draw at 62 and my husband at 70. Since my social security is minimal, I have enough credits to draw on my own but it’s not much, I don’t see the point of a couple of hundred dollars a month, at 62 it doesn’t even cover Medicare. My husband has some health issues, he may not make it to 90 as his dad did.
These are the things a calculator can’t do.
2 Likes