it looks like the older thread is closed so posting this new SS calculator on when (statistically) to apply for SS:
https://www.aarp.org/money/budgeting-saving/info-2018/when-to-take-social-security.html
As a financial advisor who deals with this issue every day, I can 100% say without hesitation…ready…it depends. It depends on individual circumstances.
So many suggest to wait to FRA (full retirement age) or even 70. Starting at 62 means you walk away from tens of thousands of dollars. Blah Blah Blah. To singularly recommend that strategy shows one’s math skills but lacks the human condition aspects of planning. What if the client needs the money earlier? What if they don’t have great longevity (my dad passed at 71, His dad passed at 71. 72 will be a good day in my house) Generally speaking it takes to approx 79 or 80 or later to financially benefit from deferring. Is it worth it to put off retirement five yrs (assuming you needed SS money to comfortably retire)?
Some will say yes, it’s worth it. Others would disagree. It’s not clear cut.
I’m for one collecting SS as soon as I hit 62. My reasoning is that: 1) I don’t take SS for granted especially given the way things are going in politics. There’s no guarantee that a) it’ll be around at FRA, or b) I’ll be around at FRA. And 2) SS isn’t going to be the only or major source of my retirement income, which made my decision 1) not too difficult to make.
What?! The How Much… thread got closed?!
@TiggerDad Are you already retired? If you take SS before full retirement age and still have a significant income, you’ll end up having to pay a lot of the SS money back.
@bluebayou Thanks for the link. It gave me a start date I didn’t expect. Of course based on math alone, not factoring in lifestyle or health factors.
Yes, I’m already retired. I have enough to get by, not a lot of income.
At this point we are thinking to take it when husband is 62 (we have enough years between us that it’ll be a while before I can file). We’d rather spend SS money than our own investments.
But … you can also play it by ear. If you choose to wait, you don’t have to wait until you hit FRA. You can file at any point after you hit 62 (or whatever your date is).
That calculator estimated that DH should wait til 70, which we were planning to do, but said I should start collecting 2 years before FRA. I played around with the numbers, and it seems the calculator assumes dying sometime in your 80s. If we both live to 90 (could happen), I’m better off waiting til my FRA.
In my state…teachers don’t contribute to SS. We are subject to the offset and windfall provisions…so our SS benefits are reduced based on a formula and our pension amounts.
I want to say up front…I’m not complaining.
My SS benefit would have been $455 a month at age 62. It was reduced to about $128 a month.
I decided to collect at age 62, because really…all my SS pays for is my Medicare bill. I decided that between ages 62 and 65, I would enjoy my little SS benefit. I used that $128 as part of a car payment for those three years.
Once I started getting Medicare, my monthly deposit was about $3 a month…after Medicare was paid (I had increased SS benefits due to work, or my Medicare wouldn’t have been fully covered…).
Anyway…for ME collecting at 62 was the right thing to do. Even my financial planner agreed when he heard my reasoning.
My husband will wait until age 70…but for him we are talking a HUGE amount difference per month…huge.
I’d be cautious about the calculator linked through the AARP article. It shows my retirement benefit if I don’t file until age 70 at a significantly lower figure than I get from the SSA’s calculation. I think that’s because the SSA assumes I’ll continue to earn enough to max out on SS taxes every year until I retire, thereby increasing my ultimate retirement benefit—and my wife’s spousal benefit. That’s certainly my plan. The free online calculator makes no assumptions about my earnings up until retirement—so by default, it’s in effect assuming I earn nothing in the years beyond my FRA. The difference is enough to throw the whole recommended strategy off.
Longevity assumptions also matter. I don’t necessarily expect to live to a ripe old age. I’ve got a number of health problems, and neither of my parents lived extremely long lives. my dad dying at 77 and my mom at 84. My wife is very healthy, five years younger than me, and she has some great longevity genes—her mother lived until 99, and her grandmother until 98. So there’s a good chance DW could outlive me by a couple of decades. My main concern is maximizing her SS income if that happens, but there’s no way to plug those longevity assumptions into this calculator.
Of course, things don’t always turn out as you expect. My mom had serious health issues since she was in her 40s, while my dad was always healthy and strong as an ox, never so much missing a day of work. My mom worried incessantly about how he would take care of himself after she was gone, taking as a foregone conclusion that she would be the first to die. She ended up outliving him by 15 years.
Did you adjust your PIA? The default is 1,000.
Well, my longevity is a huge unknown. My folks are alive and fairly healthy in their late 80s, early 90s. I was given a pretty dire diagnosis in my 40s, nearly 20 years ago. Now, my docs and I are scratching our heads and have no idea how my serious chronic progressive condition will affect my longevity. H is over a decade older than me and has already outlived his sister. His younger brother just got a pacemaker. His folks didn’t live as long as mine have, but he’s in pretty good physical condition with no serious health conditions. No idea whether how long either of us will live.
I’m currently thinking I will take my SS when I reach FRA, but may change my mind at take it at age 65, to pay my Medicare B premiums, as it will probably just do that and not leave much extra. I may wait until age 70, but who knows?
@BunsenBurner, Yes, I adjusted my PIA, using the figure I got from the SSA. I also adjusted my wife’s PIA. I’m quite certain the difference is that my base benefit will be bigger if I have more years of earnings at the max for SS taxes. The online calculator linked above is assuming I have no earnings subject to SS tax from my FRA at age 66 until actual retirement at age 70.
The SSA’s “retirement estimator” is very clear that their figure is based on the assumption that I continue to earn at my present rate until I claim my retirement benefit at age 70. But it also allows me to plug in an alternative earnings estimate. If I enter $0 for SS-taxable earnings between now and age 70, I get the same reduced benefit at age 70 that I get from the AARP-linked calculator.
Here’s a link to the SSA’s retirement estimator:
https://www.ssa.gov/benefits/retirement/estimator.html
In short, if you expect to have SS-taxable earnings between your FRA and a subsequent date on which you actually file for your SS retirement benefit, the AARP-linked calculator is inaccurate and misleading.
I guesstimated based on my recall of the last time I ran our numbers on ssa.gov. It said H should file at 65 and 1 month while I should wait for 70. My PIA is about twice H’s. I don’t know if this strategy takes into consideration that H might do better collecting on my record, but I am not sure if he can do that since I am three years younger. I won’t be 62 till he’s 65 and 3 months. We’ve had this talk a bit since H turned 62. His dad died 2 weeks before he turned 65 and never got a penny in SS benefits. However, his mom is turning 94 soon so she has been collecting for almost 3 decades.
I would like to retire at 65 at the latest but then spend a few years in private practice with a friend. I would go on Medicare but not take SS, just my two pensions to supplement what I would earn in private practice.
My mom and my aunt, my closest blood relatives, both dies at about 70. I live a healthier lifestyle, but I’m thinking I’m taking SS earlier, not later, because of that.
I was surprised at the results of the aarp calculator. the calculator certainly didn’t allow input for a variety of scenarios. Has anyone used this SS calculator?
https://maximizemysocialsecurity.com/.
I have seen too many people have major health issues earlier than later in retirement. And these are mostly doctors with no real bad habits… If you want to travel and have fun while still able to do it get the $$$ and go. No second chances.
Still working [because I love my job too much to retire], so it would be stupid for me to SS now and give most of it back because of my earned income. If I don’t live that many years past 70 [projected retirement], my wife [who took it at 66] can get the benefit of it because the survivor’s benefit will be much higher than her own. Everyone’s case is different; there is no “one size fits all” answer.
You don’t give any of it back no matter what you earn once you have reached 66, only if you take it early (you probably know that but just I’m case any reader does not).
I’m planning to take spousal SS January - 4 months before I reach 66. Still working but there are different income rules for the year you turn 66. It will reduce a little bit in my case there is no benefit to waiting. I haven’t worked long enough in the US to get SS in my own name and taking spousal a few months early does not affect survivors benefits as far as I can tell. (It is already reduced cause H took it early - but we did need it)
Glad you started the thread - reminds me i need to go in and apply soon!
“In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a [specified] limit. In 2018, the limit on your earnings is $45,360 but we only count earnings before the month you reach your full retirement age.” And what I was really talking about was the income tax consequences. The post-tax marginal increase doesn’t strike me as worth giving up the increase in benefits by deferring, but that’s just how my case looks to me.