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A thread that was started yesterday, (and a silly one at that), got me thinking about my own situation, and what I should do about it.
I realize that the longer one waits before receiving Social Security benefits, the more one gets per month. I'm 62+ now and am thinking of retiring in just under four more years, which will make me 66 and a half, or thereabouts. I could forestall retirement until I'm 67, but I don't know. It will probably depend on the best time to sell the house and how fed up I'll be with getting up so early and commuting into work. (Just ran my SS statement yesterday and the difference between SS at 66 and at 70 is $874 a month.)
What I would like to ask is . . .
Would it be 'better' to draw SS when I retire at 66.5-67, or
Put off getting SS till I'm 70 and use the funds in my 403(b) for living expenses in the interim, (between retirement and age 70)?
The money in the 403(b) in is a TIAA-CREF account(s) and I understand we can get our money any way we want, or a combination of any of the possible methods. (A topic for which I'll need some professional help.)
To me you are answering your own question. If you can draw down on the 403 and not need the SS until 70 you will be good. Remember at this point SS COLA active so that will increase (until SS is desolved or broken) as you grow older. If you have enough to draw down monthly you will not trigger any penalty and your tax rate on that money will be lower since you will be earning less if anything.
If you do not have enough in the 403 that will go beyond it for say 20 or 30 years at a steady income stream then you should take your SS at the age you feel most comfortable given your circumstances.
Thanks for your thoughts. I don't see how I answered my own question. I'm really not sure how to approach the 'problem'.
If I draw from the 403(b) at the monthly rate that the max SS would pay me, it would last me just under nine years before it is totally gone. So, it would easily fill the gap, but then I'd have to plan on living on SS alone. I'm not sure it is good to not have a nest-egg, even a reduced one.
I guess it really depends on how much equity I can realize from my existing house and if that will be enough to purchase something outright in the place I eventually settle. No mortgage, I'll be sitting pretty. A mortgage, then I'll have to watch my coin and give up some 'stuff'.
If your primary consideration is not running out of money, I think it's generally better to draw down assets for a few years and defer SS benefits. The bigger SS check lasts as long as you do, and with some adjustments for cost of living, and is not subject to the whims of the financial markets.
Of course, don't draw your accounts down to nothing, as it's still important to have money for emergencies, surprise repairs, etc.
You did answer the question though you left some confusion. hikernut gave you a possible clarification of your own answer. The longer you can postpone the better but as you said what about emergencies.
I didnt make any assumption about mortgages or anything. It was not in the equation as you posed your question. if you can downsize to a smaller home with no mortgage yes you will be better off. If you can get into say a condo you pay off and have equity you realized from the sale of your home your savings will last much longer.
Still the answer goes only you can know your comfort level. Those are your options and the answers are here you just have to decide at what point do I go. If nothing else please take the time and file at FRA and if you plan on waiting postpone. Were/are you married? If so you can file for spousal. That could make a bit more difference in your decision.
You did not mention if you have a spouse, but if you do they will benefit from you waiting to age 70, in that any survivior benefit they might get at your death would be the higher amount.
Another thing you can do is at FRA persumably age 66 you can file and suspend. That way you lock in your money at age 66 then you can continue working or using your other money, until you are either age 70 or if you decide you need the money before then OR you need a nest egg, then you can either start collecting which would include any additional credits you earned to that point, OR you can tell them you want the whole amount, back payments from when you suspended, you will get the lump sum but it will be at your FRA amount and not include extra credits, you will then get monthly check for your FRA amount, no credits.
Thanks guys. I'm a bit confused about filing at Full Retirement Age, then not taking benefits at that time. Whichever way I go, it seems that I would want to maximize my monthly benefit, which would come at age 70. How would 'file and suspend' earlier be beneficial? It appears that it only presents flexibility and more options in the case of unexpected events. I have the 'nest egg', so don't really need to build another one, (assuming the economy doesn't do anything drastic, which who knows if it will).
No spouse in the picture, and probably won't be one in the future.
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Thanks again for focusing my thoughts and asking some pointed questions. I appreciate the input that acts to help me understand my own situation and the opportunities available to me. There are a lot of different ways I can go. So many choices.
Thanks guys. I'm a bit confused about filing at Full Retirement Age, then not taking benefits at that time. Whichever way I go, it seems that I would want to maximize my monthly benefit, which would come at age 70. How would 'file and suspend' earlier be beneficial? It appears that it only presents flexibility and more options in the case of unexpected events. I have the 'nest egg', so don't really need to build another one, (assuming the economy doesn't do anything drastic, which who knows if it will).
No spouse in the picture, and probably won't be one in the future.
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Thanks again for focusing my thoughts and asking some pointed questions. I appreciate the input that acts to help me understand my own situation and the opportunities available to me. There are a lot of different ways I can go. So many choices.
The file and suspend at full retirement age does give you options. Suppose that at age 66 you would be entitled to 2000 a month, but you are healthy and want to keep working to age 70, or at least not collect till then allowing for the 8% a year increase in that 2000. Now suppose at age 68 you become ill or disabled. If you had filed and suspended at age 66, then you would have the option of now getting 2332 a month starting when you became ill at 68 or a lump sum of $48,000. and then $2000 a month from then on.
So file and suspend gives you options and costs you nothing in terms of waiting to collect a higher benefit if you want too.
Yup. Clear enough . . . I think. It's like an insurance policy.
When I 'file and suspend' at age 66, I can...
1.) Delay receiving benefits until some future date, and the amount I receive at that time will be calculated on my age at that time. The longer I wait...the more per month I'll get. After age 70, there is no benefit in waiting to receive benefits.
2.) Something happens and I need a chunk of change. I can have them cut me a check for my 'savings', (the amount per month since age 66 multiplied by the number of months till I have them draft me a check - but when I start receiving benefits, it would get the amount per month that it was at age 66, no matter how old I was at that time.
Sounds like a good deal. It's worth it for me to wait as long as possible before drawing benefits. My statement yesterday says that at my FRA, I would get about a Ulysses S. Grant shy of $2500. If I can hold out until age 70, I'd get a couple of Andrew Jackson's more that $3300. I can live on that . . . if I don't have a mortgage, or if I do, a small one...and I'll have to stop buying so many 'toys'. I'm feeling more secure about my future. Might even be able to get that house in southern France where I can spend part of each year.
This thread is missing the obvious. CBO's projection on the Trust Fund is 17 years. That is in a good economy. Someone turning 67 today, expects to live 17.7 years. A female expects to live about 19 years when she turns 67. The point of old-age insurance is to manage the risk of oldage.
Holding out only makes sense to the extent that you continue to have a source of income outside of Social Security. Putting all of your eggs in that basket is a bit risky.
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