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For a married couple like us, the biggest reason to delay is so that the one who outlives the other has a bigger SS income. We can scrape by on our combined five figure monthly pension income right now, but it will be down to four figures as soon as one of us checks out. The more SS income there is when that happens, the easier the transition will be. I could care less about break-even points. And good luck on taking it early and investing it with a healthy return. I would venture to say that very few people will get a return more substantial than what delaying will get you.
I think the idea of the way the benefits are structured is an attempt to make your total benefits equal whether you start early or wait till 70. So I hear that many here are very sure about their choice, but I'm just leaning to starting at 66 for a couple reasons specific to me. One being my wife being quite a bit younger than me.
I don't think any of us can be sure which way is better. Sure, you will have a higher check each month if you wait But I'll have about $80,000 in the bank that you won't have. I'm not sure how much that $80,000 will earn over the years but I think I'd rather have the money to work with rather than getting it a few hundred a month over 15 years or so. Who knows I might change my mind
I still argue with myself all the time about the optimum time. I don't have ton of savings, and am still working, so I don't have to jump just yet- but the time is coming up fast. Here is where a spreadsheet really helps. I put in a full budget from current time out to age 75, with income/expenses plus (here is the important part), accumulated income and cash in the bank from taking early vs taking at 70. Everyone is different, like so many have mentioned, but for me, looking at the numbers at age 75 showed I was WAY behind the curve if I had waited until 70 to file. I don't know what my health will be at 80, but I do know there are things I want to do between now and that time, so will file earlier than 70. For me, best year to file toggles between 67 and 68 with wife filing at her FRA of 66 to offset some of the draw from savings.
Good luck with this decision; it is kind of important to get it right.
I think the idea of the way the benefits are structured is an attempt to make your total benefits equal whether you start early or wait till 70. So I hear that many here are very sure about their choice, but I'm just leaning to starting at 66 for a couple reasons specific to me. One being my wife being quite a bit younger than me.
I don't think any of us can be sure which way is better. Sure, you will have a higher check each month if you wait But I'll have about $80,000 in the bank that you won't have. I'm not sure how much that $80,000 will earn over the years but I think I'd rather have the money to work with rather than getting it a few hundred a month over 15 years or so. Who knows I might change my mind
I personally have no idea how long I will live. So this business of looking at break even ages is pointless for me. All I do is look at what sort of withdrawal rate will I need from my investment accounts to pay for my lifestyle during retirement. This percentage is notably lower if I delay SS checks until age 70, and so it is inherently safer than taking checks at 62 or any other age less than 70. Just to be clear I'm not changing my actual date of retirement, only the time of the first SS check.
One thing that rarely gets mentioned in these discussions is the possibility of future rules changes to the SS system.
Rules changes are likely to affect new SS filers, while existing claimants will be grandfathered in.
In that case it would be better to already be safely making claims, albeit at a lower rate, than sitting on the
sidelines hoping for a bigger payout which never happens.
We can speculate on what changes congress may make for people who are not yet getting SS payments:
another increase in FRA
means testing
limiting max payout to that at FRA, and not increasing it up to age 70
as well as changes which would affect everyone, such as changes in SS taxation which would push the break-even point out even further for those who haven't started making claims yet.
Of course no-one knows what rule changes will be made in the future, but I'd think it foolish to count on no changes at all and SS continuing the way it is today for all new filers.
No one knows what kinds of changes will have what affect. Some of the calculators that I used seem to always show 84 yoa as the break even point between taking and delaying. If I had a good sized pension and still wanted to work I would have delayed but my choices were limited due to choices I made in my 40's. Divorce yada yada.
Thats a poor reason to not delay. If/when changes are made there is plenty of time to file and/or make a decision. Even based on your logic you lose NOTHING but chance to gain significantly by delaying. If you file early you have locked in your loss of income.
I still don't get people that say they can afford to delay to 70, but instead "compromise" and will file at FRA. If one can TRULY afford to delay, then why on earth is it a good deal to delay to FRA to prevent losing 6% a year, and not an even better deal to prevent losing 8% a year from FRA to 70??.
The break even point is a moronic way to evaluate the decision to delay or not, UNLESS you KNOW you will be dying before age 82, and plan to spend such that there is nothing left by that age. Then it makes sense, becuase you will have USED that money. But if you will be forced to live on the same basic income amount whether you delay or not, then delaying always gives you more lower taxed income. You are just living off of savings at that level while delaying.
Of course, if you only have enough saved to afford delaying to FRA, or are actually working until FRA, then have to retire, that is perfectly understandable.. I'm not criticizing anyone for deciding to retire at whatever age they have to or even FEEL they have to and take it early because thats what it takes to live. I'm only referring to those with enough wherewithal that either choice is live able, but instead choose the bird in the hand incase they die young. Who plans a retirement around dying young??
Last edited by Perryinva; 07-27-2016 at 11:41 AM..
One thing that rarely gets mentioned in these discussions is the possibility of future rules changes to the SS system.
Rules changes are likely to affect new SS filers, while existing claimants will be grandfathered in.
In that case it would be better to already be safely making claims, albeit at a lower rate, than sitting on the
sidelines hoping for a bigger payout which never happens.
We can speculate on what changes congress may make for people who are not yet getting SS payments:
another increase in FRA
means testing
limiting max payout to that at FRA, and not increasing it up to age 70
as well as changes which would affect everyone, such as changes in SS taxation which would push the break-even point out even further for those who haven't started making claims yet.
Of course no-one knows what rule changes will be made in the future, but I'd think it foolish to count on no changes at all and SS continuing the way it is today for all new filers.
It's true that the rules can be changed. But what's realistic? How much do you think Congress would cut from someone who is already 62 or older?
A week or two ago I went through the math, looking at what sort of benefit cut it would take to wash out the SWR gain achieved in delaying. Even a 20% cut in benefits does not erase the gain. Do you expect Congress would dare announce a cut in excess of that, effective immediately for someone in their 60s?
There's precedent with the File and Suspend changes which affected people at FRA or older, with just 180 days notice. That cost people several years of spousal benefits, or forced them to not suspend and start taking smaller payments before reaching 70. So yes, I think Congress is fine with effectively cutting benefits for retirees in their 60s with short notice. Although I agree that it wouldn't be with no notice, so there would be some window to take action, but it might not be what you planned.
And to be clear, I don't think this alone is a reason to take benefits early. It's just one more thing for people to consider based on their circumstances and to factor in along with all the math and the level of risk they're comfortable with.
There's precedent with the File and Suspend changes which affected people at FRA or older, with just 180 days notice. That cost people several years of spousal benefits, or forced them to not suspend and start taking smaller payments before reaching 70. So yes, I think Congress is fine with effectively cutting benefits for retirees in their 60s with short notice. Although I agree that it wouldn't be with no notice, so there would be some window to take action, but it might not be what you planned.
Sure. This one affects me, although I'm not yet in my 60s. I expect Congress felt they could get by with this because relatively few people were even aware that these rules existed.
Changing the FRA or the primary benefit forumula requires a lot more delicate handling and more warning. Of course Congress has the power to do whatever they choose, but keep in mind the political reality of the issue.
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