Why I took Social Security at age 62 (vacations, spouses, vacation)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Everyone has a different situation. No one size fits all. The key is figuring out what your situation is or even situations. My wife died suddenly and her SS ceased. I was not hurt financially but a couple who depend on two SS incomes would be. If one spouse has health issues, and if possible, waiting to take SS might be a good idea. One can die and leave the other destitute.
You just have to study your situation in your own particular context.
Can you delay collecting ss from say 62 to 70, not work and still collect full retirement ss at 70?
Yes, but your benefits are based on your highest 35 years of earnings so if you do not have 35 years by 62 you will have some zero years and your benefit will be reduced due to earnings, not when you start to collect.
To the OP: sounds like you did what you felt you had to do. If you CAN'T work anymore,mthen you have no choice. My only devils advocate caveat is to be aware that in some instances (and I Have no idea if this is true for you) "can't" work at 62 is really "really really don't want to work, and it sounds like taking SS at 62 is a way out, as long as I cut my lifestyle way back". All those relatives that are so happy...did they have to cut back as much as you? Or are they living pretty much the same? Do you know what they have saved for future "what ifs"? You are talking 4% of your IRA or 401k plus your age 62 SSI...there are no safe harbors to i vest your savings at 4%, so you have it invested somehow. What would happen if you lost half of your savings because of a market crash,theft, or fraud?
I'm not judging, I'm just presenting possibilities. I don't know (or really care) if you lived way below your means or if you are even aware of where you should have been living spending wise, based on your income. The VAST majority of Americans do not live below their means and save enough for the future. Being in good company is of little satisfaction when you are all up $hits creek without a paddle.
So the other posters on the other forums are just saying :If you have to scrimp and live extra frugal JUST to get by at 62, then yea, while techically you CAN retire, in al honesty you really shouldn't because you have zero leeway to cut even more if you have to because your "just enough" now becomes "not even close enough". Because at age 72, if you thought you couldn't work at 62, then fuggetaboutit then.
They tell you to delay as long as you can because that guarantees you more income that you so not have to worry about not being there when you need it, and it grows even greater and faster from there. That's just the way it is.
Unfortunately, a bad work situation can adversely affect one's physical and mental health. Therefore, it's often a very wise decision to give up the job and take SS at an earlier age.
many times the only thing that change's is one form of stress for another . if you really are not funded well enough than every unexpected expense takes it's toll .
having to sweat out the water heater breaking or the roof or dental can be pretty stressful as you watch your savings and income get slashed farther with each expense waiting for the other shoe to drop can be stressful itself when you are under funded .
as many find out if they thought working at 62 was tough or finding a job tough just try it at 80 ..
Last edited by mathjak107; 09-10-2016 at 02:43 AM..
if you average things out you gain 25% in 4 years which works out to 6.25% but the amount actually varies with some years higher and some years lower .
To the OP: sounds like you did what you felt you had to do. If you CAN'T work anymore,mthen you have no choice. My only devils advocate caveat is to be aware that in some instances (and I Have no idea if this is true for you) "can't" work at 62 is really "really really don't want to work, and it sounds like taking SS at 62 is a way out, as long as I cut my lifestyle way back". All those relatives that are so happy...did they have to cut back as much as you? Or are they living pretty much the same? Do you know what they have saved for future "what ifs"? You are talking 4% of your IRA or 401k plus your age 62 SSI...there are no safe harbors to i vest your savings at 4%, so you have it invested somehow. What would happen if you lost half of your savings because of a market crash,theft, or fraud?
I'm not judging, I'm just presenting possibilities. I don't know (or really care) if you lived way below your means or if you are even aware of where you should have been living spending wise, based on your income. The VAST majority of Americans do not live below their means and save enough for the future. Being in good company is of little satisfaction when you are all up $hits creek without a paddle.
So the other posters on the other forums are just saying :If you have to scrimp and live extra frugal JUST to get by at 62, then yea, while techically you CAN retire, in al honesty you really shouldn't because you have zero leeway to cut even more if you have to because your "just enough" now becomes "not even close enough". Because at age 72, if you thought you couldn't work at 62, then fuggetaboutit then.
They tell you to delay as long as you can because that guarantees you more income that you so not have to worry about not being there when you need it, and it grows even greater and faster from there. That's just the way it is.
guarantee's are comforting in retirement . i think yesterdays stock market action confirms that aspect . we saw about 30k worth of volatility yesterday in one session . so delaying ss and trading 8 years of draw down for what could be decades of a almost 70% bigger check plus cola's can make things a lot more calmer .
the part where most people get confused is they think you actually wait until 70 to make use of the money .
that should not be the case . your draw is your draw day 1. whether it is all savings for a while or savings and ss later and the bigger check just refills you later , it should not effect your draw rate plans .
if it does it means you do not have the option to delay because you are to underfunded to have that choice .
you should comfortably be able to draw day 1 the same amount you put in place had you taken ss early .
in our case we set goal posts based on 4% of our portfilio plus all the other income we get including ss when it happens . it does not mean we will spend that much but we do stay between the goal lines .
so that initial draw is already based on all income plus our portfolio plus future ss .
when ss kicks in we will be drawing about 2% from our portfolio at that point or about 1/2 as much . our income we draw does not change but at that point the portfolio starts to refill as gains are allowed to compound now at a greater rate since we are drawing out 1/2 as much money now that ss kicks in for the rest of both our lives .
assuming below average markets and average sequencing and life expectancy you should have a bigger balance delaying eventually than taking it early . you need at least average market returns taking ss early to duplicate that .
delaying you have more longevity risk , taking it early more market risk .
being a couple adds nothing to improve the outcome of the markets but it certainly stacks the odds in your favor as a couple so longevity risk has the best chance of winning in the end .
for a single it is not so clear cut . taking it early may work out better . it is much different having 2 horses in a race with one bet than just 1 horse for 1 bet
Last edited by mathjak107; 09-10-2016 at 05:24 AM..
I said it started at 5% at 62 and gradually increased from there, not reaching 8% until FRA. Your figures support my post.
it averages about 6.25% until fra . i would be careful saying 5% as even though the first year is 5% folks here will not follow the fact that it is a rising glide path and just assume it is 5% . it is not really a compounded increase so the numbers get fluky as you move out in time .
much easier to just say 6% between 62-fra . it actually is a bit higher but close enough .
Last edited by mathjak107; 09-10-2016 at 05:20 AM..
On the date of my retirement I had about $400,000 in my IRA and 401K accounts combined. I used that as a base for my 4% distribution. The 4% was $16,000 a year, or $1333.00 a month. My Social Security payment is $1167.00 a month. So I have $2500 a month to spend. (I also have $50K in the bank for emergencies, etc.)
So with a maximum budget of $2500.00 a month I would have had to take out 7.5% of my retirement assets if I did not collect Social Security to meet my spending needs- assuming no other income. Some of my friends told me that I should have deferred Social Security until I was seventy and take out that 7.5% each year, plus a 3% annual cost of living increase (3% of $2500.00)
YES, I SAID 9% in MY FIRST POST but I was wrong, it was 7.5%
I told them if the stock market did fine, during the next 8 years I would be fine and could come out ahead even if my principal dropped 20-30%, because my Social Security Check would be close to $1900 plus any COLA increases at age seventy, so I would not need as much money from my IRA 401K and I would be eight years closer to death.
Financial Experts: What do you think of my friends plan for me to defer Social Security to 70, pull out 7.5% a year out of my $400K in retirement accounts until age 2024? Then re look at my situation then after the larger Social Security checks start coming out in 2024?
All good stuff, and all been posted many times, but some threads are just so long that finding the good stuff requires a lot of wading. And please don't be offended or put off or feel the need to insist on justifying ones own personal decision, especially with the typical "not everyone made that kind of money " or "not everyone needs that kind of money" or the ever popular, "I can come out farther ahead by taking SS early and investing it, so losing that money up front makes the break even point too far away".
The proponents of delayed filing are fully aware of all those points. We are not condemning anyones decision or trying to feel superior or conversely you inferior about your decision. What is presented is typically just math vs time, guaranteed income vs risk, a superior annuity vs managing ones own savings.
It is not a formula for certain easy living. But there is just SO much misinformation provided by not understanding the real income that delaying provides. On another post, as an example I link to SSAnalyze, an excellent free SS income calculator that allows one to input various COLA scenarios and what ever date they want to file at, and provides amounts collected at each age, in actual amounts collected AT that age. All you need to know is your SS FRA amount. It is VERY misleading in an apples to apples sense to compare the SSAs estimates, which are always in TODAYS dollars, with all other future income calculations which are always in the FUTURE DATES DOLLARS. In the SSA estimates, they are reporting to you the equivalent inflationary buying power of your SSI. So I will say it, NO, the numbers that are quoted as percentages gained by delaying are incorrect, UNLESS inflation is near zero, then the actual amount collected and the compounding from then on is significantly more, even with modest inflation. Again, its not about how much you collected if you die early, rather about how much guaranteed income you have if you live longer.
In one example, per the SSA provided information, if one were to collect at 62 and get $2400/mo, with an FRA of $2800/mo, the age 70 filing amount is about $3430/mo. So collecting at 70, you will get the amount that $3430/mo buys today, based on their assumptions. However, when one plugs in just 1.5% COLA (and the average over the last 25 years is 2.39%), the ACTUAL amount that the check will be is $4250. If the default 25 year average COLA is used the check becomes $4670/mo.
I wish there were some posters here that that had filed at 70, or FRA, and would/could report what the SSA File at FRA or age 70 numbers were when they were 62, and report the difference. The SSA reports in todays dollars so that one can get a feel for the equivalent living income difference that delaying will accomplish.
The reality, though, is that no one ever compares deflated future income with their current income. They always compare actual future income to today's income. (Ie: I'm living on $48k a year now, no reason I can't live on a little less if I cut back a bit, since I will pay less taxes and have no mortgage) but almost everyone compares current income DEFLATED to past income. (Ie: I make $48k now, and even though I Only made $22k went I was 25 years younger, EVERYTHING is so much more expensive today, I'm barely ahead of where I was).
Inflation is a deadly enemy to a fixed income. And as is often noted, even SSI does not keep up with real inflation, it is ALWAYS less. So if I can save enough to live the way I want from 62 to 70, so that I can get 2.125 times more from SSI, then I will. If I couldn't or wouldn't save enough, then I'm not ready financially to retire, if I really take inflation and increasing health care etc, etc in to account.
The further irony is that if I have saved enough, and still chose to file early, it makes far less difference than if I had to file at 62 because I didn't have enough. For the very wealthy it makes no dfifference when they file. The tax advantages are negligible. For the lowest income there isn't a choice...they have to file when they stop working in order to live. Some just work until 70, so they have more from SSI with less years to live off of it. So they knew that they are living on $2600/mo now, but if they get SSI at 62 and collect $1300, then the other $1300 has to come from somewhere else. Or if they work until 70 they het a check over $2600/mo. Or work until 67, and increase their savings now that they realize their situation, and collect a $2200/mo check, and then have to come up with much less to supplement.
So you are making the exact same mistake. You see a check for $1167 TODAY, vs a $1900 check (as reported to you by SSA) at 70 and casually throw in "plus COLAs". If the COLAs are just 1.5% then that $1900 is really $2470 when you are 70. The RISK is what will your saving do, while you are drawing from it. But you only have that magnitude of risk for 8 years. Once you are 70, your dependence on your savings, FOR INCOME, has dropped to where you have many years to ride the ups and downs. Would I gradually use $240000 out of my $400000 (remember, it's not like a REAL annuity where you cough up the full amount up front, you get to reduce your savings by 7.5% a month instead. ) so that I would barely have to draw from my remaining $160000, (plus whatever it earned over that 8 years)....yes, I probably would. But I Would be the first person to admit that Incan easily see where that is an extremely difficult decision to make. Snd If I Had the choice, I would have worked longer rather than put myself at that slim a margin. If the markets suddenly do tank while you are drawing down, you can always file then with whatever your increases would have been, or even get a 6 month do over and collect a lump sum of 6 months and checks as if you filed 6 months earlier. But once you lock in your lower SSI and depend way more on drawing from your savings and the market tanks...then you have no where to go but to reduce your income further to accommodate that. Risk living with the market for 8 years...or risk living with it the rest of your life.
Use SSAnalyze. Its on Bedrock Capital's site, but is easy to find with google and has been referenced in many SS articles.
Last edited by Perryinva; 09-10-2016 at 07:06 AM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
