Why Wouldn’t You Take Social Security at 62? (resident, withdrawal, Portugal)
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What’s the difference between that and any other kind of deferred gratification? Lots of people live frugally so they can accumulate wealth. This is no different from living frugally for 8 years and investing the money in an annuity. There’s also survivor benefits to consider. If you’re the dominant wage earner, your spouse is going to see a big cash flow hit if you collect at 62 and die at 70. Not everyone is in your set of circumstances where you have a big pile of investable assets.
I generally agree with your viewpoint but it doesn’t apply to everyone. I’m certainly not planning to spend less now than in my 70s. Our difference is that I’m more conservative and want the sure thing age 70 Social Security check. I’m an engineer who spent their career doing worst case contingency planning. I tend to only take risks when it’s my only option. What I care about is not being poor. My age 70 check assures that I won’t ever be poor.
not everyone will have enough assets to safely lay out , take the draw up front and enjoy the same level of spending early on . it is those people who need to really look at their situation and retirement spending because they either have to live on less to delay or then they really do not have a choice to delay and need the money up front .
delaying for most will not be an option without taking a pay cut early on from what they could have to spend filing early , . most of us don't like pay cuts which is why statistically so few take ss at 70 , just 2% of men and 4% of women
Well I'm 62 now and I haven't filed because I want to sell one more income property, and I don't want that extra income on my tax return until after we sell the property. It was supposed to go on the market this year but the tenant is too sick to move. He nearly died a few months ago and I just can't make him move now. That throws a monkey wrench into our plans. We don't need the money so I'll just wait.
...reducing the eventual RMD, has some real appeal.
The RMD is changing. Not sure if you are aware, but there are several proposals in Congress that are being considered, and largely they are favorable to retirees (changing the mandatory start date from 70.5 to 72, allowing for contributions to an IRA after the mandatory start date, and a shift in the naming of IRA beneficiaries). The Forbes article below gives a good overview. Nothing is settled, but something will likely pass this year.
...my opinion is it is best to take the same draw rate if you can regardless of when you file if you have the assets to have that choice ... whether delaying or early is better has lots of considerations
What does that mean? Draw rate?
At 62 I get $1,700, at 66.8 I get $2,357, at 70 I get $2,986.
The RMD is changing. Not sure if you are aware, but there are several proposals in Congress that are being considered, and largely they are favorable to retirees (changing the mandatory start date from 70.5 to 72, allowing for contributions to an IRA after the mandatory start date, and a shift in the naming of IRA beneficiaries). The Forbes article below gives a good overview. Nothing is settled, but something will likely pass this year.
all that will happen is the rmd's will get worse ... they do that with qlacs where they extended out the date where you have to take rmd's .. once you hit the date you go on an accelerated rmd schedule
At 62 I get $1,700, at 66.8 I get $2,357, at 70 I get $2,986.
When's my break even point?
i have no idea ? if you delay to 70 and retire at 62 what are you living on ? are their spousal benefits involved ? what are the ramifications of taxes at the various stages , married or single ?
are you an investor or does everything go in a bank ? how big is your portfolio if you have one and how much do you hope to draw to combine with ss ? how much extra will ss go up once you are on it if you don't collect , since you are not protected by hold harmless until you do .
The RMD is changing. Not sure if you are aware, but there are several proposals in Congress that are being considered, and largely they are favorable to retirees (changing the mandatory start date from 70.5 to 72, allowing for contributions to an IRA after the mandatory start date, and a shift in the naming of IRA beneficiaries). The Forbes article below gives a good overview. Nothing is settled, but something will likely pass this year.
Thanks for that reminder. I had heard about possible changes, but had not paid close attention. As to the impact of changes....
Quote:
Originally Posted by mathjak107
all that will happen is the rmd's will get worse ... they do that with qlacs where they extended out the date where you have to take rmd's .. once you hit the date you go on an accelerated rmd schedule
Yes, it does seem like moving back the start date could merely result in larger RMDs each year, with a compressed schedule to make up for lost time. Unless, of course, they can magically extend my life expectancy, at the same time??
My SS is very tiny due to WEP so taking it at 62 would have been a big hit. We didn’t need it because I was still working part time. Then my job disappeared so took it at 65 instead of waiting one more year for FRA.
I'm sure mathjak will respond, but my understanding (of his points) is that it's not a question of "IF." Rather, assuming we are talking about a retired worker with no income, the money to live on from 62-70 IS coming from somewhere... and that money would (or could) have been invested in something, with some level of return. Since those existing funds are being spent down (and returns lost), in order to delay SS, that is a cost that is frequently overlooked in these comparisons of 62 versus 70.
In full disclosure, I am one who ignored that aspect until now, and have been locked in on the rationale that says "where else can you get 8% guaranteed per year... of course you should delay SS." This thread has been educational, and is making me re-evaluate the strategy, even if I haven't changed my mind quite yet. So thanks for that!
I haven't ignored that, but I think there are scenarios where both options would come out on top, based on source of funds, rates of returns, etc. Even if I did retire and take SS early, I'd still have to pull from another fund to live.
Last edited by olderandwiser456; 06-13-2019 at 12:13 PM..
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