Social Security
 

I would like to hear thoughts about the decision of when to start taking Social Security payouts. I can see my expected payouts from ages 62 to 70, I understand how to calculate the future value of money and I know about the magical 8% annual return. I'm just curious what types of factors entered into your decision about taking the payouts early, at full retirement or delaying until 70.

Let's stay away from unrelated comments to derail the thread. I've got the decision coming up and you guys represent a wide sample of intelligent opinions. It's a personal decision and everybody's situation is different, but I'm curious if anyone has an idea that hasn't occurred to me yet. Thank you very much for any help you can offer.

My understanding is that there is no correct answer and considerations as to whether applying as soon as you can versus waiting to max out is based on actuarial calculations and how long one will live. Clearly most of us have no idea how long we'll live. My father was a lifelong smoker and died in his early sixties - by comparison I'm 69. My mother lived with a lifelong smoker and died in her early 80s. Not much help for me, a lifelong non-smoker.

Most people will tell you to wait until you max out your potential monthly SSI benefits, and maybe I should have done that. However, I didn't. I retired at the age of sixty, worked part-time for a few years and then starting drawing SSI benefits so I could quit my part-time teaching job(s) and fully retire. For me, that was the right choice. For someone who loves their job or has the financial wherewithal to wait or plans to live a long time, the decision will probably be to wait for full SSI benefits...

For most of us, hitting your 60's means the end is in sight. It's no longer something that's going to happen some day. Waiting beyond 62 reduces the gold in your "golden years" though it may increase it financially.

I took mine at 62 because I didn't really need the extra few hundred I would get for waiting. Taking it early allowed and allows me to help some others close to me and do more of the things I want while I still can. I'm 70 now and don't regret the decision for an instant.

On the other hand, if my retirement finances had been marginal, I would have waited a little longer.

Well, have to say I am facing the same decisions. I have set a retirement date for Sept 2020 and I will have just turned SS eligible. I met with my financial planner a couple of weeks ago and went over everything in detail.

We made the decision to hold off for a least a year, but it was based simply on if I needed to draw on it at that point. Based on numbers, it seemed like I could get by without it for a couple of years and then have 16% more per month when maybe I needed it more. It was also nice to think in a couple of years, I would see a raise in my monthly payout without really changing what I was drawing from anywhere else.

When my brother retired, he was advised to take it right away with the thought being if you took it at 62 he would be drawing money for up to 8 years before maxing out his potential benefits, which would more than make up for the extra he would have gotten at 70...

So I think beyond the numbers, it is really about being comfortable with what you will have monthly from other sources. If not enough, I would draw right away, if you can get by for a while, why not wait. This may be very simplified, but it is the strategy we came up with. I have to keep things simple.

My decision to wait was hard for the fact of all the money i had to leave on the table.
At 62 i have a daughter under 18(she is 11).
So waiting 4.6 years i lose the $700(app) a month for her until she is 18
I loose my wifes app $700 a month as a care giver for my daughter until she is 16
I make too much money to draw now and since I can't they can't.
The good thing is at FRA my wife will be able to draw for a few months and my daughter can until 18
The plan is that will be her collage money

Hmmmmmm.....
 

Kerbie,

Health was my #1. Financial set-up # 1A. Job burn-out #2. If you are relatively healthy, and financially good to go, it makes sense(cents:D) to use your time and assets to do what you have always wanted to do. Of course, if you have a career that is in that vein.....:guitar:

It's all about your financial security - how much savings/IRA you have to draw on.
For me, it's even more complicated - divorce imminent, still paying off house (separation agreement already has 7 years maximum of that - so I will have to keep working until 70).

If you want to retire early but would like the max amount at 70, you can always buy an immediate annuity out of your IRA to make up the difference.

Everyone must evaluate the SS decision based on their total income streams over retirement years. I (we, including wife) have very small defined payment pensions and 98% of future non-SS income stream in IRA accounts.

I retired at 62 and started SS at 66 (FRA). One year later my wife started spousal SS (one half of mine) while hers will max out at 70. SS stops when you die, IRA doesn’t.

Receiving a reduced SS income over my lifetime (don’t expect to live much beyond 95 years) is offset by keeping that amount in my IRA which earns more than the 8% per year I forego not waiting to 70 for max payment. The tax-free contributions continue to compound.

Same decision tree in place here Kerbie. My math is a little simpler, as I am still working at age 66 and hope to work until 70 at which time, the benefit will be about $48,000 per year. IMO, that is such a significant jump (from $26,000 - $48,000), that it's worth delaying as long as possible.

We waited until I turned 66 in July of this year because it meant another $500 per month and we didn't need the SS to pay our bills. I began doing woodworking out of the house about 3 years ago when the company I worked for pulled out of Louisiana and we didn't want to move where they had a spot waiting for me. My (younger) wife still drives downtown to work every day and she'll continue for another 5 or 6 years.

If we had chosen for me to get SS at 62 then that would cap what I could make in the shop. Now that we're getting the SS income we're doubling up on our house note and will have that paid off in 3 years (about 10 years into a 15 year note, so it will end up being about 5 years early and save a boatload on interest). Once we do that we'll only have utilities, food, and whatever we choose to buy (which isn't much).

Waiting until I turn 72 as opposed to 66 would mean losing 6 years of SS and not paying the house off early. It also would take until about age 90 for the two amounts to equal each other based on the spreadsheet I did for our calculations. So for us, the decision to begin SS at 66 was easy.

David

As mentioned, the key is knowing how long you are going to live.

I don't expect to be long-lived due to a health issue that nearly killed me back when I was 21, and surely took a few years off of my life. And I was a LEO for 28 years, and statistics show our life expectancy to be below normal due to the stresses of the profession.

So I'm shooting for 75 years. Anything more will be gravy. I'm 64 now, retired at 55, and started taking SS at 62.

Those are the factors I considered. Also as mentioned, everybody is different. It's a crap shoot, all you can do is make the best decision you can based on your personal factors and see what happens.

On a separate subject related to SS, is anyone more of an expert than I when it comes to knowing the future of SS in about 15 years or so. I've read up a little a bit on it, but I'm still not sure.

With all due respect, robj, that may get into a conversation we don't want to have here. I understand the need to know, but this isn't the best place.

Great opinions, guys... thank you! Interesting how different they are and that is what I expected.

I'll probably face this decision somewhere between 3-15 months from now, but that's still up in the air. I understand the importance of one's life expectancy, but we have to face this without knowing the answer to that question. I'm enjoying all the opinions... thanks.