When Best to start collecting Social Security?
 

David (Targa911s) mentioned in his birthday thread that he's 62 and is going to start collecting SS next month. My BIL hit 62 a few months ago and got a good union pension and began collecting SS as well. So I got to thinking when best to start collecting it. I will "retire" in about 5 years when I hit age 64.

My SS in today's dollars would be as follows:

Age 62-$1,869/mo or $22,408/year

Age 66-$2,576/mo or $30,916/year

Age 70-$3,462/mo or $41,544/year

Assuming I live to be 80 (who knows, lifestyle doesn't predict much more, but anyway). I used this Net Present Value Calculator

Present Value Calculator

assuming 2% Cost of Living adjustment. Also, it assumes that SS doesn't change, they don't "means test" me, etc.

I get the following NPVs:

Retire at 62- $358,xxx

Retire at 64-$326,xxx

Retire at 66- $405,xxx

Retire at 70-$414,xxx

It seems odd, but my NPV would be higher retiring at 62 rather than 64, because I'd get two years more of SS payments from age 62 to age 64 at the lower benefit range. $1,869/mo if I retire at either 62 or 64. That is kind of academic since to get the most out of my employer's pension funds, I really need to retire at 64 anyway.

If you don't need the money, Like my BIL, who has a nice comfortable pension, it makes more sense, to me at least, to retire at 64, but not apply for SS until age 66. I'd get a net present value of about $80K more up until age 80.

Thoughts?

I retired at age 64 and while I did the same math work up as you did, decided I wanted to be able to just teach some evening college computer classes with a lot less stress than my "day" job as an Oracle DBA. About a week into the new year, we had a bad storm roll into San Diego and I was laying in bed, drinking my morning cup of coffee and reading the paper WATCHING the traffic nightmare and the thought occurred to me that retiring was the best decision I had made in many years! I think it is not all about the $$$?

I hope you have checked to make sure the union retirement does not have any effect of your SS payment? My racing buddy found he was not eligible for SS because of the employee union setup they had. Not sure exactly what it is but he lost on the SS.

Finally, if you do any work before you get to age 65 then make sure to watch how much you make as there is a sliding limit.

And EXACTLY what makes you think that there will be a SS when you retire?

There is also the factor of wanting the money during your younger, more active years to travel, buy a Porsche, golf....etc. With all of the health issues I have been through, i'm going to take it as soon as I can, reduced amount or not, so I can enjoy life as long as I can. I would hate to wait until 70 to get the big money and then have something happen that I couldn't enjoy it.

I have a nice company pension, along with a decent 401K account that means I probably won't really need the SS to live comfortably, but I want to help my kids, travel and not worry about buying a new vehicle or buying old ones to fix up.

I think by the time i'm 80, I will have slowed down enough to not need the extra money and will live a pretty simple, cheap life.

Agree with all the sentiments. Get it while you can makes a lot of sense. And TABS, as I stated, it may or may not be there.

With all the trillion$ being falsely pumped into the economy. heavy inflation will eventually happen. How bad it will be or how soon it will happen is anybody's guess. This points to taking it as soon as you can get it. As Tabs points out, no real guarantee how long it will be there either.

What the Government gives, the Goverment can take away.

I suspect folks will get every single dollar they're promised under SS. The problem is those dollars are going to be worth a fraction of what they are currently due to inflation and currency devaluation.

I look at SS as beer money. My real retirement fun is a mix of 401k, private investment, etc. maybe a reverse mortgage thrown in if necessary but I'd prefer the kids get the house(s) free and clear instead.

I guess, unlike my parents, or my inlaws, I would love to help my kids financially as much as possible to make thier lives a bit easier than mine. Taking SS early would allow me that, because, rather like Porshe-O-phile, I look at it as beer money or mad money.

My thoughts exactly regarding my own situation. That's why I'm working getting my rentals houses sorted. I suspect in New Zealand, depending on who is in government at the time, it will start to be means tested a week or two before I'm eligible.

I thought that if you had certain assets, retirement income, etc., you can't even collect SS? I could be wrong, but thought I had hear that. I'm just way too young to be thinking of that stuff quite yet :D

Income earned while drawing SS, not pensions, can count against you. I just re-ran the numbers from drawing at 64 and 66 up to age 70, and I'd pull in more money drawing earlier up to that age (70). I heard the radio financial planner Ric Edelman once talk about how you can get very, very screwed by the IRS when pulling money from your IRA/401K if you miscalculate your expect number of years between retirement and when you kick the bucket. IIRC, he gave an example where the penalties can be over 100% of what you draw in a given year.

Hi guys, I recently read a article in Kiplinger's, Retirement Report.
Titled Strategies to boost your Social Security.
Lots of infor: the fundamentals, if you're single, if your married, smart strategies for married couples etc.

They also offer a customized report for optimizing your own benefits at
kiplinger.socialsecuritysolutions.com, might be worth a look.

Rather than look at the NPV, look at SS as earned income replacement. Maximize your earned income replacement via pension, SS, immediate annuity and investment earnings.

Under the current process SS benefits go up by 8% per year making it a very good investment, when delayed. If you delay until the end you will be maximizing your monthly SS income and have replaced a greater portion of your earned income. This may or may not be the maximum value. That will depend on how long you live. - if you happen to out live the averages -this could be the winning strategy.

This also gives a method of actually planning the use of your other assets. A portion of them can be dedicated to providing incremental income until SS starts. It may even make sense to use an immediate annuity to convert a portion of your assets into a specific income stream for a period certain - I.e. the number of years between retirement and age 70 social security starting.

The benefit of each of these steps is it may allow you to be more comfortable with a more aggressive investment portfolio as you have bought a significant amount of time with a known outcome, this may increase overall long term net worth for estate planning purposes. If nothing else it may allow you to sleep with less worrying about the investment markets and their impact on your future lifestyle.

Hopefully, you gave your kids all the tools when they were young to become successful adults, so they don't need your help. I sure would hate for my folks to suffer a dime because of me. I'm 41 and can't bear the thought of making my folks pay for anything when we're together.

I turned 55 yesterday and plan to retire in 5 years when I'm 60. Have a company pension and 401k. I will probably start collecting SS when I'm 62-63. I could care less that it will be a reduced amount, there is no guarantee how long I will live. If it's 2 years or 20 no difference to me.

Nah. You paid into it and, when your time comes, it's yours for the taking.

removed - ns

HAHAHAHA!

FWIW, you, Motion, are one of a very few on this forum that I'd buy a beer. :D

I don't fear for thier futures, we have taught them the true meaning of a dollar and both have good work ethics. I know many times in our 25 years of marriage, it sure would have been nice to get some of the help our friends were getting from thier parents, like help on a home down payment, family trips, paying off student loans when grandkids came, having a car fixed when they couldn't afford it.

No one on their deathbed said "I wished I'd worked more." Take your piece of the pie and enjoy retirement. Besides, any responsible, sane person has already set themselves to live on a more frugal path when they retire anyway. Take what you can as early as you can and adjust your lifestyle accordingly.

I did ALL that math. Go at 62 Hugh. Enjoy the money while yo are young. Waiting is not worth it.

As a responsible, sane person, one should set one's self to live on a less frugal path when they retire...IF they are content with bowing to having been serfs to their employers and being content with bowing down, saying, in effect, Oh, thank you for setting me free to live out my life frugally!

Screw that, amigo!!! Wake the fk up and smell the fking coffee! You are worth more than that! You are worth as much as any money grubbing, capitalist pig employer you ever had! Why the fk denigrate yourself to a station below theirs simply because you we're a hard worker, but weren't of their money grubbing, vulture mindset?!!

Nice contribution to the thread Darisc. WTF is wrong with you? I post something that I think might be interesting to some of the readers here. Yet you have to throw insults and garbage out in a personal attack. I don't attack your views, why do you attack mine? And this isn't even PARF.

You are just like many of the limousine liberals that I interact with in Hollywood every day:

If I don't agree with you, I must be a cretin,
If I don't agree with you, I must be stupid,
If I don't agree with you, I must be a racist,
If I don't agree with you, I must be a bigot (by the way you called me a bigot more than once). If you were "smart" you might look up the definition of the word. It means someone who won't consider the opinions or beliefs of others; like you.

BTW, if you're the removed - ns , "artist" from the other thread, your "art work" sucks.

When I retire, I plan on keeping my condo in Oxnard for the Winters and living perhaps in Coeur d' Alene, during the Summers. And I'll live out of CA six months plus one day, so I won't be paying CA income taxes. I see nothing wrong with looking out for my financial future. And so I grouse about taxes, why shouldn't I? It goes to pay for a lot of things I don't agree with, like your Social Security. I'll get my financial planners thoughts when I see him.

I have kicked this around as well. I'm 62. For every year you delay taking SS, the monthly amount goes up 7% which is not a bad return on money. I'm taking SS at 66 whether I'm working or not.

You guys who continue to work must like your jobs more than I do, but mine is hot factory work 6-7 days a week.

"For every year you delay taking SS, the monthly amount goes up 7% which is not a bad return on money."
~~~~~~~~~~~~~~~~
Where else do you get a guaranteed 7% these days?
However, every financial adviser I've heard talk about it says take it when you can.
I did.

Hugh, are you getting those letters that usually come out twice a year or so that give you the estimate on what you should get? Hopefully you do and I would suggest that after the next one to take a trip to the closest SS office (figure a day at least due to all the Mexicans there) and have them run things for you. Get the estimate in writing from whoever is at the window and ask that person to sign it too. As noted there are things that can cause it to go down and sometimes even be stopped.

My Navy retirement would have been one to cause an offset BUT I am over 30% disabled so it does not count against SS. The lady who worked my Navy retirement kept holding out for 30% or more, never knew why until 24 years later!

It is simple. You take it as soon as you can. Because the assumption that you make it to xxx years is just that - an assumption. If you kick the bucket early, you will leave money on the table. They give such a great "return" on later start dates, because chances of guys pushing the daisies go up by that same rate. You think they don't have mathematicians working for the govt.?

Seriously - once you are over 40 it is carpe diem.

JMHO!

G

In looking at it more, I agree, I'll take it as soon as I can. You are all correct. No guarantee I won't keel over or get hit buy a bus.

Looks like you are sobering up Hugh! ;) Here another way to put it:

If you die relatively early, great - you got the most out of it and so will your heirs, as you won't tap into other funds during that time.
If you die late - darn it, you left a few $ on the table by making 90 years - good problem to have, no? ;)

Take care,

G

Mmmm...much better to buy a bus than get hit buy won! :eek:

Whadevah u do, DON'T let the IRS find out....they'll tax ya even more!!? :eek:

All so, yule (belated Merry Christmas!) be less likely to keel over early if you take the internuts less seriously. :rolleyes: :D

Sorry you think my art sucks :( ...AH HAHAHA, :D :D :D

David, I don't take the internets very seriously. Certainly not you. And belated Merry Xmas to you as well. If you are able to make a living selling your "art work" good for you.

Hugh,

Thanks for the name drop I was able to do some quick searching around on google before the mod's took away his name.

My dad is going through a similar dilemma now - military pension, state pension and SS plus a few private investments - he labored over this for several months and has decided to retire in July, take everything he can from all sources as early as possible - I think my thoughts re: impending inflation and continued devaluation of the usd may have helped - better (IMHO) to take the dollars as early as you can when they're still worth something. Also he gets health insurance for life (nice retirement benefit) so that simplifies things quite a bit - if you end up with a serious medical condition as you get older all bets are off - something uncovered or only partially covered can wipe out everything. Happens every day unfortunately. May want to factor that one in...

Darsc seriously, wtf if your problem anyway? Follow the advice of Bambi's mother for once.

The break even age
 

I posted some infor. earlier in the thread. Then remembered I have Edelman's book in my library. He's answer: It also depends on whether you will stop working at 62. If you are planning to cease receiving earned income (as opposed to investment income) go ahead and start collecting SS at 62. The break even age is 74. If you live beyond age 74 you might wish you waited after age 66.
However, if you don't need the money at 62 take it and invest it.
The interest earn could more than offset the fact that you're receiving a smaller amount. SmileWavy

I will take it as soon as I can, too.

I'm 62 and I've been semi retired for 2 years. I don't need any extra income at this time and my contract guarantees my current royalties through 2020, rental income should continue too, so I'll wait until I'm 66, see what the landscape looks like, and decide what to do then. I'll have to take my health a that age into account as well as my income.
It's tough to start looking at spending down your assets after having put 60 years into building them up. Working and saving is a hard habit to break. My biggest challenge is to not bored or get some crazy idea and start another business in the next few years.

Nothing as romantic as that. Never recovered from financial meltdowns from 2000 and 2007. Throw in a divorce and home sale in 2010. Add to that send my youngest to a private therapeutic school for 18 months - there isn't much left. Did I mention my youngest starts college in the fall.

It's just money not my life.


For those who have retired early, what are you doing for medical insurance? This is my biggest fear in budgeting for retirement. My company eliminated retire medical benefits. And for those who have such benefit, do you have a plan B when those companies eliminate that benefit?

Thank goodness I've got more years in the workforce... The financial meltdown and being laid off for nearly a year in 2009 pretty much wiped me out, add to that the birth of a child, a divorce, buying a house and a couple of other recent life-changing events and I'm pretty much spoken for until about oh... 2050 or so. And that presupposes nothing else coming up between now and then which is of course unlikely. Life is a PITA sometimes but it sure beats the alternative! I don't know how you older guys deal with major events late in life knowing you're so close to retirement. Damn scary. One of the saddest things about this recession is how many people in the closing years of their careers (late 50s/early 60s) got scheet-canned to save money. At that age it's got to be utterly scary since nobody's going to hire you again and you effectively become involuntarily retired years prior to what you'd planned, and it throws all the retirement planning into the trash bin. I know a few people it happened to. Very sad, especially if they've got no medical insurance post-"retirement".

This happened to my dad. In 2008 at age 62, his company waited until the day after my folks sold their house near the company HQ and moved to their beach house 2.5 hrs. away. Then they told him he could no longer work from home, had to give up his company car and had to be in the office every day. Fortunately, my folks have always lived well beneath their means and so it was a no brainer for my dad to just say "eff it" and then try to wring as good a severance package as he could from his company. I think his type are getting a lot rarer though and most younger folks can't afford to do that.

If you take at early as possible, dollar for doallar (and not counting growth if you invest it, etc) you GENERALLY are ahead until age 82-83 for taking it at the earleist possibele date. Of course it is fact intensive ith regard to your post entitlement earned income, recomps that occur after age 65, additional earnings credited after entitlement, etc.

FWIW I worked for the SSA for 12 years and rotinely had to these types of comparisons for people trying to decide when to take SSA. I can think of only RARE occasions when it was advisable to delay benefits.

Health insurance between the age of 62 when I want to retire, and whenever medicare kicks in is what scares me also, I have had alot of health issues that require followups.

Honestly, SS will probably be the means to pay for private health insurance for my wife and I to bridge those years.

Luckily, I kinda saw that 2007 meltdown coming and switched 401K allocations after only losing 15%. I went to a gaurenteed return investment similar to bonds for about 6 months and then caught the stocks on thier way up to gain back what I lost. My greatest joy is that my house will be paid off in 4 years, then I can really start dumping in for retirement....probably another $500 a month.