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Normal retirement age =67 for those born after 1960.

if you take early benefits, it's 6%/yr penalty. (70% payout at age 62, which is the earliest you can collect.)
If you delay till age 70, you get a 8%/yr bonus thus 24%. (no additional bonus after Age70.)

i dont expect to need to the $ when i retire but i think i can make more than 6%/yr in the stock market.
(The stock market has averaged 10%/yr for the past 30yrs, including the Tech bubble of 2000 and the real estate meltdown of 2008.)

Thus i plan to take benefits at age 62.

How about you (Early, normal, or delayed)? And WHY?

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The moment they start means testing is the moment I start looking into hookers and blow.

MoonlitHollow (Apr. 30, 2012 @ 12:23p) |

Means testing is arguably already used in the current system: The current SS retirement benefit is based on the 35 year ... (more)

ananthar (Apr. 30, 2012 @ 2:24p) |

That is a great question, however I am of the mindset that if you look at various other defined plans, such as pension, ... (more)

JaxFL (May. 07, 2012 @ 2:58p) |


I, myself, would take early. Last I heard it takes about 16-18 years (from what I remember) before it becomes a loss for you. So depends on your expiration date and needs.

yurgreat said:   
Thus i plan to take benefits at age 62.

How about you (Early, normal, or delayed)? And WHY?


I would consider the ages, at death (disregarding accidental deaths), of my parents and possibly even my grandparents. This data would not be solely determinative of my decision. But it would, along with other personal factors, influence my decision.

For example, ability to "cash in" ones SS has recently been severely circumscribed by the SSA. Not everyone is aware because this rule change was not sufficiently well publicized. But it's another decision factor, one which happens to mitigate in favor of waiting to collect. The change stinks, BTW. Out loud.

Definitely delayed.

The 10 years after you retire could also look like the last 10 years in the stock market. You could gross 0% rate of return or even lose money.

I'd speculate with personal funds or your tax-sheltered accounts. JMHO.

I plan to have enough reserves at retirement to carry me regardless of Social Security.

sayhey said:   Definitely delayed.

The 10 years after you retire could also look like the last 10 years in the stock market. You could gross 0% rate of return or even lose money.

I'd speculate with personal funds or your tax-sheltered accounts. JMHO.

I plan to have enough reserves at retirement to carry me regardless of Social Security.

I dunno about you guys but I'm at 8% annualized returns for the past 5 and 10 years.

imbatman said:   sayhey said:   Definitely delayed.

The 10 years after you retire could also look like the last 10 years in the stock market. You could gross 0% rate of return or even lose money.

I'd speculate with personal funds or your tax-sheltered accounts. JMHO.

I plan to have enough reserves at retirement to carry me regardless of Social Security.

I dunno about you guys but I'm at 8% annualized returns for the past 5 and 10 years.


I dont invest in the stock market.

JaxFL said:   imbatman said:   sayhey said:   Definitely delayed.

The 10 years after you retire could also look like the last 10 years in the stock market. You could gross 0% rate of return or even lose money.

I'd speculate with personal funds or your tax-sheltered accounts. JMHO.

I plan to have enough reserves at retirement to carry me regardless of Social Security.

I dunno about you guys but I'm at 8% annualized returns for the past 5 and 10 years.


I dont invest in the stock market.


OK, JaxFL. Fair enough. So tell us:

Exactly where do Floridians go these days to gamble?

yurgreat said:   How about you (Early, normal, or delayed)? And WHY?
This is a complicated decision, especially if you're married and one spouse might want to claim on the others SS record rather than their own. In many of those cases (depending on the two ages), it makes sense to file early for the spouse with less credits on their own record, get some cash from 62 til when the other spouse hits full retirement age, and then switch to getting 50% of the other persons as their spouse benefit. The fact that the less working spouse takes a hit on future benefits on their own record for starting early doesn't matter since they don't keep taking them on their own for long and upgrade to the spousal benefit after a few years. Its basically free cash you wouldnt have gotten for waiting on your own. Something similar can happen if the spouse with all the work credits dies and the less working one upgrades to a widow(er)'s benefit (again that's based on the deceased record and not the spouse's), I.e. The young trophy wife of the hard working old dude should claim early so she gets something early before switching to his benefit when he's gone. He might also want to wait longer than personally optimal, since if he takes early, that will permanently reduce his wife's widow's benefit which will likely be collected for a much longer time than just his life.

Another big factor is how your gender and health figure into the stats. The SS benefits are designed to pay out the same number of dollars to the average person over their lifespan regardless of whether they take less early or more later. I forget if there's a present value factor involved, but it doesn't matter much. What this means for you is that if you think you'll live longer than average, getting paid 1.32x starting at 70 is more money than getting .7x starting at 62 if you live long enough. Also note that the average person is a mix of male and female, so all else being equal women should delay longer given their longer than average life expectancy while men should take sooner for the opposite reason. Personal health issues and family longevity should also be weighed heavily. I ran some stats based on average female life expectancy and I think average health present day females should wait til 69-69.5 or so.

Rarely if you have kids under 18 when you hit 62, you may want to early then since you get extra SS for them on top of your regular benefit.

I know everybody online beats the market, but I don't know if that makes a huge difference here. Max SS benefits are only around $20k/year. If you take a year early at -6% relative to next year, you need to not only make slightly more than 6% to make up for this (assuming constant tax rates), but you need to keep doing that for a number of years going forward to have it work out better (until at least you reach the age when you would have otherwise optimally started your benefits). I would be cautious of assuming you can beat 6-8% in the market these days, especially on a risk-adjusted basis. When you're investing your whole nest egg in retirement, you may not have the luxury of waiting for the 30 year average to be realized, compared to say the 2007-2008 average.

There are also tax timing issues to consider, especially if you have a big regular pension or something that kicks in a 65. Getting a head start on early retirement with your SS in low income years can be good if you expect to move up several brackets down the road (or if you expect the brackets to rise in general in the future). There are phaseouts and similar things if you've got relatively low income that can make your marginal tax rate really high (much more than you might expect), so careful tax planning is definitely advised.

I just want to add that, in case you haven't already noticed, this stuff can be obscenely complex and there are millions of permutations based on joint ages, live expectancies, tax considerations, and investment assumptions. I did some free consulting for one family member and got them an extra $10k for making a good decision, but if they'd asked me at 62 instead of 65 it would have been several times that. If I knew what I know now when my parents retired, I could have gotten them well over $100k in additional lifetime benefits. Water under the bridge at this point.

Good luck.

guardian44 said:   
OK, JaxFL. Fair enough. So tell us:

Exactly where do Floridians go these days to gamble?


To the NW side of town!

How is this a complicated issue? SS is going to disappear and soon, in addition to inflating the shit out of the dollar. If you can get the government to give you some money today, you do it.

No way SS is going to disappear.

Expect to see some combination of the following to close the SS shortfall:

1) Increased FICA
2) Reduced Benefits
3) Means testing for at least SOME of the SS benefit
4) Further manipulation of CPI, bringing cost of living increases up slower than real inflation
5) Increased retirement age

These factors combined can very easily close the social security shortfall -- I don't see it going anywhere. If you're 20 today, perhaps you should expect 1/2 to 2/3 of the purchasing power of current benefit amounts -- but it's not an inherently unsustainable system when you consider how much wiggle room exists to restructure it.

jd2010 said:   How is this a complicated issue? SS is going to disappear and soon, in addition to inflating the shit out of the dollar. If you can get the government to give you some money today, you do it.

This is hyperbole at it's worst - people repeat this over and over but SS is not going to disappear. The MOST dramatic reduction of benefits this century would be either a phased in reduction that will eventually equal AT MOST 25% of total benefits, or raising the retirement age by a couple of years, or both. The problem is that the most good would be done by putting these reductions on the Baby Boomers NOW - will save a lot of pain for everybody later. It's a lot easier to balance the books by reducing benefits by 10% for 75 million people than reducing it 25% for who's left after all the boomers retire. The only real solution I think is mass euthanasia for people born between 1946 and 1966 as they reach 70.

I agree, I dont think SS is going away any time soon. A combination of small tweaks can address the projected shortfalls. As usual, it is kick the can down the road till it becomes politically imperative to act. My own guess is that increasing the income limit on which SS tax is paid would be a part of the tweak. I am not necessarily saying that it is the right/fair thing to do.

People still plan on getting SS benefits in their current form? My personal plans assume -0- SS. Age: 34. I realize that SS will not go away, but the immense burden will fall to my generation and there are too many variables to accurately plan for it at a particular level at a particular age.

yurgreat said:   Normal retirement age =67 for those born after 1960.

if you take early benefits, it's 6%/yr penalty. (70% payout at age 62, which is the earliest you can collect.)
If you delay till age 70, you get a 8%/yr bonus thus 24%. (no additional bonus after Age70.)

i dont expect to need to the $ when i retire but i think i can make more than 6%/yr in the stock market.
(The stock market has averaged 10%/yr for the past 30yrs, including the Tech bubble of 2000 and the real estate meltdown of 2008.)

Thus i plan to take benefits at age 62.

How about you (Early, normal, or delayed)? And WHY?
Draw at 62. Then if you end up not needing the money by the time you are 70 (and you find you have no obvious health concerns at that age), pay it all back and re-file for the larger benefit.

Glitch99 said:   yurgreat said:   Normal retirement age =67 for those born after 1960.

if you take early benefits, it's 6%/yr penalty. (70% payout at age 62, which is the earliest you can collect.)
If you delay till age 70, you get a 8%/yr bonus thus 24%. (no additional bonus after Age70.)

i dont expect to need to the $ when i retire but i think i can make more than 6%/yr in the stock market.
(The stock market has averaged 10%/yr for the past 30yrs, including the Tech bubble of 2000 and the real estate meltdown of 2008.)

Thus i plan to take benefits at age 62.

How about you (Early, normal, or delayed)? And WHY?
Draw at 62. Then if you end up not needing the money by the time you are 70 (and you find you have no obvious health concerns at that age), pay it all back and re-file for the larger benefit.
To my knowledge, that option is no longer available.

Glitch99 said:   ]Draw at 62. Then if you end up not needing the money by the time you are 70 (and you find you have no obvious health concerns at that age), pay it all back and re-file for the larger benefit.
This is no longer allowed - the deadline for this trick is now 6-12 months back, not the years that it used to be. It got too much publicity in the mainstream press than SS killed it as a "loophole".

kjgco said:   Glitch99 said:   yurgreat said:   Normal retirement age =67 for those born after 1960.

if you take early benefits, it's 6%/yr penalty. (70% payout at age 62, which is the earliest you can collect.)
If you delay till age 70, you get a 8%/yr bonus thus 24%. (no additional bonus after Age70.)

i dont expect to need to the $ when i retire but i think i can make more than 6%/yr in the stock market.
(The stock market has averaged 10%/yr for the past 30yrs, including the Tech bubble of 2000 and the real estate meltdown of 2008.)

Thus i plan to take benefits at age 62.

How about you (Early, normal, or delayed)? And WHY?
Draw at 62. Then if you end up not needing the money by the time you are 70 (and you find you have no obvious health concerns at that age), pay it all back and re-file for the larger benefit.
To my knowledge, that option is no longer available.
Could very well be the case, I haven't paid much attention to the subject recently.

Glitch99 said:   kjgco said:   Glitch99 said:   yurgreat said:   Normal retirement age =67 for those born after 1960.

if you take early benefits, it's 6%/yr penalty. (70% payout at age 62, which is the earliest you can collect.)
If you delay till age 70, you get a 8%/yr bonus thus 24%. (no additional bonus after Age70.)

i dont expect to need to the $ when i retire but i think i can make more than 6%/yr in the stock market.
(The stock market has averaged 10%/yr for the past 30yrs, including the Tech bubble of 2000 and the real estate meltdown of 2008.)

Thus i plan to take benefits at age 62.

How about you (Early, normal, or delayed)? And WHY?
Draw at 62. Then if you end up not needing the money by the time you are 70 (and you find you have no obvious health concerns at that age), pay it all back and re-file for the larger benefit.
To my knowledge, that option is no longer available.
Could very well be the case, I haven't paid much attention to the subject recently.
This is now the case, but with one exception. You can now only do a one time repayment/reapplication and it must be within one year of your original application. Kind of an OOPS, made a mistake, and I want to change my mind option.

I wouldn't call this the FW effect, but rather the "knowledgeable" retirement community effect. When this was flying under the radar, everthing was fine. Once it hit MSM it was only a matter of time before it was curtailed. As we have learned many times on FW, excessive explotation of an unintended benefit will case its demise.

Most people only look at this as a zero sum analysis. Which way will I net a greater payout. This is a fool's game. You have better odds betting roulette on double zero, than determining your own likely mortality date. I choose to look at it as a purely risk analysis proposition. Delaying SS if you don't need it, is simply the purchase of an extremely low cost COLA based immediate annuity (the good kind). It is the best longevity insurance you are ever going to get.

Which do you think happens more often, people regretting not collecting SS earlier or people running out of money in retirement. You absoutely want to enroll in medicare at 65. Your part B premiums increase 10% for every year you delay after 65.

However, nothing says you can't retire earlier and use your retirement accounts/investments to allow you to deferr collecting SS. This has the added benefit of using up some of your tax liability and and preventing the taxing of SS benefits. A good age to retire (or at least convert to part time) is 63.5. This allows you to carry COBRA until you are 65. Then whatever you can do to delay collecting SS, increases your benefit.

btuttle said:   You have better odds betting roulette on double zero, than determining your own likely mortality date.

This is definitely not true. By the time you get to 62, you have a lot of data that can help you to determine the odds.

As mentioned here, at what age did your parents and grandparents die? Have any of your siblings, cousins died and at what age.
How is your health? Do you have serious problems like heart disease, diabetes, emphysema, etc? Even if no problems how healthy a life do you lead? What is your BMI? Do you exercise regularly?

There are other factors that you need to consider like the health of your spouse but to think that you do not have a good idea of your life expectancy is grossly wrong.

yurgreat said:   
(The stock market has averaged 10%/yr for the past 30yrs, including the Tech bubble of 2000 and the real estate meltdown of 2008.)

Thus i plan to take benefits at age 62.

How about you (Early, normal, or delayed)? And WHY?


You forgot to adjust for inflation, so your return of 10%/yr is barely enough to beat the 6% penalty + inflation for social security.

Plus you are comparing a guaranteed 6% + inflation return with a risky 10%/year investment return. A better comparison is can you beat 6%+inflation at age 62 using an inflation indexed annuity ?

raringvt said:   People still plan on getting SS benefits in their current form? My personal plans assume -0- SS. Age: 34. I realize that SS will not go away, but the immense burden will fall to my generation and there are too many variables to accurately plan for it at a particular level at a particular age.

At 34, not your generation. Call yourself already vested. Only minor tweaks needed to keep the program solvent. It will be the infants of today who will start getting really screwed... but they can't vote.

vegetation said:   raringvt said:   People still plan on getting SS benefits in their current form? My personal plans assume -0- SS. Age: 34. I realize that SS will not go away, but the immense burden will fall to my generation and there are too many variables to accurately plan for it at a particular level at a particular age.

At 34, not your generation. Call yourself already vested. Only minor tweaks needed to keep the program solvent. It will be the infants of today who will start getting really screwed... but they can't vote.



Exactly... Seniors vote for themselves. Parents split their vote and kids get no vote...

yurgreat said:   How about you (Early, normal, or delayed)? And WHY?
Delayed, not sure for how long (I'm 63), for a very simple reason: we don't need the money. We've been retired 5.5 yrs w/ no earned income but enough other income to be fine. Therefore there's no reason to get SS until we have to.

I'm pretty surprised I made it to 50 so if I make it to 62 will start taking right away. Benefit calculator shows me getting about $1,600 a month in todays dollars

If you can assume the continued solvency, a lot depends on the two earner claiming strategy stated eloquently above. Additionally, if you don;t have a trraditional pension, Social Security is a good way to secure sstaedy income and delaying Social Security is the only way most of us can get an actuarilly fair inflation adjusted annuity, so if you expect a long life delay your claiming if you can.

Take it @ 62 and do 2 chicks at the same time. Why leave money on the table? When you're that old, any little ailment that might not affect you 30 yrs younger, will hit you hard.

xerty said:   
This is a complicated decision, especially if you're married and one spouse might want to claim on the others SS record rather than their own. In many of those cases (depending on the two ages), it makes sense to file early for the spouse with less credits on their own record, get some cash from 62 til when the other spouse hits full retirement age, and then switch to getting 50% of the other persons as their spouse benefit.


This is completely false. If a wife takes her own benefit at 62 she may have the option of becoming 'dually entitled' to her spouses benefit once he starts collecting or is full retirement (she wouldn't just switch to his). Let's assume she waits until 66. She will NOT get half of the spouse's benefit at 66 since she took her own at 62. For example, if her full amount (at full retirement age or FRA) is $1000/mo that means her benefit at 62 is $750. Let's assume her spouse's full amount is $2400/mo. Half of that is $1200/mo. The wife would get an extra $200/mo on hers by becoming dually entitled at full retirement age because that is the difference between half of the husbands full amount and her full amount ($2400/2 = $1200, $1200-$1000 = $200), thus making her benefit $950/mo ($750 of hers and $200 from his), not $1200/mo (of course my examples aren't factoring in any COLA adjustments, but you get the picture).

Also, the spouse with the lower earnings has to have a full amount that's less than 1/2 of the other spouse's full amount in order to become dually entitled to a portion of that spouse's benefit. If not then she only gets her own.

xerty said:   Max SS benefits are only around $20k/year

Max full benefit is around $30,000/yr ($2513/mo) per http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/5/~/maximum-... And that's not factoring in delayed benefits.

Social Security can be extremely complicated for the average person and even the people who work there. Whatever you read in an article somewhere usually doesn't tell the whole story. Even retirement 'experts' are misinformed.

Duplicate.

I would take it at age 50 if it's offered. Every second that ticks, is one second less to live. A larger wad won't bring back lost time.

BlackKnight85 said:   xerty said:   
This is a complicated decision, especially if you're married and one spouse might want to claim on the others SS record rather than their own. In many of those cases (depending on the two ages), it makes sense to file early for the spouse with less credits on their own record, get some cash from 62 til when the other spouse hits full retirement age, and then switch to getting 50% of the other persons as their spouse benefit.


This is completely false. If a wife takes her own benefit at 62 she may have the option of becoming 'dually entitled' to her spouses benefit once he starts collecting or is full retirement (she wouldn't just switch to his). Let's assume she waits until 66. She will NOT get half of the spouse's benefit at 66 since she took her own at 62. For example, if her full amount (at full retirement age or FRA) is $1000/mo that means her benefit at 62 is $750. Let's assume her spouse's full amount is $2400/mo. Half of that is $1200/mo. The wife would get an extra $200/mo on hers by becoming dually entitled at full retirement age because that is the difference between half of the husbands full amount and her full amount ($2400/2 = $1200, $1200-$1000 = $200), thus making her benefit $950/mo ($750 of hers and $200 from his), not $1200/mo (of course my examples aren't factoring in any COLA adjustments, but you get the picture).

Also, the spouse with the lower earnings has to have a full amount that's less than 1/2 of the other spouse's full amount in order to become dually entitled to a portion of that spouse's benefit. If not then she only gets her own.

thanks for the reminder about the early retirement penalty effecting spousal benefits. Still, many wives will have personal benefits well less than 50% of their husbands and this is a good deal. It especially makes sense for them to take their early benefits prior to their husband filing for his, since there's no other option in that case until he files. Once he hits FRA, you can do various file-and-suspend permutations too.

Social Security can be extremely complicated for the average person and even the people who work there. Whatever you read in an article somewhere usually doesn't tell the whole story. Even retirement 'experts' are misinformed.
yup.

EggplantWizard said:   No way SS is going to disappear.

Expect to see some combination of the following to close the SS shortfall:

1) Increased FICA
2) Reduced Benefits
3) Means testing for at least SOME of the SS benefit
4) Further manipulation of CPI, bringing cost of living increases up slower than real inflation
5) Increased retirement age

These factors combined can very easily close the social security shortfall -- I don't see it going anywhere. If you're 20 today, perhaps you should expect 1/2 to 2/3 of the purchasing power of current benefit amounts -- but it's not an inherently unsustainable system when you consider how much wiggle room exists to restructure it.
In other words, SS in it's current form will disappear. His point was to take the money earlier than later, instead of waiting only to find your benefits reduced.

jd2010 said:   How is this a complicated issue? SS is going to disappear and soon, in addition to inflating the shit out of the dollar. If you can get the government to give you some money today, you do it.So why, since the creation of Social Security in the 1930s, have the trustees' most pessimistic forecasts been the least accurate and their most optimistic forecasts the most accurate?

larrymoencurly said:   So why, since the creation of Social Security in the 1930s, have the trustees' most pessimistic forecasts been the least accurate and their most optimistic forecasts the most accurate?

Because the cup really is half-full!

Just check the back of your birth certificate for the expiration date and act accordingly...........A

JaxFL said:   I, myself, would take early. Last I heard it takes about 16-18 years (from what I remember) before it becomes a loss for you. So depends on your expiration date and needs.

So if it takes many years before taking SS early gives you less total benefits than waiting, I wonder what type of investment return would be necessary to make it a permanent win.

- Take SS @ 62 though not needed
- Invest all payments up through age 70, when you would have to take SS.

At that point, I wonder what return would be necessary so that distributions (let's say over a 20 year period) from that pile of savings would exceed the reduction in benefits by taking @ 62.

I an planning to take it early. Both of my parents are already deceased. My father at 54, and my mother at 63. My paternal grandfather died in his 40's, my maternal grandparents in their early 70's. My paternal grandmother is still alive, and in her 90's, but I think the odds are against me for that. I was raised in a cigarette smoke filled home and married a 3 pack a day smoker. I am almost 43.

biomajor said:   I an planning to take it early. Both of my parents are already deceased. My father at 54, and my mother at 63. My paternal grandfather died in his 40's, my maternal grandparents in their early 70's. My paternal grandmother is still alive, and in her 90's, but I think the odds are against me for that. I was raised in a cigarette smoke filled home and married a 3 pack a day smoker. I am almost 43.
Its never too late to gtfo. Run!!!!!!

Skipping 6 Messages...
kranky said:   JaxFL said:   I, myself, would take early. Last I heard it takes about 16-18 years (from what I remember) before it becomes a loss for you. So depends on your expiration date and needs.

So if it takes many years before taking SS early gives you less total benefits than waiting, I wonder what type of investment return would be necessary to make it a permanent win.

- Take SS @ 62 though not needed
- Invest all payments up through age 70, when you would have to take SS.

At that point, I wonder what return would be necessary so that distributions (let's say over a 20 year period) from that pile of savings would exceed the reduction in benefits by taking @ 62.
That is a great question, however I am of the mindset that if you look at various other defined plans, such as pension, pre-paid education ( not 529), health.... And lets include state pensions....All of the plans that are/used to be managed by entities, that have the knowledge, accessibility, prowess...who'd you'd think could do abetter job of it.... They are pushing those risks on the individual. Reason is they are flawed and they'd don't manage them well. So one wonders if you can do better.



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