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Valued Social Butterfly
Richva
Posts: 5,076
Registered: ‎02-28-2008

Taking Social Security at 63 or 66

I am planning to retire this year after my 63 birthday.  I could forgo social security and use  dividends and maybe dip into savings to make up the difference between expenses and pension.  It would allow a bigger check at 66 I have to believe this was already discussed but what is the thought here?

 

Thanks

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Recognized Social Butterfly
drawpoker
Posts: 932
Registered: ‎06-25-2013

Re: Taking Social Security at 63 or 66

I am more familiar with the model of reduced benefits at age 62 versus full benefits at age 66.  So age 63 is throwing me off. 

But,  I think most financial calculations use a break-even age of either 82 or 83.  Meaning,  if you expect to live a long life,  the effect of taking smaller benefits for a greater number of years will be pretty much equalized by taking larger benefits for fewer years at that point. (I think the actual age used varies according to which inflation factor is used to calculate)   So, you really have to think about your family history,  parents' longevity,  etc.,  as welll as your own health to gamble on how long you wll live.  

Having said that,  there are many variables to this.  For ex:  Some planners are advising if you don't need the soc. sec.  $$  to meet current expense,  take them early anyway and Invest the checks in some good,  no-load mutual funds.  The return on "taking soc sec. early"  will then be a far more enriching outcome than using the old,  traditional models.   

(Sorry I can't offer much else.  In my case,  it was a no-brainer.  I started drawing as a widow on my husband's account as soon as I turned 60.  Waiting to draw on my own at age 62 would actually have been slightly less as I did not have nearly as many high-earning years on my record.  I could have waited until age 66 and drawn full benefit on my late husband but after running the numbers a 6 year jump seemed the best way to go.  Widows get 71.5% at age 60,  then it goes up by increments to 100% at age 66.)    

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Valued Social Butterfly
GailL1
Posts: 3,389
Registered: ‎08-18-2008

Re: Taking Social Security at 63 or 66

draw poker said . . . .
(Widows get 71.5% at age 60, then it goes up by increments to 100% at age 66.)

****************************************
I was with you until you said the above, specifically about the 100% at 66 - if you started drawing at a younger age because you were widowed, how would you ever get to 100% at age 66?
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Valued Social Butterfly
GailL1
Posts: 3,389
Registered: ‎08-18-2008

Re: Taking Social Security at 63 or 66

http://www.ssa.gov/pubs/EN-05-10147.pdf
That is a pamphlet from SSA on just your question except most folks don't have the option of delaying their benefits.

It will make several hundred dollars difference in your monthly benefit if you begin benefits at 63, then you also have to remember that Medicare B premiums will begin to come out of that check at 65. If you are one with a higher annual income (right now at $ 85,000/ $ 170,000), there is also a high income surcharge on Medicare Part B and Part D premiums.

If you are already set for retiring at 63, then your decision to draw now or later should be based on the amount that you would receive under each condition and whether or not that will meet your financial needs for the long term.

I also wouldn't even consider any COLA adjustment for those three years cause I don't see our economy taking off in any huge way - we'll maybe you could add in 1% per year just to give you the whole picture.
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Info Seeker
hf5371
Posts: 1
Registered: ‎04-20-2014

Re: Taking Social Security at 63 or 66

Delaying social security benefits until full retirement age has significant financial benefits. You want income that will not run out in your lifetime. This requires comprehensive planning to ensure a smooth transition.

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Valued Social Butterfly
Richva
Posts: 5,076
Registered: ‎02-28-2008

Re: Taking Social Security at 63 or 66


hf5371 wrote:

Delaying social security benefits until full retirement age has significant financial benefits. You want income that will not run out in your lifetime. This requires comprehensive planning to ensure a smooth transition.


I agree but, as some of the others pointed out, the break even is at 82 or something.  I would really feel cheated if I waited to 66 and died at 72!!!!  (Joke). Seriously, I think the reason financial advisors tell you to wait to 66 is that they all use 90+ in their life assumptions.  If you believe that, it makes sense to wait. If not sure......................

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Frequent Social Butterfly
LeCherie
Posts: 17,778
Registered: ‎08-22-2008

Re: Taking Social Security at 63 or 66

There's a pretty good difference between your benefit at 63, and the max you would get later.  If you can live well on the other income, I would recommend delaying the SS as long as possible.  The alternative would be to take it now, but put it in a high yield savings account.  You won't be able to make up the difference though.

 

Also consider that when you draw your SS, you could be in the high enough tax bracket to have to put part of it back into the SS Fund.

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nyadrn
Posts: 25,904
Topics: 219
Kudos: 5,868
Registered: ‎02-27-2008

Re: Taking Social Security at 63 or 66


LeCherie wrote:

There's a pretty good difference between your benefit at 63, and the max you would get later.  If you can live well on the other income, I would recommend delaying the SS as long as possible.  The alternative would be to take it now, but put it in a high yield savings account.  You won't be able to make up the difference though.

 

Also consider that when you draw your SS, you could be in the high enough tax bracket to have to put part of it back into the SS Fund.


Once you reach your 100% distribution point 65 66 or whatever yours is, you can collect salary and SS without penalty to SS and pay tax on the SS funds. You can see your tax liability and pay quarterly if need be.   "You won't be able to make up the difference though" depends on your life term..  something else to consider.

Life's a Journey, not a Destination" Aerosmith
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Valued Social Butterfly
retiredtraveler
Posts: 3,906
Registered: ‎02-14-2008

Re: Taking Social Security at 63 or 66

[ Edited ]

   You've done a bunch of planning for retirement, so you know there is no 'one size fits all'.   It's not simply about getting payback at a certain age,  it's your entire financial picture and expectations. How much do you want to spend now (for whatever activities you want in retirement) versus what is realistic for long-term finances?  Do you anticipate some extra expenses right after retirement for remodeling your house, or traveling? Do you want to wait on anything (expense wise) until you're eligible for full SS, or do you want to do some things now. If you take SS out early, how is your long term income/expense picture?

   There is as much 'personal choice' in this as actuarial stats, to me (while being 'realistic' about long-term finances).  

   However, if pressed for a short answer, I'm waiting until I get full benes, but I'm not in a situation where I need the money now. So, easy for me to say wait.  

     

“The IQ and the life expectancy of the average American recently passed each other in opposite directions.”
― George Carlin
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Recognized Social Butterfly
drawpoker
Posts: 932
Registered: ‎06-25-2013

Re: Taking Social Security at 63 or 66

GailL1 said:
"I was with you until you said the above, specifically about the 100% at 66 - if you started drawing at a younger age because you were widowed, how would you ever get to 100% at age 66?"

Thanks, guess it wasn't it clear. To clarify, I meant the age at which the widow first Files for benefits, not that there are increases after filing. If she waits to age 66, she gets 100% of the husband's benefit amount.
I mentioned it because it is another way of looking at "early versus full retirement age" filing. Only widows have a 6 year window to consider, not 4 years, in addition to the factor of what they would get on their own work record if they waited.
Complicated stuff!
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