When will you collect Social Security?

[AARPLynne]

Collecting before full retirement age? These individuals decided to start collecting Social Security at the age of 62. In the following video from AARP, hear what factors went into each person's decision making process (video: 2:38). When will you collect Social Security?

[dnovakfhu]

I began at 62 also.  I had 2 adopted children that were 9 & 10 when I turned 62.  My job I had worked for 32 years at was cutting back personal so I vollenteered to retire.  because of their retirement package I was able to continue my insurance  for $60/month till 65 when I would switch to Medicare.  I was able to draw social security for my two children and wife that about matched what I was drawing from Socical Security.  This income was about what I was taking home from my job.  So far I have drawn very little from my IRA savings.

[ed28849526]

I plan on retiring next year when I turn 65 and hopefully I can wait until 66 to collect. That's my full benefit year. I will check SSA to compare my age 65 vs. 66 benefit. If it's pretty close I may take it at 65.

Has anyone checked their 65 vs. 66 payout? I know part of the calculation involves earnings but just looking for comparisons.

[JLSurratt]

ED, your amount for age 65 will be 93.33 % of your FRA amount.

[LogicsHere]

Taking your SS a year before you FRA, you will lose permanently 6% a year from what I remember.

[ed28849526]

thanks

[LogicsHere]

My full retirement age was 66.  I was working and had planned on working to age 70 and then would take it at that point.  However, I got laid off from my job shortly after turning 68.  I still was able to collect SS, but not my own.  I collected Suvivor Benefits which I had just learned I had been eligible for when I turned 66 but didn't know about.  Using that and money from my 401K, I waited until age 70 and then applied for my own.  I have no regrets. Although there are no guarantees in life, 9 people in my family reached age 84 to 101 (3 in their 80s, the rest in their 90s and higher).  I felt it important enough to wait until I got the larger payout, which after 10-1/2 years at breakeven point will yield me a much higher COLA the rest of my life (hopefully).

[retiredtraveler]

I was going to wait until 70, but decided to take it earlier at 671/2.  Went back-and-forth about that. Don't need the money, but (not to be a downer), don't know my lifespan.

   Waiting gave me a 12% boost from retirement age, which was good enough for me. I'm donating most of the money to family anyway.

[fffred]

I plan to wait until I am 70; I just retired at my FRA of 66.

By SS rules, my benefit will increase by 8% per year (not compounded) so for 4 years that's 32%, or roughly one-third (1/3) greater than today. I do have enough other funds available to cover living expenses until age 70.

Another benefit of delay is that there are 4 years with greatly minimized income. This provides the opportunity to perform some very large IRA conversions to Roth IRA. With the conversions taxes are due on the withdrawn IRA funds "now" but as the funds are put into the Roth then future growth (cap gains/dividends) will not be taxed when withdrawn.

My spouse is 11 years younger than I am and may outlive me by a considerable period. Having the larger (by 1/3) SS benefit provides a "longevity insurance" for her in that if she lives long and long outlives me she will still have a good SS benefit as survivor (she has no SS benefit on her own history).

I have run these scenarios through a number of analyses...my own Excel spreadsheets, various commercial software, and my fave analyzer... "iORP" (free, at www.i-orp.com).

One thing that most of this software ignores (even my favorite, i-ORP) is the risk of my early death. I found that our greatest risk was not me living long and spending all our assets, leaving peanuts for my widow, but the greatest risk was me dying young (after retirement) while my wife/widow was not yet eligible for SS. This was a nasty scenario and I extended my term life policy for another 10 years at a lower face value (but, rats, much greater premium). This should work out well per my spreadsheet analyses.

My analyses, ORP, and most software I have seen consider the possibility that SS benefits will be cut by some percentage at some time in the future. So this is not really a consideration in my decision to delay until 70.

Edit: Let me expand on the risk of "early death". Most people, and most programs that look at saving for retirement, plan for some assumed longevity...age of death, and figure how much of a nest egg you need to attain the desired income level during retirement (or call it "spending level"). This is reasonable enough.

But when you have saved your nestegg, it is what it is and that's all it is (except for future growth), and you are now planning for the draw down, considering all income sources including SS. For a couple the effect of the loss of SS benefit at the death of a spouse may cause the surviving spouse's income level to fall too low. Let's say that before the death the couple gets 100% of one party's SS benefit) and the spouse gets the 50% benefit. So, 150%. Now the primary insured passes and the survivor gets 100%, their income has dropped by 50%...and perhaps expenses have been reduced by some portion. But if the survivor is too young to collect SS then ... oops! This is the scenario for which I extended my term life insurance.

[DavidM942136]

Very detailed contribution. I am looking for advice. I have pension income to meet my needs. I am trying to answer this question: what would be best for someone taking their SS at 62, full retirement or 70 if they invested their SS at a reasonable rate (5%?) instead of spending it? Which option would yield the most income if one lived to their actuary age? Cannot seem to find anything comparing SS 8% growth to investment growth if that makes any sense.

[GailL1]

The thing to remember for people who want to begin benefits early is that as the Full Retirement Age (FRA) is increasing; but the early retirement age has not changed and the reduction in benefits because of early retirement is increasing because the reduction is based on the (early) time period to FRA.

This was done by design, I'm sure,  but people can accommodate this reduction by adding a year to their (still) early retirement age.  So if Your FRA is 66 - stretch the early retirement date to your 63rd birthday and so on as the FRA marches on.

[JLSurratt]

Gail.1 Delaying one year will cost me $15,456 and it would take 12.5 years until the increase of $103 gets back the $15,456. IMO it is not worth waiting one year for just $103

[GailL1]

@JLSurratt

I am sure that most people do what they have to or want to do - I am just making them aware of it so they have all the info needed to make the decision.

All I am saying is since the Full Retirement Age has increased and is continuing to march towards 67 BUT the early retirement age of 62 has not changed the early reduction will get larger for those making the decision to file for early old age benefits.

When the FRA was 65 and early retirement was 62 that was a 36 month period or a 3-year early retirement deduction.

Now the FRA is 66 (or greater with additional months added) that is a 48 month + period or 4-years of early retirement deduction.

When the FRA reaches 67 and the early retirement age is still 62, that a 60 month or 5-year early retirement calculation (reduction).

Here is the explanation chart from SSA on early retirement - notice how the % of reduction keeps getting larger and larger.

https://www.ssa.gov/planners/retire/agereduction.html

If you retired at 62, your full benefit would have to have been pretty small for the ( per month) reduction to only be $103.

[JLSurratt]

Gail.1 - I was talking about your comment of delaying your benefits for 1 year because the FRA is going to 67. not that it was the reduction if you take your benefits at 62.
You cannot just look at the reduction and say I am going to wait for the bigger check.
For me it was easy take it at 62 to get out of debt. I will receive $69,688 from age 62 to FRA. If I waited until FRA it would take until age 78 to get that money back. The big question for many, is how long will you live. By taking SS at 62 I am only losing $60,000 from age 66 to 86 = $250 per month if you subtract the $69,688.

[GailL1]

@JLSurratt

I think you are still missing my point and I am giving this caution, not so much for you cause you have made your decision already, but for others who want to retire EARLY.

Just as it was when the FRA was 65 and the early age was 62 - try to keep the reduction to this percentage by adding a year to a person's own early retirement based on whatever age is the person's FRA.

IOW,  Keep the reduction % the same - at the 36 month early retirement, no matter what FRA a person may have.  

To keep the reduction % the same, the early retirement age has to advance just as the FRA does where there is that 36 month period between them and not get wider.

The Government planned this on purpose - keeping the early retirement age at 62 while advancing the FRA - it save SS money because most people do take early retirement.

[JLSurratt]

Gail.1 I am not missing anything. I have done the math and if you wait until FRA you do not see any increase in total benefit until after age 82. Since I do not know how long I am going to live I took SS early to get out of debt. Since I have other retirement income and life insurance of $100,000 for my if i die before her. She will be just fine with my lower SS check . Plus we can travel and do things from age 63 to 66 that would not be possible without the SS checks. Who knows the quality of life in your 80s. Bigger SS check in my 80s for the nursing home, I have seen it happen to older Aunts and Uncles.

[GailL1]

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@JLSurratt wrote:
Gail.1 I am not missing anything. I have done the math and if you wait until FRA you do not see any increase in total benefit until after age 82. Since I do not know how long I am going to live I took SS early to get out of debt. Since I have other retirement income and life insurance of $100,000 for my if i die before her. She will be just fine with my lower SS check . Plus we can travel and do things from age 63 to 66 that would not be possible without the SS checks. Who knows the quality of life in your 80s. Bigger SS check in my 80s for the nursing home, I have seen it happen to older Aunts and Uncles.

---

Yep, that's right - more self-payers, or at least paying a fair amount, for that nursing home stay in later life would help out society as a whole.

Like I said, you made the decision for your benefit - I am not disclaiming your need or want.  

But others need to be aware that since the FRA has and is increasing and the early retirement age of 62 has remained the same - sticking with the early age of 62 to retire will reap a person less and less in their benefit as the FRA keeps marching upward towards 67.

[RichardaB956294]

My opinion...just like something else....we all have one. 🙂 First and foremost, it depends on your personal situation.
The MONTHLY Social Security amount will most definitely grow...at a decent return of 8% a year...if you wait until your full retirement age (or even further if you delay until age 70). That is simple math.
There also is a crossover point that compares the TOTAL amount you are receive from Social Security if you take it early...lets say 62...versus someone who takes it at full retirement age...lets say age 66.
The person who takes it at age 62 has been collecting for 4 YEARS by the time the person who waited until age 66 BEGINS collecting. There is a chart on the Social Security webpage that shows your the crossover point (for me it is age 78). That is simple math.
Back to my first point. It is a personal decision. You may need the money so you take it early. You may want to do things before the "crossover point" so you take it early. You may not need the money so you take it late to get the 8% growth. You may have
longevity in your family so you take it later.
It's personal...



which if you take social security early

[s804940b]

JL Surratt-That $250. could mean the difference of being able to fully pay your monthly bills to some people. Gail makes sense with her calculations. If you feel early is best for you, then you certainly should take it. Some of us look at the monthly nut and how much it takes to live on. 66 has worked great for me so far. If I die early, I don't think I am going to care about the issue. If I do live a long life, the additional monthly amount will make a huge difference to me.

[JLSurratt]

I also have a Military Pension, so for me $250 per month is not enough for me to give up almost 70 K $ from age 62 to FRA.

[d863190j]

Hope you understand my position. Thank you

[s804940b]

I do d863190j. Sometimes in life there are hard choices to be made. You are doing the best that you can.

[d863190j]

Thank you!!

[EveRH]

I began collecting last month, shortly after my 66th birthday. For me it was a "bird in the hand" decision, after my Mom died at on 77 from cancer. She was diagnosed the month before she planned to retire, and had treatment on & off for 12 years. I wasn't going to let any grass grow under my feet; retired at 50 & didn't wait too long for SS.