Anyone know about Social Security?

[Wade Lippman]

I haven't been able to find a decent SS forum, so I figure this is as good as anyplace.

My wife is a year and a half older than me, and about to hit 62. I know everyone says to wait until 66 or 70, but my math is that it takes 22 years for that to pay off, and I am not going to worry about 2036 now. Our tax rate should be the same for the foreseeable future, so I don't see any point to waiting.
Are there any clever strategies or gimmicks I should be thinking about? I have read various articles with all sorts of things to do, but none of them seem particularly appropriate.
My benefit is nearly twice hers, but my understanding is that she is only entitled to spousal benefits of 40% of mine, so there doesn't seem to be anything there.

Any advice, good websites, or anything else is appreciated.

[David Weaver]

You don't really have to rely on anyone else's descriptions of what they would do. I don't know what your social security normal retirement age is, but I'll assume that it's 66, nor do I know what your wife's is, but I'll assume the same. The social security reduction is 5/9% per month up to 36 months and 5/12ths beyond that. (6 2/3rds percent per year, and then 5% per year, so a total reduction of something like 25% for early commencement.

If your circumstances make it better to start earlier, then by all means do so.

Part of the strategy to defer taking social security probably has to do with tax considerations, in terms of what you have to pay taxes on (in terms of your earnings and wages - like if you pay SS taxes before normal retirement age, and not after - I'm not sure about the tax treatment. Also, if you're in a higher tax bracket, then it might be more advantageous to wait.

Take a guess at your life expectancy, the reduction factors are chosen to provide a sort of equivalence, so there is no real reason to scheme them other than tax considerations, at least as far as I can tell. One thing you won't do is take the money, put it in a side fund and earn 6 2/3rds percent without any risk to match delaying payment, but at the same time, if you delay taking payment, you risk not getting anything, or not getting much at all.

If you don't have tax considerations and have good use for the money (paying down debt, etc), I'd probably start early.

[David G Baker]

I don't know much about SS but many companies bring in a specialist to help educate their employees about SS. I took mine at 62 because the males on both sides of my families do not have a history of longevity most die in their mid 50s to late 70s. The main thing that I learned from the specialist is that if I actually retire at the of 55 I can access my 401K and IRAs with out any penalty and because the money in the 401K and IRAs are tax deferred you want to live off of your non tax deferred money and save the tax deferred money for when you are in a lower tax bracket. The thing that is the most important when you retire is medical insurance. You will not have access to Medicare until you are 65. This may have changed with all of the Obama Care issues.

[Steve Peterson]

Before starting, I have to warn you that I am not an expert at the rules, so you may need to double check. It may be possible to have your wife draw half of your benefit until she reaches the maximum collection age of around 70, then her benefit should be higher.

Steve

[David Weaver]

I don't know much about SS but many companies bring in a specialist to help educate their employees about SS. I took mine at 62 because the males on both sides of my families do not have a history of longevity most die in their mid 50s to late 70s. The main thing that I learned from the specialist is that if I actually retire at the of 55 I can access my 401K and IRAs with out any penalty and because the money in the 401K and IRAs are tax deferred you want to live off of your non tax deferred money and save the tax deferred money for when you are in a lower tax bracket. The thing that is the most important when you retire is medical insurance. You will not have access to Medicare until you are 65. This may have changed with all of the Obama Care issues.

It's likely going to be a little cheaper due to limitations on age rating on individual policies, but the policies will still be expensive. For an 80% type policy, which I believe is the "silver" rated policy, it'll still be something like $8k a year here for individual on a rate schedule that I have.

So, it's still a real issue.

Of course, you can forgo insurance and pay a much lower penalty tax (that is only $95 the first year, IIRC, and something like $695 or so when fully phased in). I don't know if forgoing insurance between 55-65 is a great idea, though, especially now that younger individuals are paying part of the insurance cost for older individuals (the younger folks get the other side of the sword in the age rating game, they subsidize the older folks, thus the spate of news articles about young folks having their premiums double).

That said, if someone manages to have fairly low income in those interim years, they could get some subsidy on federal exchanges.

[Mel Fulks]

I don't have to think about such things very long to get a headache. But in the decision about starting to draw at 62 or waiting I've found many don't understand that if they retire early,wait to start draw, and take a lesser or part time job they
REDUCE their ultimate draw since the formula for figuring is weighted toward what income was in the last few years.

[Bob Vavricka]

It's real easy to figure. But, first you have to determine how many more years you are going to live. :-)
I still haven't figured that part out, so decided to take SS early while I worked on finding the answer.
As already mentioned, there are different answers depending on your circumstances...Still not an easy decision.

[Wade Lippman]

Before starting, I have to warn you that I am not an expert at the rules, so you may need to double check. It may be possible to have your wife draw half of your benefit until she reaches the maximum collection age of around 70, then her benefit should be higher.

Steve

Thank much, that is a good lead.
It doesn't actually work like that though. It would be just the opposite. I found this example that fits out situation exactly.

"Beginning at age 62, Mrs. Brown gets $978 a month in early retirement benefits. Beginning at age 66, Mr. Brown receives a spousal benefit of $767 a month (50 percent of his wife's full retirement benefit of $1,534/month). Then, at age 70, Mr. Brown stops receiving the spousal benefit and begins receiving $3,209 a month (the maximum amount of his retirement benefit)."

I would have to wait quite a while, but it has the added benefit that she would be entitled to survivor benefits at my level; so it appears to be a great deal.

[Kev Williams]

If I wait till I'm 72, I'll make nearly twice as much as I'll make at 62-- approximate numbers are $1400 a month now, $2600 10 years from now...

Well, lets see-- 1400 x 10 years is $168,000. To make that amount if I wait till 72 will take nearly 5-1/2 years. By then I'll be nearly 78 years old

If I live that long. Or live the extra 10 years in the first place...

My math says collect it NOW, even if you WANT to wait. Just put it in the bank or whatever you consider a good investment. Even at only 2% you'll have $188,000 10 years later. You'll still get $1400, plus you can draw another $2500 on top of that for 7-1/2 years before the $188k is gone. If you pull only $1600 to add to the $1400, it'll last 117 months (plus more for interest)

I don't know about anyone else, but I'M not waiting---

[William Payer]

If I wait till I'm 72, I'll make nearly twice as much as I'll make at 62-- approximate numbers are $1400 a month now, $2600 10 years from now...

Well, lets see-- 1400 x 10 years is $168,000. To make that amount if I wait till 72 will take nearly 5-1/2 years. By then I'll be nearly 78 years old...

Ken, a little correction to your math. The 5.5 year point where you say you will break even , is really further down the age line than that. During that 5.5 year period to "catch up" and break even , ou forgot the original situation of drawing $1400/month would still be on going. This would give you another ($1400x12x5.5= $92,400 ) At any rate, your conclusion remains the same.

[Rich Engelhardt]

Any advice, good websites, or anything else is appreciated.

I called the local SS office and talked to a guy there.
I was pretty amazed at how helpful he was since my experience with anyone employed by the .gov or even remotely associated with the .gov has never been real positive in that respect

[Larry Browning]

Surly there are local advisers in your town that do this sort of thing for a living, like a financial adviser or some such. To me this is such an important decision in your life that paying someone who knows the ins and out of the whole thing would be a very good investment. This is my plan, even though I have not actually looked for someone to help me! (and I am already 62). Guess I had better get to looking, huh?

[Stan Calow]

What Bob said is true- it all depends on how long you will live. I am of school of thought that it is better to start collecting as soon as you can, even if its less. You can run the numbers all you want, but you also have to consider if you will be living the life you want during the time you are waiting for the full payment to begin.

[Larry Frank]

My wife and I found a good financial adviser quite a few years ago and started planning at that point. There is so much more to retiring and figuring out finances and such that it can make your head spin. A good financial adviser can lead you through all of the various things and the advantages of doing different options. So much depends on the rest of your finances. You need to take stock of your entire finances and what you want to do when you retire. In addition, you will need to think about medical coverage. The choice as to when to take social security is more about your current situation that it will be about how much you get when.

I urge you to find a financial adviser.....it is the best way to go in my opinion.

I found my financial adviser by talking with a couple of very trusted friends and got a recommendation on who they utilize.

If you talk with one, and do not get a good vibe then move on.

[David Helm]

I started mine at 64. If you look at actuarial tables, you will find that it doesn't really matter when you start, the total payout works out to be about the same. Waiting till 70 will give you a larger monthly, but the shorter life expectancy balances the total payout with what you would get from early retirement. Since I am now 71, and have outlived other males in my family by 11 years, I feel I am ahead of the game.