Social Security at 62?

[k0nkuzh0n]

Re: Social Security at 62? File and Suspend

We are taking a look at the question of SO drawing SS at age 62 w/ 25% reduction. Based solely on math it will take 12.4 years from FRA (66 for her) to break even. This would be at age 78. I.E. She would be 78 before she would reach break even point.

And she would be expected to live to 84-85.

 

[konakathy]

Here is an article addressing different scenarios for withdrawing SS at age 62 that may apply to some folks. I personally plan to withdraw mine at age 62 for investing and traveling.

When It Makes Sense To Take Social Security Income At 62

 

[evilanne]

I've always planned to take my SS when I reached 62. But after looking at it from a different viewpoint, I'm not so sure.

Delaying SS payments after 62 increases the eventual payment by about 5-7%/year until age 66 (8%/year after 66). This seems to me to be similar to receiving 5-7%/year (tax-free) on an investment. Not sure if I'm viewing this accurately.

If I delayed my payments, I would withdraw a similar amount from my retirement accounts until I began receiving SS. It would be about 2% of my total retirement funds and I'm OK with that. The downside to this is that those retirement withdrawals would be mostly taxable, while SS would not be. So maybe it would be kind of a wash...
I think I might wait until 63 and then reevaluate which way would be better for me.

I realize everyone's retirement situation is unique. Lots of important factors like health, family, retirement account balance, etc...just trying to figure out which would be best for me.

Thoughts, anyone?

A lot depends on how much you have in your TSP. When you reach 70.5 Required Minimum Distributions apply, which are out of your control for traditional TSP and IRAs

Using TSP calculator https://www.tsp.gov/PlanningTools/Calculators/retirementCalculator.html, age 62 for both, Expectancy=115(max), Earnings Rate=5% & no dependents for different balances. Below is a summary of annual withdrawal from tables and resulting balances at different ages:
Age / Starting Balances:

$100K​	$500K​	$1M​
66​	$5,025​	$25,127​	$50,254​	$101,429​	$507,146​	$1,014,291​
71​	$3,728​	$18,640​	$37,280​	$99,904​	$499,520​	$999,040​
100​	$6,650​	$33,249​	$66,499​	$37,160​	$185,802​	$371,604​

[TD="bgcolor: #fdfdfd"]

Age​

[/TD]

[TD="colspan: 3, align: center"] Balances- Annual 5% ROI [/TD]

[TD="bgcolor: #f3f7e9"]

62​

[/TD]
[TD="bgcolor: #f3f7e9"]

$4,255​

[/TD]
[TD="bgcolor: #f3f7e9"]

$21,277​

[/TD]
[TD="bgcolor: #f3f7e9"]

$42,553​

[/TD]
[TD="bgcolor: #f3f7e9"]

$100K​

[/TD]
[TD="bgcolor: #f3f7e9"]

$500K​

[/TD]
[TD="bgcolor: #f3f7e9"]

$1M​

[/TD]

[TD="bgcolor: #f3f7e9"]

70​

[/TD]
[TD="bgcolor: #f3f7e9"]

$5,872​

[/TD]
[TD="bgcolor: #f3f7e9"]

$29,362​

[/TD]
[TD="bgcolor: #f3f7e9"]

$58,724​

[/TD]
[TD="bgcolor: #f3f7e9"]

$98,793​

[/TD]
[TD="bgcolor: #f3f7e9"]

$493,963​

[/TD]
[TD="bgcolor: #f3f7e9"]

$987,926​

[/TD]

[TD="bgcolor: #f3f7e9"]

93​

[/TD]
[TD="bgcolor: #f3f7e9"]

$7,738​

[/TD]
[TD="bgcolor: #f3f7e9"]

$38,689​

[/TD]
[TD="bgcolor: #f3f7e9"]

$77,379​

[/TD]
[TD="bgcolor: #f3f7e9"]

$70,052​

[/TD]
[TD="bgcolor: #f3f7e9"]

$350,260​

[/TD]
[TD="bgcolor: #f3f7e9"]

$700,520​

[/TD]

[TD="bgcolor: #f3f7e9"]

115​

[/TD]
[TD="bgcolor: #f3f7e9"]

$7,634​

[/TD]
[TD="bgcolor: #f3f7e9"]

$38,168​

[/TD]
[TD="bgcolor: #f3f7e9"]

$76,337​

[/TD]
[TD="bgcolor: #f3f7e9"]

$353​

[/TD]
[TD="bgcolor: #f3f7e9"]

$1,765​

[/TD]
[TD="bgcolor: #f3f7e9"]

$3,530​

[/TD]

No matter what rate of return you achieve, traditional TSP & IRAs are designed to be spent during your lifetime. The calculator assumes 2 different IRS life expectancy tables, which is why the monthly/annual amounts generally drop (36.5%) from age 70 to 71 when RMDs kick in. Payments then increase until peaking at age 93 and decreases beyond that. If you expect to live to a ripe old age, delaying social security until 70 may be beneficial since it will offset the TSP drop from 70 to 71 due to RMDs kicking in & it is adjusted for inflation over time while your retirement nest egg will eventually decline.

Between 62 and 70 you can specify what your monthly withdrawal amount to manage your current taxable income/tax bracket and to a certain extent your future RMDs. A lot depends on your actual rate of return, interest rates and the market.

 

[Scout333]

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