Social Security at 62?

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ripper

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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?
 
I plan to keep working past 62 if my health holds out. Looking at delaying SS as an investment, 5-7% looks great given my track record.

As for taxes I think you need to look into that some more. I thought up to 85% of your SS is taxable depending on your income.
 
If you can achieve 5-7% a year at 62 with your benefits, why not take the money immediately and invest it? I caution that when you get to 62, your risk of life termination goes up pretty quick. So, I will take the money, from the investment I made contributions for 44 years, I want my investment to be mine to control as soon as possible.
 
There are so many articles and calculations on the internet and youre right...everyone's situation is different and yours might change when you hit 62...like me, i'm still a ways out but I keep reading about it. Here's an interesting quote on an article.

When you claim early, you also are subject to what are called "early claiming reductions." If you claim at age 62, your retirement benefit is 25% less than what it would be at 66. If you claim a spousal benefit at 62, it's 30% less than what it would be at 66. Don't ask me why they have different penalties; it's why we needed to write a book."

3 ways to maximize Social Security benefits - Yahoo Finance
 
It's a personal choice. The only way to be sure what the right choice is, is to somehow determine how long you are going to live.
 
Social Security assumes you will die at about age 82. So if you wait until age 66 it will take you about 16 years to break even with your 62 yr old self who took SS early. If you wait until age 70 it will take you about 12 years to break even. The question is will you live past age 82? Also, would you enjoy the money more from age 62 to 70 when you're in better health than at age 82+? Another point is that you really should be retired at age 62 to take SS unless your earnings will be under $15K or so.
 
Cactus said:
I plan to keep working past 62 if my health holds out. Looking at delaying SS as an investment, 5-7% looks great given my track record.

As for taxes I think you need to look into that some more. I thought up to 85% of your SS is taxable depending on your income.
Click to expand...

Thanks. I was under the impression that only earned income (from employment) counted against SS income. Looks like I'll be paying 25-28% tax on 85% of my SS. :(

Doesn't seem right that we pay tax on our contributions and then again when we receive our distribution.
 
Frixxxx said:
If you can achieve 5-7% a year at 62 with your benefits, why not take the money immediately and invest it? I caution that when you get to 62, your risk of life termination goes up pretty quick. So, I will take the money, from the investment I made contributions for 44 years, I want my investment to be mine to control as soon as possible.
Click to expand...


Let's put this into a little test on which one is better. 80% retirement at age 62 or 100% retirement at age 67?
Lets just say someone will receive $20,000.00 at age 67 for a full SS retirement. at age 62 that same individual will only receive $16,000.00.
$16,000.00 x 6 years = $96,000.00 (from age 62 to age 67)
$20,000.00 x 1 year = $20.000.00 (start receiving SS at age 67)
at 85 years of age, individual that pulled out SS at age 62 receiving $16,000.00 per year would have accumulated $384k
at 85 years of age, individual that pulled out SS at age 67 receiving $20,000.00 per year would have accumulated $380k.

This is not a true representation of what an individual will receive for their SS, however, I feel that it's good to do the math and see for yourself which one is more beneficial. For me, i will definitely going to take out my SS at age 62. Not just that i'm able to get to it earlier(with penalty), but because i know how to turn it around and hopefully get more return from it than the 5-7% some of us are hoping to get by leaving it in the SS system.

Just food for thoughts
Travelerlady
 
Here's another take on the subject :

Pull it at age 62, whether you need it or not...invest it if you don't need/want to spend it. Me ? I'm not looking forward to living until I'm 85 or 90...as some comedian said...what's that get you ? Three more years in the nursing home ??? :D

Assuming the Wife has enough to live on, until she passes, too (and that's a big assumption in your calcs !)...but now you have a "benefit" that's part of your estate, and can pass on to whoever you darn well please ! Can my heirs draw my or the Wife's SS benefits after we're gone ? I don't think so...

As others have noted...everyone's "situation" is different...ya gotta do the math ! :smile:


Stoplight...
 
ripper said:
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?
Click to expand...

I don't expect Social Security to be solvent when I am able to collect. I'll see it as a bonus if there's money there when I turn 62. :friday:
 
Viva_La_Migra said:
I don't expect Social Security to be solvent when I am able to collect. I'll see it as a bonus if there's money there when I turn 62. :friday:
Click to expand...

Even so, I would never admit that in a public forum.

I believe a study showing that 100% of Americans expect ss to be solvent would have a more desirable [for me and mine with regard to the money we've put into ss; imo] effect on current/future politicians than them being able to say: 'Well, since only 10% expect it to be solvent...don't worry about it.'
 
Lets face it. There are some folks who just have no intention of working past 62, at least not full time. While there are others who enjoy working and will chose a time that is more to their liking. Just like I'm sure there are folks who have been saving for a long time who will step out at 59 1/2 or even earlier.

Life expectancy is really a non-issue for me. When I drop, whether I'm employed or retired, I'm not going to like it.

Additionally the age of ones significant other comes into play as well. If my spouse and I are the same age 62 may be more of an option as opposed to if I am 5 years older. Of course this really only applies if both are workers.

62 VS 67 VS 70- Every day over 62 is a risk, everyday closer to 70 is a reward. Health is an important component in the decision making process but so is overall portfolio value.
 
My uncle, private sector good job, worked well past when he'd expected to be able to retire, due to his beloved wife's progressive brain tumor-related incapacitation over 10 years. He kept her at home til the bitter end, paid his daughter to provide inhome daytime care while he continued working. I think he retired when my aunt died, when he was about 70. Everyone has their own reasons for timing retirement and what post-retirement plans turn out to be. He still volunteers at a medical charity related to his lifetime passion and career in aviation, even tho he's pushing 90. The charity was nominated for a Nobel peace prize a few years ago.
 
Stoplight said:
Here's another take on the subject :

Pull it at age 62, whether you need it or not...invest it if you don't need/want to spend it.....

....Can my heirs draw my or the Wife's SS benefits after we're gone ? I don't think so...

As others have noted...everyone's "situation" is different...ya gotta do the math ! :smile:


Stoplight...
Click to expand...
Never thought of this angle, SL.... I would be able to leave SS investment to my heirs plus whatever is left of my TSP.
thanks SL for a different pov. I guess this is applicable if both husband and wife has SS coming...
Have been debating whether to start claiming at 62 or delay until FRA.
 
Thoughts:


ripper kindled a feeble flame of hope, causing me to go back and check. Unfortunately it is called "combined income" the sum of AGI, non taxable interest and a % of the SS payment.


userque presents an interesting thought. I am afraid that cat is long out of the bag and running amok.


Interesting thought Stoplight. A way to maybe leave some of it to the heirs.


That book just may be worth 10 bucks or so.


PO
 
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