Social Security at 62?

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My intent will be to draw social security as soon as I'm eligible. For every dollar I receive in SS that's one less dollar I'm pulling from my investments which can continue to earn at a higher rate. You cannot inherit SS.

And while my family has a history of longevity (parents are still chugging along at 84) that doesn't mean I can't be taken out by other means.
 
Itchn2retire said:
My intent will be to draw social security as soon as I'm eligible. For every dollar I receive in SS that's one less dollar I'm pulling from my investments which can continue to earn at a higher rate. You cannot inherit SS.

And while my family has a history of longevity (parents are still chugging along at 84) that doesn't mean I can't be taken out by other means.
Click to expand...
I am now 70/30 in favor to AGE 62....
 
A couple of facts that came to light when I applied @62. Windfall cost me 350/mo. Under CSRS for 20 yrs. and not paying any SS. Also under FERS so still got 750/mo. Being older father, my son received 500/mo. while in highschool. That was a bonus! ATC's retire @ 56 and now on yr. 8 of retirement. Pretty sweet if you plan ahead. Save lots of money!:banana:
 
Breakeven analysis is important, but everyone's circumstances are unique.
Remember to consider income tax impact on taking SS vs.. investments.
Also, if you care about leaving a legacy to children or charities you obviously cannot leave SS benefit to
those when you die. If you draw down investments (TSP/IRA/401 K) for income while postponing claiming SS,
you are taxed at 100% and are depleting any potential legacy..
Lastly, by 2030, SS,Medicare,interest on 18-22 trillion dollar Federal debt will consume ALL of Federal budget.
Big changes will have to be made to social programs, possibly including means testing (reduced benefits based in income).
Politicians continue to say, "those 55 and over will not be impacted" by any changes, but can you take that to the bank ?
 
Dutchy said:
Breakeven analysis is important, but everyone's circumstances are unique.
Remember to consider income tax impact on taking SS vs.. investments.
Also, if you care about leaving a legacy to children or charities you obviously cannot leave SS benefit to
those when you die. If you draw down investments (TSP/IRA/401 K) for income while postponing claiming SS,
you are taxed at 100% and are depleting any potential legacy..
Lastly, by 2030, SS,Medicare,interest on 18-22 trillion dollar Federal debt will consume ALL of Federal budget.
Big changes will have to be made to social programs, possibly including means testing (reduced benefits based in income).
Politicians continue to say, "those 55 and over will not be impacted" by any changes, but can you take that to the bank ?
Click to expand...

So - claiming SS at 62 instead of drawing on TSP/401K/IRA gives one a tax advantage plus possible legacy to heirs (either by investing SS benefits or conserving TSP).
 
hotwings said:
Good read on "Why taking SS at 62". You need to read the comments as well..

Social Security: Why Taking Benefits at 62 Is Smarter Than You Think
Click to expand...


He has some good points... but his life expectancy number isn't realistic.
"But here's the thing that's important to keep in mind: According to the latest data, the average lifespan of an American is 79.8 years old. And for men, it's only 77.4 years compared to 82.2 years for women."

but that's from birth. So you are including everyone that never retired. The statistic you'd really want to know is average lifespan of an American that made it to 62.

From the SS website (http://www.ssa.gov/planners/lifeexpectancy.html):
According to data compiled by the Social Security Administration:

  • A man reaching age 65 today can expect to live, on average, until age 84.3.
  • A woman turning age 65 today can expect to live, on average, until age 86.6.
 
I crunched a lot of numbers on this topic as I was curious. Definitely a lot of variables.

Life expectancy is probably the #1 factor, but very hard to predict.

The biggest factor that I don't see people mention is what you expect your annual retirement income/expenses to be, as that is not money that can be invested (at least not very long).

I found that the plan to take payment early and invest it, pivots at a 7.5% return.

At whatever age you choose to start taking SS payment, if you invest that money, you'll have to average a 7.5% return annually to keep up with the annual payout had you waited until 70. At that point you would be ahead by how much you were able to accumulate prior to age 70, and that would stay the same. If you average less than 7.5%, what you were able to accumulate will erode relative to the age-70 payments. Greater than 7.5% would put you further ahead.
 
As mentioned, estimated life expectancy is the ultimate factor in most cases to deciding whether to take it early or to wait. Whether or not expenses in the afterlife are covered is a question that goes beyond the topic of this forum. As a 63 year old, I've done some research. The best info I've found will take some reading. Check out "Get What's Yours" by Lawrence Kotlikoff - excellent and detailed analysis. Make sure to dig into this, especially if you have been married for at least 10 years, then divorced and not re-married before 60. Ex-spouse benefits are not intuitive and can be very profitable in the right situation. There is also a "file and suspend" technique that you should understand. Don't take blanket advice from know-it-alls on this one. It all depends on your situation. Good luck.
 
Greybeard said:
As mentioned, estimated life expectancy is the ultimate factor in most cases to deciding whether to take it early or to wait. od luck.
Click to expand...

Exactly, GBeard. Life Expectancy is the ultimate key. The only problem is we can only guess, or hope that the actuaries are correct.
 
Don't forget genetics play a huge role in longevity. My mother is 87 and my Dad was 81 but chain-smoked his way to an early grave. I chose to draw at 62 due to our countries present leadership. Check your state. Georgia exempted 30k of my retirement this year. It will rise at age65.
 
Hi jaybro61, just curious...what age did you retire?

jaybro61 said:
Don't forget genetics play a huge role in longevity. My mother is 87 and my Dad was 81 but chain-smoked his way to an early grave. I chose to draw at 62 due to our countries present leadership. Check your state. Georgia exempted 30k of my retirement this year. It will rise at age65.
Click to expand...
 
This data gives a better idea of actual life expectancy:
Actuarial Life Table

The thing to do would be to copy the table into excel, and find the number of deaths for each year but subtracting the "Number of lives" of the previous year, from the "Number of lives" in the current year. If you graph that, you'll get a nice left-skewed distribution that shows how the "average" life expectancy FROM BIRTH isn't a great way to estimate how long you'll live.
 
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. Even longer if the money is invested well as it is collected (even if only after tax amount is invested). I like the point raised about money set aside for heirs or for long-term care. Leaning towards drawing early and investing amounts collected as received! Thanks for the input! One of the best things about TSPTalk!
 
Re: Social Security at 62? File and Suspend

I realize everyone is different (longevity issues, spousal benefits, etc.), but the one thing most of these posts have in common is treating SS as an investment. As for me, I tend to think of it more as insurance. I figure my retirement based off of FERS, TSP, and outside investments. SS is there in case I mess those up. Given my track record, that is a distinct possibility. I therefore choose to increase my insurance because I have a spouse dependent on me for retirement as well. Just another take on it. :smile:
 
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