It Might Be Better to Take Social Security at 66 Instead of 70. Here's Why

[MULTIZ321]

It Might Be Better to Take Social Security at 66 Instead of 70. Here's Why
By Mark Hulbert/ MarketWatch/ Retirement/ Barron's/ barrons.com

"Conventional wisdom about Social Security bites the dust—again.

As you undoubtedly already are well aware, most financial planners recommend that—so long as you can afford to do so—you should wait until age 70 to begin receiving your Social Security benefits. Your monthly payment in such an event will be 32% higher than if you begin receiving benefits at age 66. So long as you live to your early 80s, those higher monthly payments should make up for the foregone income over the four years from age 66 to 70.

I recently presented one argument for why conventional wisdom could be wrong. In this column I present another.

This additional reason traces to Social Security’s uncertain fate at the hands of our elected officials. If you take at face value some of the proposals being given serious consideration in Congress and in President Trump’s administration that reduce future Social Security benefits, then the financial planners could be giving the wrong advice to wait until age 70....."

How to decide when to dive into Social Security. Agence France-Presse/Getty Images


I'm not sure if you will be able to access this article without a paywall. I decided to post it to test the waters and determine if it would be available to all.


Richard

 

[bluehende]

I get a paywall.

 

[SmithOp]

I got a pay popup that I was able to close and read the article but it didn’t add much information to the decision I face this year when I turn 66, take my own or take spousal and delay until 70.


Sent from my iPad using Tapatalk Pro

 

[MULTIZ321]

I get a paywall.

Thanks for letting me know

Richard

 

[DrQ]

I was able to read it, but I have not read Barron's this month.

 

[DaveNV]

I got a paywall, but the window let me close it. I was able to read the article.

I turn 66 this year. I'm taking my retirement money while I can, because tomorrow isn't guaranteed. And politically, I don't trust anybody.

Dave

 

[mjm1]

I was able to access the article and appreciate you sharing it with us. Very good information to consider.

Best regards.

Mike

 

[bluehende]

I got a paywall, but the window let me close it. I was able to read the article.

I turn 66 this year. I'm taking my retirement money while I can, because tomorrow isn't guaranteed. And politically, I don't trust anybody.


Dave

Thanks for the heads up. It worked for me too. It was so obvious I missed it.

 

[WinniWoman]

My head has been spinning with all the financial stuff lately. My husband is definitely taking his at age 70 as he will have a slightly higher benefit than me. I will be 63 in a couple of months. My FRA is 66 + 4 months. FA said it would be good if I also wait until age 70 so so far that is the plan, but I can alter it a bit if I want, of course. I am no longer working. Husband retires the end of this year.

My husband will take his 401k and "slashed to all heck" pension in a lump sum and roll it over into an IRA.

The thing is everyone's situation is different. Depending on your assets you have to watch for the tax torpedo that can kick in if your income is too high from withdrawing IRA investments and so on, and when you hit 70 1/2 and have to take your RMD's. Then your SS can get taxed a lot.

Our plan so far is to take some of our income from our taxable accounts and a little from our Traditional IRA accounts - possibly not to exceed what NYS will not tax - which is $20,000 - then do some Roth conversions as well. With the increased standard deductions we will stay just under a certain income as to minimize taxes. Every little bit helps if we can minimize the taxes on SS and other income.

Then when we turn 70 - we each will be taking SS and the mandatory RMDs at 70 1/2 and hopefully our taxes will be at least a bit less.

I have always thought of Social Security as an annuity and we do not have any insurance annuities.

So- yeah- you can take SS early or at FRA or anytime in between 62 and 70, but you do have to look at your overall big financial picture and also factor in taxes.

 

[WinniWoman]

I was able to read the article.

 

[GetawaysRus]

The traditional saying is: "Man makes plans and God laughs."

The corollary is: "Man makes plans and then the government changes the rules."

 

[Luanne]

I got a paywall, but the window let me close it. I was able to read the article.

I turn 66 this year. I'm taking my retirement money while I can, because tomorrow isn't guaranteed. And politically, I don't trust anybody.

Dave

That's what I did. I took it at 62 when I retired. Dh took his at 67, but he worked up until then. Part of our reasoning was we wanted the money while we could still enjoy it.

 

[DaveNV]

Part of our reasoning was we wanted the money while we could still enjoy it.

Exactly. I'm going to continue working till at least the end of the year, (and maybe next year, not sure yet), but start collecting SS this year while I'm still working.

Dave

 

[slip]

We both plan on retiring taking ours at 62. My wife turns 60 in a couple weeks and I turn 56 in June.

 

[VacationForever]

It is anyone's speculation as to what will happen to resolve the Social Security shortfall. We do know that if you need the money now, then start taking SS now. The alternative is drawing down your savings which in itself will lose the ability to remain invested and grow.

For us, it is a no brainer with our age gap. My husband draws on his at 70 to maximize the amount for both himself and potential widow's benefits. I start at 62 and will switch to his if I outlive him. If he lives until 95, then we are at breakeven. If he lives beyond 95, then we lose by my taking SS at 62. Either way we win, either in terms of maximizing SS benefits or his longevity.

 

[geist1223]

Neither Patti or I have long lived families. I am 65 and have out lived my Dad by 4 years. So we both started at 62.

 

[klpca]

We are just starting to think about this ourselves. My family lives forever (late 90's) husbands not so much but both of his parents are still alive in their mid-80's. That said, no one knows for sure. I still can't decide, but am leaning toward full retirement age for both of us. We are far more worried about health insurance at the moment (because my husband has had some health issues - and I trust no one in the gov't not to change the rules). We are also more focused on how to keep our expenses under control in retirement - looking at every item on the budget and deciding if it stays, goes, or gets adjusted.

 

[Talent312]

I took my SS benefit at age 62 for two reasons:
1. It added enuff to my pension so I could retire w/o drawing from IRA's.
... 'cept for major ticket items, like a kitchen remodel.
2. As another poster said, make use of it while still ambulatory.
... I calculated that I would be 82 B4 it would've paid me to wait.
.

 

[tompalm]

I started at age 65 with the logic that saving and investing the money for five years would be a winning strategy if I die before age 90. Or the other factor is if the government changes the rules, I will take what I can get right now while I can get it. My math below is not perfect and figures are ballpark. Someone with a computer program can probably figure out better numbers. But the basic info below shows saving money between age 65 and 70 and paying yourself back can change your breakeven point and provide a lump sum of cash to my beneficiaries should I die early. The numbers below are for my account. I didn’t work 35 years and did not reach the max payout.

Social Security invested at age 65 vs age 70

$2200 x 12 months x 5 years = $132,000 saved

$132,000 invested in a bond at 2.5% =$3300 year

Age 70 to 90, bond should payout $33,000 additional funds

$132,00 + $33,000 or a total of $164,000 extra at age 90

age 70 pays $8000 / yr more than age 65

at age 70, reduce $164,000 nest egg by $8000 yr so that payout is equal

20 years later nest egg is gone and 90 years old is my break even
—————

Payout is based on highest 35 years

 

[artringwald]

DW started hers at 66 and I was going to wait until 70, but when my Medicare Part B premium jumped 22% and hers stayed the same, I started taking it at 68. What I hadn't considered is that the COLA increases are much less that the Part B increases. SS will never decrease the net amount of the check due to Part B increases.

 

[pedro47]

This is a very nice article Richard. I took my Social Security at age 66. I would have waited to age 70 if my doctors could have guaranteed, I could lived to see 70 and in good health. I am now in pretty good health.

Between the age 65 to 70, the human body goes through many changes, mostly they are not good. I am only speaking about me.

Here are some keys to have a good healthy life IMO. Reduce your alcohol consumption & red meat eating habits, walk more each day, go to Y, jump into the pool & swim,
stop smoking, eat good nutrition meals , add green & colorful vegetables to your diet, nuts and exercise. Exercise At least 150 minutes per week. These are my humble opinions only.

Also, you need to look at your family medical on both sides.

 

[artringwald]

I'm 69 and I'm still putting more miles/year on my bicycle than DW puts on her car. My key to long life is exercising and eating a balanced diet.

 

[geekette]

It is a tough decision for all. I had planned to wait until 70 but I thought I would work longer than will be my case. I have always thought I would take it when I need it, but that is now looking like sooner vs later.

 

[WinniWoman]

DW started hers at 66 and I was going to wait until 70, but when my Medicare Part B premium jumped 22% and hers stayed the same, I started taking it at 68. What I hadn't considered is that the COLA increases are much less that the Part B increases. SS will never decrease the net amount of the check due to Part B increases.

Can you explain this further, please, if you don't mind? I was trying to explain this to our Financial Advisor last weekend, but I could not articulate it well. I would like to run this by him again.

Also, was the 22% increase you got in the Part B premium a significant amount of money? Isn't the Part B premium fairly low- like $135 or something like that? Are you saying the increase in SS benefits that you would get by waiting until age 70 would not offset the increase in Part B premiums?

 

[WinniWoman]

I started at age 65 with the logic that saving and investing the money for five years would be a winning strategy if I die before age 90. Or the other factor is if the government changes the rules, I will take what I can get right now while I can get it. My math below is not perfect and figures are ballpark. Someone with a computer program can probably figure out better numbers. But the basic info below shows saving money between age 65 and 70 and paying yourself back can change your breakeven point and provide a lump sum of cash to my beneficiaries should I die early. The numbers below are for my account. I didn’t work 35 years and did not reach the max payout.

Social Security invested at age 65 vs age 70

$2200 x 12 months x 5 years = $132,000 saved

$132,000 invested in a bond at 2.5% =$3300 year

Age 70 to 90, bond should payout $33,000 additional funds

$132,00 + $33,000 or a total of $164,000 extra at age 90

age 70 pays $8000 / yr more than age 65

at age 70, reduce $164,000 nest egg by $8000 yr so that payout is equal

20 years later nest egg is gone and 90 years old is my break even
—————

Payout is based on highest 35 years

I am not understanding this. And what are you living on while you invest your SS check?

Also, yes, the government can change the rules, but more than likely people of ages over FRA will be grandfathered in anyway. Of course, who knows?

Funny how many people with insurance annuities aren't bothered about handing over a ton of money to the insurance companies and waiting 10, 20 or 30 years to get their money each month. Yet they worry they won't get their SS money back. It's the same concept people.

This said, everyone has to do what they have to do. If you need the money, take it early. If you don't need the money, take it early and invest it and - heaven forbid- spend it or gift it!. If you don't need it presently, but will need it in the future, look at your individual situation, taxes, medical expenses, best guess on longevity, etc. and deal with it from that perspective.

There are a lot of factors to consider. And actually several of them could work for the same individuals. There are lots of options and just a matter of preference in many cases. Whatever the decision, it is the right one.

If you drop dead before collecting, well......people also die in their 50's, 40's, 30's and younger. They don't get their money back either.