Why claiming Social Security early could be more popular than ever this decade

[pedro47]

If I had worked past 62 to raise my SS income, there'd be two issues:
1. Eight years of missed SS payments, which I'm not sure I'd last long enuff to cover.
2. If I did pass the breakeven point (80), I doubt the extra $$ would matter much.

Wait, there's one more. So, make that three issues:
1. Eight years of missed SS payments. 2. Not needing the the extra $$, and...
C. I'd have to keep working... which I did not want to do.
.

Talent312, working steady keeps the mind & body active, keep on moving on.
Plus, working daily keep you out of trouble at home. LOL

 

[geist1223]

I only have 18 years of SS contribution, 17 years of 0s - I was working 15 of those years, just not in the US. Like you, I am not going back to work. My contributions were still high enough that my PIA is more than half my husband's PIA so I will claim at 62 against my own SS contribution.

Have you checked into drawing from the Country you worked in for 15 years? Also USA has treaties with some Countries covering this issue. Have a friend drawing a little from Germany, more from Canada, and more from USA. I think there is a treaty that limits how much he can draw between the 3.

 

[VacationForever]

Have you checked into drawing from the Country you worked in for 15 years? Also USA has treaties with some Countries covering this issue. Have a friend drawing a little from Germany, more from Canada, and more from USA. I think there is a treaty that limits how much he can draw between the 3.

It was like a 401K account and you withdraw the lump sum when you no longer live there.

 

[Rjbeach2003]

If you earned 10½% you are ahead of the game. My understanding is that if you delay taking Social Security until age 70, your benefit only increases 8%...

George

No 8% per year. I waited until 70 1/2 to maximize mine. I was still working and drawing another State retirement. I am an independent Salesman and have been for nearly 40 years. Also someone wrote about knowing a woman who waited until her mid 70's to take SS. You should know that the monthly benefit doesn't grow after 70 so there is no point in waiting.

My recommendation for what it's worth is to review your options with a reputable financial planner. There are many decisions to make and if you make the wrong one, you will live it till you die. They can take into account you health history and your families. Also your financial needs both now and at a later date.

 

[Rjbeach2003]

Sure, a person can wait until 70 but would want medical insurance, imo. His SS is used to pay his Medicare so he doesn't have private medical insurance anymore is the gist of it.

Bill

You can still take medicare regardless of when you take SS. If you do buy the medicare advantage insurance you will have to pay for that.

 

[Rjbeach2003]

The government and social security "experts" like those at Harvard want you to die before you ever claim social security.
That's why they advocate waiting.

In fact of the 78 million born during the boomer cohort years of 46 to 63, over 5 million have already died.
Lucky Social Security will not have to pay any benefits to those 5 million.

They want you to wait as long as possible to start collecting benefits and if you do live long enough to claim benefits, they want you to die as soon as possible, thus limiting payouts.

An interesting exercise is to take the amount of benefits you expect to receive at age 62 until a full retirement age of say 66 or even 70 and add them up.
It could be as much as $50,000 or more that you will receive during those years.

Then figure out the annual amount of your benefits at age 70 (which increase 8% per year until you claim benefits - in 4 years it would be about 32% more than your age 66 benefit).

Then subtract the early retirement age benefit from the age 70 benefit to calculate the difference.

Then divide the $50,000 (or whatever it is in your case) by the difference in benefits and see how many years you will have to live beyond age 70 in order to get the $50,000 you gave up by not claiming early.

Generally you will have to live at least until age 90 in order to break even.
If you die sooner you will leave money on the table.

(There are other factors to consider before making a decision. For example if you claim at age 62 but continue working then a portion of your benefits could be penalized. That will have an impact on the calculations above. At age 66 or 67 or whatever your full retirement age is you can earn without penalties.)

I did the calculations for myself and found that the break even point from age 66 was about 5-6 years, so significantly earlier than 90. I also just ran the figures for someone born in 1958, turning 62 this year, earning $60,000 in final year. Their benefit would be $1169. If they wait until they are 70, using the same $60,000 the monthly benefit would be $2286.

So each person should investigate their own case, don't simply do what someone else has done.

 

[VacationForever]

I did the calculations for myself and found that the break even point from age 66 was about 5-6 years, so significantly earlier than 90. I also just ran the figures for someone born in 1958, turning 62 this year, earning $60,000 in final year. Their benefit would be $1169. If they wait until they are 70, using the same $60,000 the monthly benefit would be $2286.

So each person should investigate their own case, don't simply do what someone else has done.

Unlike government pension where they use the final year or best 3 years of pay, Social Security uses the highest 35 years of contribution, adjusted for inflation. Final year earnings does not determine SS payout.

 

[SmithOp]

Have you checked into drawing from the Country you worked in for 15 years? Also USA has treaties with some Countries covering this issue. Have a friend drawing a little from Germany, more from Canada, and more from USA. I think there is a treaty that limits how much he can draw between the 3.

The treaties allow foreign income to be treated the same as SS income for federal tax purposes, but States may tax it as ordinary income. For instance CA does not tax SS income, but will tax Canadian or German old age pension.

My father collected his UK OAP, he liked that extra income.


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[simpsontruckdriver]

You can still take medicare regardless of when you take SS. If you do buy the medicare advantage insurance you will have to pay for that.

As I have said in my Medicare posts, you won't pay for a Medicare Advantage Plan with Prescription Drugs (MAPD) when you also take Medicare Parts A & B when you turn 65. Medicare Part-A (in-patient and hospice) is $0 if you've worked at least 40 quarters since you were 18. Part-B (outpatient doctor, diagnostics, labs, and PT) is just under $145/month as of today. Some MAPDs have a premium, but most are $0 premium. Some MAPDs pay part of your Part-B premium, and MAPDs can be either HMO (referrals for specialists) or PPO (pay more for out-of-network). On the other hand, a Medicare Supplement's "network" is anyone who will take Medicare, their premiums + required Part-D (drugs) is $75+ per month + $145/month Part-B.

TS

 

[Talent312]

... I also just ran the figures for someone born in 1958, turning 62 this year, earning $60,000 in final year. Their benefit would be $1169. If they wait until they are 70, using the same $60,000 the monthly benefit would be $2286...

... Less 8 years of collecting $1169 (=$486,304), not including COL adjustments...
... It would take ~8.37 years to make up the difference, which may or may not happen.

Anecdote:
One my ex's aunts retired from a bank at age 70... She died eggsactly six months later.
Another aunt lived until age 95. IOW, its a crapshoot. I decided not to wait it out.
.

 

[geekette]

Unlike government pension where they use the final year or best 3 years of pay, Social Security uses the highest 35 years of contribution, adjusted for inflation. Final year earnings does not determine SS payout.

Correct. And anyone can go check their estimates at any time.

 

[TheTimeTraveler]

.

Many folks figure holding off until age 70, and always use financial tables as if they were going to plan for that. One think to keep in mind is that the check goes up about 8% a year for each year that you hold off between 66 and 70.

So, why not 67, 68, or 69 instead? Greed? Maybe, maybe not.

Another tidbit; If one can wait until 70 then they are likely not hurting financially anyways.

Finally: Money isn't everything, but is sure does help! The question as to when to begin accepting will go on forever.......



.

 

[pedro47]

Can anyone guarantee you will live to the age of seventy (70).

 

[geist1223]

Started drawing as early as possible. If I live to 70 I will set a record for males in my family.

 

[geekette]

Can anyone guarantee you will live to the age of seventy (70).

Sure, on my 70th birthday.

 

[WinniWoman]

Can anyone guarantee you will live to the age of seventy (70).

Can anyone guarantee that you will not? The risk is not that you will die early. The risk is that you won’t and will live a long life.

If you die early and did not collect SS yet, you won’t care. You’ll be dead. If you live to a nice ripe old age and collect SS later there’s a good chance you’ll be liking those larger monthly payments.

Especially if you have no pension and are not rolling in dough. Then again if you really need money it makes sense to collect ASAP. Also, if you are rich it probably makes sense to just take it early. Why wait? It’s play money anyway.

It’s the people in between that need to strategize and also take taxes into consideration as well as future Medicare premiums.

Everyone’s situation is different and their strategy for when to start collecting SS will vary.

 

[easyrider]

Started drawing as early as possible. If I live to 70 I will set a record for males in my family.

I'm probably waiting until 70 unless I decide I need the money now. This way the SS amount will eventually be higher for my wife whether I live or die before 70. So far I am the longest living man of my family on my dads side. They all croaked in their 40's of heart disease. I have set the record, lol.

I am helping her spend her SS. We bought ebikes and fun stuff with her SS. She started collecting at 62.

Bill

 

[Brett]

Can anyone guarantee that you will not? The risk is not that you will die early. The risk is that you won’t and will live a long life.

If you die early and did not collect SS yet, you won’t care. You’ll be dead. If you live to a nice ripe old age and collect SS later there’s a good chance you’ll be liking those larger monthly payments.

Especially if you have no pension and are not rolling in dough. Then again if you really need money it makes sense to collect ASAP. Also, if you are rich it probably makes sense to just take it early. Why wait? It’s play money anyway.

It’s the people in between that need to strategize and also take taxes into consideration as well as future Medicare premiums.

Everyone’s situation is different and their strategy for when to start collecting SS will vary.

probably why most people start collecting SS at their 'full retirement age"
https://www.stltoday.com/business/i...cle_8e8b175b-2de3-5945-bca8-cfe623d4fd67.html

 

[Sugarcubesea]

I only have 18 years of SS contribution, 17 years of 0s - I was working 15 of those years, just not in the US. Like you, I am not going back to work. My contributions were still high enough that my PIA is more than half my husband's PIA so I will claim at 62 against my own SS contribution.

I have pulled my ss report every year for the past 5 years and I knew that I had enough years in but as I was looking this year, I see that I have now eliminated the 4 years that had zeros with income, since Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most.

 

[geekette]

I have pulled my ss report every year for the past 5 years and I knew that I had enough years in but as I was looking this year, I see that I have now eliminated the 4 years that had zeros with income, since Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most.

Yes, it is so much fun when you have the full record filled out, and then the lowest years start dropping out of highest 35. Every kid should start their FICA record as young as possible. Wherever life takes you, get official wages on the record every year. Upgrade the non-zeroes starting at age 50. However longer one works at higher than earliest annual income, while deferring taking the benefit, the better set towards maximizing the eventual benefit payment.

I used to think I would work until 70. Then I realized what a life suck that was. There is some happy medium Sweet Spot Retirement Age between those. It's not that I won't work again, but I don't want the stress mill again. I don't have to make a lot of money to offset those early very low earning years and continue to improve my eventual monthly income via SS payment to me.

 

[Ralph Sir Edward]

To do planning, you need to have facts. The first thing you need to do is to download the SS Benefit Calculator for your computer.

www.ssa.gov

and fill it out. Then you can start running different scenarios.

For more fun, go to the 1040 instruction booklet and print out the instructions for calculating the taxable portion. See how much, and at what rate, you SS will fall into.

Another small land mine. SS going up at 8% per year is true, but also less than true. Why? Medicare. At age 65, you can start Medicare. But you pay for Plan B coverage, and each year the Plan B coverage goes up. However, if you are already on SS the amount is limited to to the amount of the annual COLA, or less. If you aren't already on SS you pay the full freight of any cost hike. So if the cost runs more than the annual COLA, then you will need to deduct the difference between the COLA and the higher Medicare rate, from the 8%. So you may end up with the full 8% or less.

Lots and lots of games involved. . .

 

[TravelAmore]

To do planning, you need to have facts. The first thing you need to do is to download the SS Benefit Calculator for your computer.

www.ssa.gov

and fill it out. Then you can start running different scenarios.


Another small land mine. SS going up at 8% per year is true, but also less than true. Why? Medicare. At age 65, you can start Medicare. But you pay for Plan B coverage, and each year the Plan B coverage goes up. However, if you are already on SS the amount is limited to to the amount of the annual COLA, or less. If you aren't already on SS you pay the full freight of any cost hike. So if the cost runs more than the annual COLA, then you will need to deduct the difference between the COLA and the higher Medicare rate, from the 8%. So you may end up with the full 8% or less.

Lots and lots of games involved. . .

But do I need Medicare Part B? If my employer retirement plan includes full medical and I sign up for Medicare Part A, do I need Part B and Part D (employer insurance includes drug plan also)?


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[Ralph Sir Edward]

But do I need Medicare Part B? If my employer retirement plan includes full medical and I sign up for Medicare Part A, do I need Part B and Part D (employer insurance includes drug plan also)?


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You may not need it. Everybody's situation is different. As I posted earlier, it's a very, very complex subject.

I will add, you need to plan ahead - far ahead. If one waits to the last minute, one will end up with very few choices, mostly bad. . . .

 

[pedro47]

I had a friend who worked for Costco p/t who was 90 + in years. He retired in the last part of 2019..
I guess working in your later years; is go for some people

 

[Ralph Sir Edward]

Here's some long-term considerations.
#1. Taxes. So do you want to pay taxes in retirement, or do you want to dodge as much as possible? I make no value judgement, but that is the most important question you must decide, as far in advance as possible.
a. You don't care about taxes. Any method of investing is fine.
b. You do care about taxes. Then you should be stuffing as much as you can in IRA/401Ks, and convert them to Roths on a steady basis. You must have them converted by them time you start Social Security, otherwise, converting will kick your SS tax rate up. Like an old car repair ad said, "Pay me now, or pay me later. Later will be much more."
#2. Do you have pensions? If so, your tax decisions are already made for you. Pay taxes. Doing Roth conversions will help with taxes, but won't keep you out of the tax brackets.
#3. Debt status. You should start Social Security at zero debt. Debt is a killer on a fixed income.
#4. Do you like working? If you really like what you do, postponing SS is no big deal. If you hate your job, it's a different matter entirely.
#5. Medicare starts at age 65. Can you afford medical coverage before age 65?
#6 Are you willing to spend money as "bridge money" between retirement age and starting SS? Just because you retire does <not> mean that you have to start taking SS. Two totally different questions. But if you wait to take SS, you will have to bridge the difference out of your own savings.
#7. If you have pensions, when do they start? Most likely, they will not increase if you don't start them on their starting date.