Countdown to retirement

Miscellaneous and Personal Stuff I Must Share
421

I don’t know if this is the right thread, but I’m gonna share my recent SS experience. Plus, all dollar amounts in this post are made up approximations.

I turned 70 earlier this year. My ‘normal’ retirement age, according to the SSA, was something like 66 years and 4 months. Had I started drawing my SS benefit then, it would have been $2400 each month. But I delayed until age 70, so my monthly benefit now is $3200 each month.

My wife is 13 months younger than me, so she just turned 69. She started drawing her SS benefit two years ago. She never made a whole lot of money, so her monthly benefit was $1000. When she applied, she was assured by the rep that as soon as I retired, she would then get 50% of my monthly benefit. (That’s called the spousal benefit.)

When I started drawing earlier this year, we assumed that her benefit would jump to $1600, which is half of my benefit. But she received a letter stating that her monthly amount would be raised to just $1200. We appealed, using their online form.

That was back in February. The SS had told us that an appeal process may take 90-120 days, so we sat tight, waiting to hear back from them. Today was the five-month anniversary of the appeal, so we decided to call the local office. We actually got through to a live agent within 10 minutes. We explained the problem, and she pulled up the case. She explained that the spousal benefit is based on 50% of the amount that I would have drawn had I started at normal retirement age, not the amount I’m actually drawing now. So my wife’s new amount of $1200 is correct, as it’s half of the $2400 that I would have drawn at that time.

Maybe this is common knowledge, but we certainly didn’t know about it. This may or may not be helpful to anybody else, but it’s still a good thing to know.

Why we didn’t hear back sooner from the SSA remains a mystery.

422

Hoo boy, easy mistake to make.

Thanks for sharing.

mmm

423

As it turns out, it was only dashed expectations. We wouldn’t have done anything differently even if we had known.

Now, it’s true that she could have started drawing the spousal benefit had I started drawing earlier, but I still think it was in our best interest for me to wait until age 70. I’ll either live long enough to prove that my decision was correct, or I’ll die and won’t care.

424

As always, the real point of waiting to 70 is that unlike savings or employer-pensions that are almost never inflation-indexed, SS has been and therefore should be a) for life, b) inflation indexed.

Waiting to 70 is all about ensuring you won’t starve in the cold if you should have the weird and decidedly mixed fortune to outlive your assets and watch your other pension(s), if any, be inflated away to pocket change.

It’s about the only deal on offer that can offer insurance against that unlikely worst-case scenario. We insure ourselves our whole life against unlikely worst cases, so why not this one too?

425

If you are going to starve if you wait until 70 to collect, then collecting early makes sense. Waiting to collect is an investment, a pretty good one, and also assumes you are going to live long enough to collect as much as you would if you started earlier. There is no single right answer. I waited until 70, but that might not work for everyone.

426

Granted. There are a number of different risks that depending on the individual will (or at least may) mature at different ages. SS gives you one mallet to whack one risk. Better pick wisely about which one to whack when.

One upside to waiting is if one of the early risks starts to happen you can still apply right then. If not then it continues to grow into a bigger mallet that’ll be more effective against later larger risks. Taking it early thinking only about “greatest total dollars vs life expectancy” makes it a much weaker tool against later pop-up risks.

The fact lots of pundits talk about “break even dates” rather than “net present value” indicates how little financial sophistication underlies a lot of the advice out there.

Then again, a lot of advice is aimed at people who can’t eat if they don’t take SS starting the week after their paychecks stop. But that’s more an indictment of Americans’ savings habits and America’s economic system than it is an indictment of the advice given to those unfortunate souls on the very short end of the overall stick.

427

To pick up a different thread, in order to have a successful retirement, you really need outside interests or hobbies.

I have two good friends that I met in grade school. We were all born within a two week window and turn 60 in a few months. I retired at 56 and have always been a live music freak. Retirement allows me to go to way more shows (once covid restrictions ended) and I have very large number of friends that I see at the shows.

A and his wife are both medical doctors and new empty nesters. They will do a slow retirement by reducing their working hours over the next several years. He enjoys going to the symphony with his wife and golfing. He will golf more and take more golfing trips.

R is a school teacher and retired military and his wife is a lawyer working for the Federal Government. They are also empty nesters. They are both going to retire in exactly a year. R is very happy to not work but he is rightfully nervous because he doesn’t really have any hobbies and none of the typical hobbies really appeal to him. He has a few friends but they will still be working. I’m sure that he will figure something out but it’s daunting.

428

I’m in a bit of a unique situation as far as when to start SS. I had planned to start taking it at full retirement age - which is about a year from now - but I would be fine financially if I postponed it until later, so I could do that, no problem.

However, based on my family history, I’ll be shocked if I make it to 75, much less my 80s. This points the needle toward starting SS earlier more than later.

It’s a quandary.

mmm

429

My late first wife was an active stage IV metastatic cancer patient the day she turned 62. We started her SS then. Good decision. She died a couple months before her 66th birthday. But nobody treating her expected her to last half that long. Said another way, she lasted a lot longer than the available data suggested.

Point being that even truly dread disease can take its time finishing you off. I’d suggest that your health now, and your personal health history means a lot more than what happened to Grandpa or Uncle Joe. Especially if you’ve been an office worker and he was a coal miner or other manual laborer. Smoker / non-smoker, fat/thin, etc., etc.

430

True enough, but family history could play a part in your decision. It certainly did in mine. Dad died at age 95 and Mom made it to 101. That was a factor in delaying my draw until I turned 70.

The biggest factor, however, as others have stated, was our financial situation. My parents left my siblings and me a nice inheritance, so we didn’t need the SS money immediately, and it was essentially a no-brainer to wait until my 70th birthday. I ran the numbers in my handy-dandy Excel spreadsheet, and if I live to be 81, that’s the break-even point. So just 11 years to go.

(I should also add if I predecease my wife, she will start drawing my monthly SS check, which will replace her current monthly draw.)

431

Well, Mom died at 63 and Dad at 73. That said, they were both life-long, heavy smokers.

I’ve spent a good amount of time thinking and researching about this and I’ve come to the conclusion that it likely does not matter when you initiate SS. Unless you have circumstances that are at either distant end of the bell curve, the gov’ment has the odds nicely calculated to make it a six of one/half-dozen of the other proposition.

So I’m not going to fret about it. I might initiate next year at full retirement age, I might delay longer. In the meantime, retirement life is the best!

mmm

432

Agree completely that the system is designed to be actuarially neutral. Across the great bulk of people, whether folks pick 62, 65, their FRA, 70 or whatever works out to a wash for the SSA. Or should.

But Congress doesn’t let them tweak the “interest rate” on delaying to match the current level of long-term interest rates. it was fixed by statute many, many years ago. The effect now, even with the increased interest rates of the last couple of years is that, actuarially speaking, waiting is more profitable. Said more explicitly, if everybody waited to 70, the SSA would payout more time-corrected money than if everybody picked 62. Retirees win, SSA loses. To the degree you too are average, you too will benefit by waiting some, and benefit more by waiting more.


I also agree that unless you have strong reason, like my late first wife, to expect a very short life, or strong reason, like @Railer13 just above, to expect a very long one, the lifetime difference between 62, 65, and 70 to any individual person is rather small. As you say.


The one point I personally keep coming back to, and it may be an artifact of my personal slightly odd circumstances and attitude, is that I’m going to make one hell of a run at spending my entire non-trivial fortune by the time I’m 80. Income, growth, and principal. It’s gonna be a hell of a ride.

If the market keeps booming, I’ll fail at that; it’ll still grow faster than I can spend it. If the market sucks the next 15 years, I will succeed; it’ll all be gone. In which case I will fall back on my maximized SS & my LTC insurance to ensure my late dotage is at least middle-class tolerable, not squalid. That’s what waiting to 70 does for me.

Others may have other plans. Or, armed with very little in savings, may have no choice but to take it at 62.

Clearly you’ve thought about this and equally clearly you have options.

433

OK, does this also apply to spousal survivor benefits?

In other words, once I purchase the farm, does Mean Mrs. Mustard receive a portion of my full retirement age benefit, or a portion of the benefit I was receiving when death came a-calling? (assuming I waited until 70 to start receving SS)

mmm

434

Assuming you’re both of retirement age, been married long enough, etc., benefits to your survivor are the same as your own benefits.

Here’s a different way to look at it / explain it. Again for the vanilla case.
Once both members of a married couple are receiving SS retirement benefits from whichever commencement date(s), it doesn’t matter who dies first. The smaller benefit dies with the first person and the larger benefit continues with the second until they die.

435

Ok, so this is another consideration as to when to draw. The longer I postpone initiating SS, the more it will benefit my spouse PM* (assuming she outlives me).

mmm

*post-Mustard

436

This is a fact that I’ve tried to hide from my wife.

437

Never tell her / him about any life insurance you may have. Sleeping with one eye open for the rest of your life sucketh greatly. :slight_smile:

438

Welp, it’s finally my turn. I’ve already had my last day of actual work. Tuesday is my last day of employment and on Wed I awaken a retiree.

As best we know all the paperwork for employer, union, SS, and Medicare is dotted, crossed, signed, sealed, and delivered. Now I’ve taken a knee and we’re running out the last seconds on the clock.

Given my weird schedule and often less-than-full time nature of the job, it’s not like I’ll wake up Wed to a completely strange new world of mid-week sloth. I expect it’ll take a week or 10 days before that “I’m itchin’ to go again … oh, yeah, not happening.” feeling sets in. Kinda like when you get the sudden itch to call somebody long dead: “… oh, yeah, not happening.”

The rest of the year will have a slow drip drip of 401k/IRA rearrangements driven by other people’s schedules, not mine. But otherwise, I’m as done as I can be.

Gonna be epic! But first, a nap. :grin:

439

Congratulations!! :tada:

440

Enjoy! I’m still loving it after 15+ months of retirement