Retirement age discussion

In My Humble Opinion
61

That happened to a colleague of mine as well. I was taking over his job in the military because he was retiring. A couple of years later he started having mystery pains in one arm, went to his Dr and found out he had bone cancer. He was also told that he really only had time to get his affairs in order and make himself comfortable.

My wife and I had a combination of significant stressors about 10 years ago and I’ve been driving along not quite on empty, but close, and I’ll be retiring in about three years at age 65. My plan is to do jack-shit for about a year, except for what I want to do. I’ve got to try to recalibrate my sleep cycle, which has been a bit of a mess the last 10 years, spend time on the bike, noodle on my guitars, drink tons of coffee, read lots, and enjoy a judicious intake of various micro-brews.

62

Happened to a guy I worked with. He kept postponing his retirement, then, had a massive heart attack and died a few months before his really this time retirement date. It was sad, because he died obviously, but his widow also had much lower surviver benefits because he died in service instead of being a retiree. Can’t remember the details now.

63

Harry Nilsson’s POV:

64

I see a possible difficulty there.

65

Yes, this may seem a bit contradictory I s’pose :coffee::grin:

66

That’s the real kicker for us.

We’re both 62+ years old and, in theory, eligible for Social Security. My husband’s earnings history is such (due to grad school) that every year he continues to work, will make a notable difference in his benefit even if his salary remains stable - mine will not increase much, by comparison (we’re ignoring the “retire early, take SSA hit” component for the moment).

Theoretically, if we moved to some place cheaper, we’d get enough cash out of selling our house that we could purchase something for cash, and have very low housing expenses. But then there are 2+ years of medical insurance to worry about, and of course ongoing medical expenses over and above what Medicare pays.

I would definitely not retire early without doing some serious planning with a specialist.

As another poster mentioned, you do have to weigh how long you expect to live (looking at family history etc.). Both my parents died of cancer at age 75 - so I have a sort of weird thought that this is how long I’ll live. On the other hand, I won’t be dying of what they did - not being possessed of a prostate, and never having smoked. Oh the gripping hand, I’ve got other health issues that might make up for that reduced lung / prostate cancer risk :smiley:

67

[Understand this thread is a year plus old]

My father waited to take Social Security until 70 - largely on my advice I’m afraid - and he regretted it. He was a construction worker, and in retrospect, he felt that he could have used the money at age 63 to do things and have fun, and by the time he hit 70 he was too old and worn out to enjoy it. Hopefully not the case for most of us, but the case for some.

Whenever I see articles on “Maximizing Your Social Security Benefits” it virtually aways points out the greater benefit at age 70, but rarely if ever points out that SS is trying to pay us all the same by the time we die when we reach the breakeven point. I think enjoying life when you can in your early 60s should be a greater portion of the equation than it is for many.

68

Which is why I took SS at 65.5 years of age, despite my full retirement age being 66.5. Actuarily, I’m unlikely to reach the break even point if I delay benefits due to my cancer and cardiac diagnoses. I’d have to make it to about 82 or so to start benefiting from that sort of delay.

69

“Benefits” in that context is typically meant by the authors (and interpreted by readers) to refer to the dollar value, but the simpler articles don’t remind readers to think about how long they are/aren’t likely to live, which can change the math. Also, a more holistic view of “benefits” would consider the point you made, i.e. when you receive the money can be as important as how much you receive.

70

I suspect for most people even if they aren’t too tired to enjoy the money at 70, they still would have enjoyed it more earlier. I expect to be able to travel and still enjoy it at 70 - but I’ll enjoy it more at 62. And while I am retired already at not-quite 60 (yay pension !) my husband won’t retire until we can collect SS in two years. If we wait till 70 for SS, that probably means he will work until 70 and vacations with the grandchildren will most likely not be possible then. Not because we’re too old, but because they will probably not be interested in family vacations by then.

The only circumstances under which I would wait is if I couldn’t afford to retire with whatever I will get at 62. Funny thing is, the few people I know who can’t afford to retire on that payment are still planning to collect at 62 and keep working at least part-time.

71

Concur with all. There is also an opportunity cost to waiting from 62 to 70. In my wife’s case, if she waits until 70 to take her SS, she will have forgone over $210,000 in that 8-year period. It will take her almost a decade to reach the breakeven point. $210,000 is a lot of dough.

72

Don’t forget the tax implications, though. If I take Canada Pension and my wife is still working, it pushes us into a higher tax bracket and I pay more tax on my pension.

In Canada, if you are low income you can also get an old age supplement on top of your standard Canada pension, but this gets clawed back almost 1:1 for any income you are making at that time. So if you are planning to get Old Age Security at 70, it’s better to have a lower pension income so you’d be better off taking an earlier pension for less money per month.

But in general I agree that waiting until 70 is a bad idea. You really aren’t making any more money - you’re just getting paid more per month for a shorter period of time, actuarially speaking.

If you knew you were going to live to be 100, it would make total sense to wait until 70 to collect a higher pension for the next 30 years. But life expectancy in the US is falling, and is now 77.8 years. So on average, taking SS at 65 gives you about 13 years to enjoy it. Taking it at 70 gives you 8 years. That seems like a poor tradeoff.

I should point out that life expectancy is not 77.8 if you’ve already made it to 65. But much depends on your health. If you’re 65 and have chronic diseases like Diabetes or an immune disorder or high blood pressure or arteriosclerosis or other killers of older people, take the early money. But if you’re 65 and completely healthy and fit, and your parents lived to be 100, maybe you should wait if you can.

73

Assuming you are no longer working…

-If you are flat broke or have very little savings and you literally need the money to survive, take it early.
-If you have enough money to get you to your early 70s or so and then you are going to run out, take it late.

These cases are obvious.

-If you have enough savings that you will never need the money, and especially if most of your savings are tied up in retirement accounts and equity in your primary residence, take it early.

This is less obvious. You would rather take tax free money now than pull money out of tax deferred investments that can remain invested and tax deferred.

If you are working and making over around $21k, part of your benefit becomes taxable and things get more complicated but you should generally wait you are no longer working.

74

That seems to be a reasonable age assumption - I’ve heard similar figures elsewhere.

My full retirement age is 66 and 10 months. I have a silly idea that I’ll die at 75, as each of my parents did. To be fair, I’m unlikely to go from what killed either of them (never smoked, don’t have a prostate) but I have other health issues.

Neither my husband nor I work PHYSICALLY strenuous jobs, but we’re just tired of the whole rat race. And I do worry that by the time we have the free time to, say, travel, we won’t be in any shape to do so.

One argument for continuing to work is that every year I delay taking Social Security is a year where I have my full income, as opposed to my SS benefit which would be about 1/3 of that. And when we DO retire, our expenses really will not drop appreciably unless we move to someplace smaller / cheaper - we both telework, so clothing expenses are a nonissue, we only own one car (well, two, but the second one is nominally my son’s), which needs fuel only every month or so.

Continuing to work only bumps up my SS benefit a few dollars a month for every additional year. Not nearly as much as the difference made by delaying TAKING the benefit, e.g. if I retired now and waited 3 years to take it. My husband’s work makes a bigger difference (though I have not crunched the numbers); his salary has gone up a lot faster than mine (after a few years of earning quite a bit less than I did).

The project I’m on has a contract recompete about the time I turn 65. I’ve just about decided that if we don’t win the recompete, that’ll be it for me.

Health insurance is the big kicker for us too. I’m just over a year away from Medicare eligibility; my husband is just a couple months more than that. In either case, we could COBRA our health insurance to cover the gap. A close friend is doing exactly that - she’s my age, and is retiring in another month or so. In her case, she never married, had no kids, and now owns her condo free and clear - so she’ll likely have MORE disposable income than she did 6 months ago.

We were in Florida selling our condo a couple months back. It was small, but with some major downsizing we could certainly have lived in it. It was quite sobering to realize that had we kept it, we could have afforded to retire right away (once we sold the place we live in). But… Florida!

My older brother just snuck in under the wire for an option that is no longer available to anyone younger than him (born 1953 or earlier, I think). He was able to claim under his (ex) wife’s coverage, and receive half her benefit, while waiting until 70 to claim on his own. He was still working part time until quite recently - so between that and his own investments, he was doing fairly well. I gather his income will go up once he claims under his own, later this year, since he will be getting it at age 70.

In general though, waiting until 70 seems like it’ll be tough to have that pay off in the long run - especially if you go with the assumption that you’ll use your own retirement assets to live on until then. You can leave your assets to your heirs. You can NOT leave your unused SS benefits to your heirs.

75

Rereading this thread I am struck how a couple of years have altered my mindset.

Just back then I couldn’t imagine ever retiring. Now, turning 64, I can imagine it. The corporatization of medicine has turned my profession into a job. I am working harder for less and more importantly the message is increasingly how we need to remember that we are a for profit company without remembering everything else we should be for above that. There is still some sense of that greater good, more to individuals, but less than ever. I can see travel, learning pottery, taking up tennis … I can imagine it now.

So has anyone done the actual math with expected moderately conservative portfolio returns? My old plan was 70 and then think about it. I am willing to bet on a long life as a reasonable bet. Let’s say 90. If I do 67, better to live dipping into the portfolio and waiting until 70 to start drawing SS benefits or start drawing to minimize the opportunity cost of letting it appreciate tax protected?

How do minimally required withdrawals factor in?

Yeah time to talk to a planner soon. I know.

76

That’s the main reason I am going to start taking SS as soon as I can. Sure, if I wait until 70 (or even 67) I’ll get a larger monthly benefit. But I have already retired ( not quite 60 but I have a pension) and I want my husband to retire no later than when he turns 62. If we don’t start collecting SS, we will have to dip into retirement savings for him to retire. Lets say we spend $400K of retirement savings in those eight years - ( approximately what both of collecting SS from 62-70 would come to ) and then one of us dies after getting SS for 2 or 3 months. That would be $400K we couldn’t leave to our kids - and even if no one dies right away , we won’t live long enough to put away $400K from the increased SS benefit.

77

This is a key point that is often overlooked. I don’t have kids nor do I have a spouse so it makes the decision much easier.

78

I waited until 70 to take SS, helped by having lots of post tax savings to draw from and a hack that let me get half of my wife’s benefit while waiting for mine to increase.
At the moment, with the max benefit and the IRA withdrawals I’m making to reduce my mandatory withdrawals, I’m paying more tax than I expected. I also find that I don’t have to draw down my retirement account at all. The one thing I discovered when I retired was that it isn’t your balance, it is cash flow.
We did not give up anything we wanted to do before 70 because of my not taking my full SS. But YMMV. We just got back from a road trip (I’m 71) and we’re going on a Viking river cruise in October so we’ve not slowed down yet. If we don’t do stuff, it is because we’re too busy, not because of lack of money.
BTW my doctor is on the verge of retiring for the same reasons you are.Retirement is great.

79

The math goes beyond me (and I’d love to be walked through it by someone with the chops and the patience) but there are the two pulls:

I’ll probably have enough to last. But one fears running out if life keeps going with expenses unforeseen and one hates to fear living a long time. Having a max SS pay out each year is a decent base to live minimally at.

Other side of course is fearing dying earlier and not having maximized what I left to kids or possible future grandkids.

My initial impulse to be more meh to the latter as a fear.

And I worry about the cost of health expenses as a drain. I have bear none right now but our out of pocket for my wife’s with multiple not life threatening but ongoing issues gives pause.

80

When I was offered early retirement they made an offer so attractive, I could hardly refuse. I was 25 months short of 65 and they offered 75% of that 25 months salary. But the big thing was that the annuity they were paying at the time was insanely high and they were lowering it starting Jan. 1, 2000. If you know anything about actuarial science, an annuity that pays $83,000 a year on a pension fund of $960,000 is insane. In 23.5 years, I have collected $1,950,000. So I took it. I have not touched my retirement savings accounts at all. And, until about 5 years ago, when my creative juices seemed to run down, I did what I always did anyway: mathematical research. Just didn’t sit on committees and didn’t teach. I enjoyed teaching, but it comes with exams and paper marking, which I hated. What do I do now? Read the Times, do crosswords and Beehive, and follow TSD. Like now.