If you make smart choices with Medicare your expenses should be pretty irrelevant too unless you go onto long term care. LTC will eat a fortune in just a few years.
My point too. Once you are on LTC - which I assume means nursing home, lying in a bed or if you are lucky, hauled into a wheelchair for the day… your disposable income will be somewhat irrelevant. No housing cost, no car, no vacations… not a lot to do with your time and money.
At that point, maybe more money will determine how quickly the orderly answers the call button - except in my family experience, $10,000 paid each month didn’t make much of a difference.
So it’s a gamble. You give it a rough guess how long you will need a regular lifestyle - if you have medical problems that indicate your mobile solo living years will be short, make the most of them.
I think it also matters how much you’re earning when you hit 62. I was only working part-time, so what SS paid me was a huge percentage of what I was making. Since you’re allowed to make money while on SS, I was able to cut my workload even further and ended up making more than I was before I took SS. Less hours, more money at 62 worked for me, but I wasn’t making a whole lot of money anymore anyway.
I can’t imagine anyone disagreeing with the idea that financially it is always better to keep working rather than take SS-if that is an option.
The usual discussion is by people who for some reason have to retire before age 67. For those folks, they often have savings (401K is the usual) that they could live on for a time and thereby delay taking SS. This is the group with the questions. Is it better to take your SS early and use your savings at a slower rate or delay and depend more on SS later? In every case I have read about, and in every program I have tried (a small subset of both groups), the answer is to delay SS if possible. However, these answers all seem to be based on a simple calculation of the total amount of money earned over an average lifetime without consideration of when the money is actually collected.
We absolutely agree. I was supporting your contention that SS is cheaper and better than an annuity, since I have both.
I was going to mention this. The value of a dollar of SS income can vary dramatically between people. Someone just staying above water at 61 will find the income a lot more valuable at 62 than someone with a job and lots of savings.
I’ll add one point on the “when to take social security” question.
For the longest time, this seemed to be framed that the smartest thing to do was to wait as long as you could to take social security. You increase each year by ~8% by waiting.
That is true (for me) when I compare my cumulative amounts from 62 to 67. But when I compare my amounts from 67 to 70, surprise surprise, my break even point is at my stated life expectancy as calculated by SS!
And lately, I’ve seen it written more and more that in some ways, it doesn’t make a huge deal when you take it. Additionally, one might enjoy having the money more when you are at 62, than you might at 70.
This is because the increase from 62 to full retirement is a more significant increase than from full retirement to 70. Like I said in my earlier post, for most people the best age to take ssi is age 67. For some people 64 65 or 66 is better. It’s rare that it’s best to take ssi younger than 64 or older than 68. Unless you have a good reason to start that early or wait that long you are usually doing yourself a disservice.
I don’t doubt that cutting SS would not work for people already receiving it, IF THOSE PEOPLE ARE POOR. My question was about my situation - where I have a very nice set of investments, and the monthly SS will be a nice bonus, but I won’t be eating cat food without it. Seems that if the government gets in trouble, it could cut me loose without too much political backlash.
There would be rioting in the streets. Seriously. If you are over 50 the odds of you not getting social security are low.
But odds are SS is 20% or more of your expected retirement income - and a reliable amount, regardless of markets or interest rates.
From what I can find, max SS is about $31,000/yr. Even if you settle for a discounted half that, $15,000/yr - well, as 20% of your income, that would imply a retirement income of $75,000/yr. with, $60,000 without. (Ignore inflation, just update all numbers as the years go on…) How many people seriously expect that level of income? If the government were to take some or all of SS for people at that level, don’t you think the people retired on $50,000 or $40,000 will think - “It’s only a matter of time before they come after us!”? It’s a lot of grief and bad publicity for not much money back. Besides, they’re already getting some of that back as income tax, if you make a decent amount. Plus, if you cut retirees’ income, how many more qualify for extra medical benefits?
The previous (Conservative) Canadian government wanted to up the CPP payment start date to 67, the current government (Liberal) has said no, it’s staying at 65. OTOH, CPP contributions have doubled from about $1000 to $2000 max per year (plus an employer portion) to help properly fund the system. Has SS premium rates increased by the same amount in the last 15 years?
You don’t know us geezers! And the relatively rich ones have more clout and more money to direct against anyone trying to take away some benefits. AARP would have a fit too.
I think I read that 2/3 of people retire before FRA.
Anyone thinking about doing this should be aware that there are other issues with retiring this early. I was investigating a complex potential strategy for us and came across this free calculator which got recommended in a column comparing calculators. It handled my case and recommended a strategy far weirder than I had imagined (and I imagined quite a few.) It will tell you the net present value of the recommended strategy based on your life expectancy and when you want to retire.
Professional curiosity, what did it have you do?
This what all the newly formed SWAT teams around the country are training for.
It mostly involves buying out the country’s supply of used tennis balls, rendering all walker-assisted elderly immobile.
Not quite. If you can get “disabled” classification after you start receiving regular benefits you can get the same monthly amount as if you had waited until full retirement age before starting to collect, retroactive to the date you became disabled.
Why?
I’d think the answer would be along the lines that SS as it is executed now is an insurance program with defined benefits where all are treated (somewhat) equally, where a means test would fundamentally change this to yet another redistribution program.
I’d argue it’s clearly progressive enough already.
Detailed answer - probably too much for most people. My wife has been freelancing and her benefits at FRA will be less than half of mine, so it makes sense for her to go on my spousal benefits. But I’m not going to file until I was 70 (I was a perfect candidate for file and suspend, curse you Congress!) So I was investigating if it made sense for her to file now (she is over 62) and then go on spousal benefits when I file. (We were both born before 1/1/53.)
It recommended that she wait until RFA, file, then I can file for spousal benefits, and we both switch the other way when I hit 70. Which seems overly complicated, and some stuff I’ve seen says that I am considered to be filing for my benefits when I file for spousal benefits. I might have misled it by saying I was going to stop working at 66, which is true but not true in the sense of filing then.
I think we’ll just let her file, since even if she files early and is locked into the pre-RFA amount the delta between my benefits and her benefits is > 1/2 of my benefits, so she’ll always get the full 50%.
I’m not doing anything until I talk to our financial planner and the local SSA office, which is in walking distance from my house. I’d not do their plan this year anyhow since I have way too much income to make it useful.
Almost all the hits I got when investigating this was for taking spousal benefits first and then shifting to your benefits, not the other way around.
(The rest of you can wake up now.)