Social Security - 62, 66 or 70?

[sixdogs]

Social security won't ever be broke. They'll just keep printing the paper to pay for it. The money won't buy much but they will long be retired having left the mess for the adults to clean up.

 

[Travelover]

Social security won't ever be broke. They'll just keep printing the paper to pay for it. The money won't buy much but they will long be retired having left the mess for the adults to clean up.

I think that a younger person would be wise to not plan on it and if it is there, take it as a bonus. That said, it will more likely continue to be given as promised, but taxed back (from Medicare fees and income taxes) such that it maintains a safety net function for those with no other means and amounts to not much for those with adequate pensions and or investment income.

 

[KennyG]

Everyone has a unique situation. If you are 62 retired and need the money, by all means take it. I'm waiting until the last possible time. I'm over 65, still working (I know it's a personal problem) and won't need the income. My wife is over 10 years younger so maximizing my payment will increase her benefits.

The one argument I don't buy is "take it now, you don't know when you will die". After you are gone you don't need it anyway. The only factor is the survivor benefit so if you think you will die early and your spouse will survive, waiting makes sense.

For years I've been advocating a simple solution for SS funding - just make it taxable (Federal only) as regular income. Low income people (bottom 40% in recent years) generally don't pay any Federal income tax anyway and higher income retired people can afford it.

 

[TCowner]

I will try to avoid turning the question of the best timing to commence our SS benefits into a political one as that is really not the question the original poster asked. But the claim by some that the trust fund will "broke" by 2033 and then just go away isn't true. Of course the congress and the president could completely repeal Social Security. Given the death sentence to the political party that makes that part of their election platform social security will continue. And when the "income" from workers and their employers fails to meet the "outgo" then its fair to say the program is broke. But its not like the 6.2% paid by the employee and the 6.2% paid by the employer would just stop. It could if the law is changed but again, not likely. So the worst case scenario is that benefits would have to be reduced but not eliminated. And think about it, when Social Security was enacted it was primarily a male dominated work force and the average man lived to be less than 70. That has now increased to about 80 so the system is clearly making payments to retirees for several more years.

So, I don't think we need to keep claiming the system is doomed. And I also think that younger workers today need to pay a little more attention to how they are going to pay for the retirement. With advances in health care that surely will come in the next 30 years someone entering the workforce today will probably have a life expectancy of nearly 90 years or more. Of course Social Security and private pensions and all of the IRA programs simply cannot pay for 30 years of retirement until death takes them. They are either going to devote 30% of their income to retirement savings or delay retirement until they are 75..

Again, I was trying avoid making this a political discussion but I think Social Security should and will continue to be significant part of our plans for retirement well into the future. We need to make some changes in the law now that would ensure stability well past the 2033 date. To me, the critical point is that we need to be more honest with our younger workers. I am quite sure that very few of today's young workers are prepared to jump on the idea of working to 75. It almost seems like they only want to work to about 45 at times. But the fruits of healthcare advances will simply strip any retirement/private savings plan of its ability to pay until death if we live too long.

 

[dave1949]

Very thoughtful post TCowner.

 

[RedNeckGeek]

Very thoughtful post TCowner.

Indeed.

I agree that your future scenario, or some close variant of it, is the most likely outcome.

For the sake of fairness, though, if changes are made to SS, they need to effect only those with enough time left before needing benefits to make alternate plans for their financial support. The resulting brouhaha in the press might make those younger people realize they are responsible for their own financial future, and motivate them to take a more active roll in its planning. Especially if it's made clear that Uncle Sam isn't going to guarantee them a comfortable bed and three squares in their climate of choice.

 

[Whiskey Sniffer]

I took my SS at 62, one reason was I had a 7 year old son so I get my SS plus 50% more for him till he turns 18. When he turns 17 I just may make a new one....::scratchchin: So get busy in the bedroom you old timers and supplement your retirement. Oh finial thought it helps to have a young wife!

 

[oldpilgrim]

I took mine at 65. I was going to wait until 66 but then I found out that the amount I'd get at 65 was $2000, and if I waited until 66 it would be $2050.

By taking it at 65 I would get $24000 extra than if I waited til 66. For the extra $50/month I'd get waiting til 66, it would take me along time to make up the $24k I got up front.

There was no way I was going to wait until 70, for the larger amount that would come then.

 

[Travelover]

Another reason to postpone SS if you can afford to, is to help pay for long term care should you need it. Depleting your savings and going the Medicaid route really sucks for the remaining spouse.

 

[Threepoint]

One thing not yet discussed in this thread is the SS strategy known as "file and suspend." Lots of folks (even some retirement planners) are not aware of it, despite it being explained on the SS website and in literature. Maximize Benefits with File and Suspend | Social Security Choices If your spouse is just a few years behind you, it may be a real incentive to wait until you're 66 (full retirement age, for SS purposes), then file for benefits but simultaneously ask that they be suspended until a future date. Suspending them until age 70-1/2, when they must be taken, yields the most benefit.

This strategy isn't for someone who really needs as much immediate cash flow from SS as possible. If you really need it, then of course it makes sense to take it. But that does mean that the monthly payments will be at a reduced rate the earlier you take it, significantly so if taken at 62. Another member observed that the 8 percent simple interest annual growth of payments resulting from waiting is low compared with an average 10-12 annual return in the stock market historically (indeed, much higher in the most recent years). That's true, but as someone else mentioned, the SS yield is indexed to inflation, and is (IMO) a much safer bet than the stock market, although I'm very big on that, too. It also assumes that the reduced SS early payments are actually used to purchase stock (I'll bet that doesn't happen often!), or that taking them avoids having to cash out of well-performing securities that are already held and that are the only other available source of funds.