Taking Social Security at age 62

[grampster]

Well, here I am at age 78.  Been pulling SS since March of 2006 at 62 1/2.  Swmbo is 80 and she started with SS the same date as me.  She was 64 at the time.  We have a company pension and an IRA.  No regrets at all and we've maintained our lifestyle and spend 3 months renting in Florida.  My only advice is the same today as it was 16 years ago....Don't have any major debt such as a mortgage or credit card debt.  I use my credit cards to take advantage of the discounts or credits you get back and pay each of them off every couple weeks.  One gives us 5% back on gas.  Another gives 5% from a variety of merchants.  Another gives back 5% from Amazon.

I've leased a vehicle along with a paid for 2nd veh.  That was not a problem.  You either grab money from your savings to buy a primary vehicle every so often, or lease or finance it for the length of the warranty.  Interest rates are only 2% on a car loan.  I bought my last leased vehicle when the lease ran out.  It is a '19 Buick and just flipped to 20,000 miles. Major warranty is 5 years.  My elderly Colorado pkp is paid for.  I call it my trailer with a motor.  Don't use it often.

[Ben]

So I've seen a couple of references to 62 1/2. Did I miss a benefit of waiting a few extra months or did you guys pick 62 1/2 for other reasons?

[Northwoods]

I’ve been running numbers on the pension from work.  I can pick no spousal benefit after I croak, or she can get 50%, 75% or 100% of my monthly payments after I die.  The more she gets after I die the less I get while alive.  Given that we can withdraw less from IRAs with a larger pension payment the only 2 options that make sense are 0% or 100% levels.  Which is best though depends on how long I’m going to live post retirement, and to a lesser extent how long she lives.  For now I don’t need to pick.  As it gets closer to the time to start collecting the benefits we’ll need to evaluate our respective health states and try to divine which is better.

[MillCreek]

My wife is retiring from the school district at the end of this school year.  Her retirement pension options are $ 2700/month with no survivor benefit, $2250 with 100% survivor benefit, $ 2460 with 50% survivor benefit and $ 2390 with 66% survivor benefit, all of which with me as the survivor.  We are probably going to go for the 66% survivor benefit.

[Bogie]

I'm probably going to have to work until I die... But the house is paid for, and with a few minor mechanical things, the car and van are in good shape. Before I figured out that Jen was not an accountant, just a bookkeeper, she had pretty much drained everything.

[grampster]

The only significance of 62 1/2 for me was coincidence.   I waited till after January 1 to collect unused vacation cash, a year end bonus and some large commission checks that occurred in February.

[MechAg94]

My nephew is about to finish his Masters with the possibility of going PhD. I'm trying to convince him to start a ROTH through Vanguard. Even if it's just $50 a month, it gets him in the habit and starts something that can grow for the next four or five decades.

I have another ten years before I qualify for retirement through my current job. If they don't nerf retirement plans, I can retire and then go back full time after a year. Double-dip five or six years while for the extra cash, then retire for real somewhere around 70. Weighing that against just working until 70 to up the years-of-service calc. Will depend on where I stand in terms of salary at the time.

Brad

I would agree on the first.  Start setting up savings that you don't raid for extra spending money, pre-tax and taxed.  I had a hard time getting that started when I was starting out.  I would also suggest to get in the habit of looking for investments or income outside your normal occupation whether it is hobby work or passive investment income.

[MillCreek]

My nephew is about to finish his Masters with the possibility of going PhD. I'm trying to convince him to start a ROTH through Vanguard. Even if it's just $50 a month, it gets him in the habit and starts something that can grow for the next four or five decades.

At that age, he can choose an aggressive investment strategy that is heavy on stocks.  If he wants a 'set and forget' investment strategy that can remain untouched for years, think about something like Vanguard target 2055 (VFFVX), which is currently at 90% total stock fund and total international stock fund and 10% total bond market and international bond market.  Lots of diversification at a very low expense ratio. 

[HankB]

I turned 65 not long ago and decided to take my SS at the same time as I went on Medicare. It's taxable (thanks, Ron Reagan and Bill Clinton     ) to some other sources of income I have including a pension. (Yes, I'm one of the lucky people to still have a pension, although having been forced into an earlier than planned retirement it's a bit less than I'd hoped for . . . which is a long story I won't go into here.)

I ran some spreadsheets and tried to factor everything into it that I could think of and it didn't make a whole lot of sense in my particular case to wait until 70 to take it like some people advise.

After I do my 2021 taxes I'll try to figure out how much additional I'll have to have withheld so I avoid the underpayment penalty next year.

[Kingcreek]

I’m a couple weeks away from age 64. I plan to wait until my full SS age 66+ to start drawing benefits. If Bidenflation doesn’t completely F things up for me I might retire a bit sooner but not draw SS.

[Northwoods]

If you can avoid taking money from IRAs and such and wait on SS until 70 or now I think 72, that’s probably the best bet.  Once you have to start accessing the IRAs you’re probably better off taking SS to reduce the withdrawals as the investment returns will probably exceed whatever benefits you would get from holding out for the larger SS payments.

[charby]

At 62, I can retire from my current employer and draw from my pension, but I'll probably wait until I'm 63 for a 4 more quarters of work and a better payout. Hopefully being able to use my acquired sick leave to pay for health insurance until I'm Medicare eligible. I'm not sure if I want to be fully retired or be a seasonal agricultural consultant. I'm 15 planting seasons away from retirement and I already have folks wanting me to come work for them the day I leave my job, that will be the big deciding factor in if I take early SSN or not. I'll probably make as much during the growing season (7 months) as I do year-round work at my current job, sans the benefits.

[MillCreek]

My healthcare system lost about $ 400 million last year and the bond rating was downgraded. There is now more talk of 'restructuring' and 'belt-tightening'. This always makes my ears perk up since I have lost a couple of jobs over the past decade due to restructurings from financial distress. I have tentatively penciled in the summer of 2023 to retire at age 63, and now I am wondering if that may be accelerated.

[Lennyjoe]

I’m retiring at 60. 4 more years and I’m done.

[gunsmith]

 I always said I would take early SS at 62 and find off the books jobs.
However, I am 62 this May, and I can't imagine doing that right now.
 I've only started a 401k last yr, and it wouldn't be worth it to take it now - I am aiming for 67 .
  between the SS and 401k, I will barely make 2000 a month-i plan to do the vanlife or RV thing until late seventies, depending on health and go for a long swim in my early eighties and not return - when the 401k runs out - perhaps things will change and i could make it on the ss alone, but i doubt it - plus BIG BROTHER will probably go digital currency and make traveling around in a van illegal

[JTHunter]

MechAge's idea of both a traditional and a ROTH IRA are good - if you can afford both.
In 2012, I converted my traditional to a ROTH and, as I was unemployed at the time, the taxes weren't bad.  But the fund's value at the time was only about 15K.

I became "medically unemployable" in my early 50's as I found out employer's insurance carriers don't like people with back, blood pressure, and weight problems.  I lived off of my savings for about 8 years then filed for foodstamps.  A couple of month's later, they set me up for Medicaid as well.  I filed for SS at 62 and was automatically put on Medicare at 65.  I got my healthcare through United HC and, after a year, they moved me to an "advantage" plan.  This puts my Medicare premiums back in my SS check.
My work "history" isn't that good and my "benefit" with its permanent 25% reduction (that is going to change for you younger people !!) is now just over $1,000/mth., thanks to that big COLA this year.

[MillCreek]

https://www.marketwatch.com/story/whats-the-ideal-time-to-claim-social-security-11647972562?mod=retirement

https://opensocialsecurity.com/

From the article:

That said, the calculator has a very useful feature: It produces a color chart showing all possible Social Security start dates and compares the present value of each relative to the ideal claiming date. For instance, the section of the chart shaded dark green shows dates that are within 1% of your ideal start date’s present value.

My calculated ideal date is five months shy of my 70th birthday, but I could start two years and three months earlier and still have an expected present value that’s less than 1% below the ideal. I hadn’t realized there was such a wide range of dates that were close to the ideal. Even starting benefits at my full Social Security retirement age only dropped the present value to 98.2% of the ideal starting date.

The upshot: After all my research, I realized that there’s no single ideal date to begin Social Security. As Piper’s calculator shows, there’s a range of essentially equal ideal dates that you can choose from based on your personal situation and preferences. Indeed, because of the unknowns that lie ahead, any date within that range could wind up being more beneficial than the single calculated ideal start date.


I did the graph to look at the range and was surprised to see that filing much earlier than 67 did not impact the total amount collected all that much.  Social Security is supposed to give you the same amount for your expected life span whether you file early and collect more but smaller payments, or file at your full retirement age and get fewer but larger payments.

[K Frame]

Weird... I just logged into my Social Security account and I noticed for the first time that I could get more information on my earnings history, so I started clicking years...

In the early 1990s I apparently worked for... several... companies and I have absolutely NO memory of them.

I was working part time at the gun shop after NRA laid me off, and I'm wondering if that had something to do with it. My tax returns and associated records for those years are LONG gone, but I don't recall getting W2s for any of those companies. Not talking about a huge amount of money, a few thousand a year, but all of these phantom companies have/had their own EINs, so you'd think that I would get a W2 from them.

Weird.

[MillCreek]

https://www.kiplinger.com/retirement/604428/dont-let-the-market-ruin-your-retirement

Taking Social Security to reduce withdrawals from your retirement portfolio is a way to mitigate sequence of returns risk.

[Viking]

Weird... I just logged into my Social Security account and I noticed for the first time that I could get more information on my earnings history, so I started clicking years...

In the early 1990s I apparently worked for... several... companies and I have absolutely NO memory of them.

I was working part time at the gun shop after NRA laid me off, and I'm wondering if that had something to do with it. My tax returns and associated records for those years are LONG gone, but I don't recall getting W2s for any of those companies. Not talking about a huge amount of money, a few thousand a year, but all of these phantom companies have/had their own EINs, so you'd think that I would get a W2 from them.

Weird.

Identity theft?

[Bogie]

And... My bud Arne still gets mail for me every so often... And it looks like someone filed for unemployment with my info last year, was denied, and they are investigating...

[K Frame]

Identity theft?

No, I don't think so. I've never gotten any indication of anyone ever trying any shenanigans with my financial information. I'm thinking it was something the owner of the gunshop was doing.

[MillCreek]

https://www.marketwatch.com/story/when-is-the-best-time-to-claim-social-security-retirement-benefits-sooner-or-later-11649958688?mod=retirement

Another MarketWatch opinion on the optimum age for claiming Social Security. The recommendation for most is to wait until full retirement age or even 70, but this sums up my thinking:

Another argument for taking Social Security money earlier is that it can help people avoid spending their retirement investments on daily expenses, which allows retirement savings to keep growing, said Joseph Favorito, managing partner at Landmark Wealth Management in Melville, N.Y. Favorito generally favors collecting Social Security earlier. But by his calculations, a 5% compounded return on investments would outpace the annual 8% simple interest increase on Social Security.

“If I take that dollar amount that I didn’t spend because I had my Social Security benefit at 62 and I kept it and invested it, and I do live to 95 or 100, even though I might have collected less from Social Security, the amount of money that accumulated, that stayed invested over that time, far outpaces by a large number what I would have otherwise gotten from Social Security with those higher payments,” Favorito said. However, that strategy only works for people who are disciplined investors who don’t panic during periods of volatility, he said.

[Ben]

https://www.marketwatch.com/story/when-is-the-best-time-to-claim-social-security-retirement-benefits-sooner-or-later-11649958688?mod=retirement

Another MarketWatch opinion on the optimum age for claiming Social Security. The recommendation for most is to wait until full retirement age or even 70, but this sums up my thinking:

Yup. I just got my  first SS deposit this month. Now with that plus my pension, I have more money than I need for annual expenses. Vanguard and my TSP continue to grow, and dividends and capitol gains from Vanguard are essentially charity donation money and buying stuff I don't need money. I'll wait a year just to collect more data, but I might even go back to a more aggressive investment strategy at Vanguard since it looks like I won't be needing any of that money for a good while.

I'm very happy having retired early and taken both the reduced early pension and the reduced early SS.

[Northwoods]

If I wind up “retiring” on disability (I’d rate that as pretty likely within 10 years, so I’d be 54-55 by then) I’d have no reason to take SS earlier than 65 as SSDI goes until then and is slightly more.  And employer provided disability insurance is 60% of salary, so that’s close to double the best case pension payments.  So in both cases I’m far better off waiting until at least 65 to draw on either SS or pension. 

If a miracle cure for PD comes along and I’m no longer subject to its depredations I’ll probably shoot for 62 to retire.  Unless swmbo starts making plenty of money when the kids are all grown.  Then I might pull the ripcord sooner.