<p>@Vladenschlutte
I thoroughly reviewed the Social Security payment calculators late last year when my H had the opportunity to take a voluntary reduction in force (VRIF) at his company at age 61. All of the statements sound familiar and I think that is really accurate. There is a maximum that anyone can collect (I believe it’s about $2500 a month but that’s based on memory) also at full retirement age (which depends on the year you were born). You can also go on the social security website and they will calculate numbers for you (just create an account). One important thing that I think a lot of people miss and is important is if you plan on working while you are collecting your SS benefits, they will reduce your benefits if you are under full retirement age. I’ve seen people post that they are going to start collecting at 62 and work part time. However, if you work part time while you’re collecting, you don’t have to make much money before your benefits go to zero. None of us have a crystal ball and knows exactly how long we will live so this is difficult to decide when to start collecting SS. If you are an optimist and expect to live a long life, put off collecting SS as long as you can. If you wait till you are past full retirement age, you collect more also. If you have some health issue that may cut your life short, then you may want to consider collecting early. You are really betting on your own health here.</p>
<p>@Vladenschlutte, who here knows how long one is going to live, only God knows.
I also think one needs to know the purpose of SS for one’s intended use. I tend to use it as inflation hedge, ie I have no intention of planning to maximize my take from SS, I mean I don’t care that much as long as I have enough to live on, I’m happy.
When I’m 66, I get to take out half of husband’s SS(which is more than I had expected). But I also wants to use it as hedge against future unknowns like inflation, catastrophe, so waiting till I’m 70 to take out SS base on my earnings gives a small hedge. If my income has not kept up with inflation, the big boost I receive from waiting for SS at 70 will come in handy. Other thing as well, my husband is older so I think there is a good likelyhood he will go before I do, same scenario as his dad/mom, women also live longer. When that happens, I will not have his income . Waiting until I’m 70 insure that I will get the maximum I could have received to compensate for the lost of husband’s SS.
But in case I’m wrong, I also have a small insurance when that happens to cover the mortgage if it’s not paid off by then. It also works the same for my husband, if I go first.
I ran multiple scenarios(in my head) and couldn’t come out any different scenario that will be better to take it out early.</p>
<p>The thing about the SS website is that while they have calculators, they do not help you find the optimal strategy for your situation. I agree with @ixnayBob, $40 seems cheap to validate that you have evaluated all the options you have.</p>
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<p>@vladenschlutte has it right though.</p>
<p>The main factor seems to be when you “plan” to die.</p>
<p>I have a ways to go, but I was curious and ran the numbers on Excel for take SS benefits starting at different ages.</p>
<p>If I die at 78, better to start taking money at 62.
If I die at 80, better to start taking money at 65.
If I die after 80, then better to start taking the money at 67.</p>
<p>Also, the difference between various ages (e.g. if I started at 62 but lived to 80) was not a heck of a lot.</p>
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<p>The main scenario to consider is the program itself. My bet is that over time there will be substantial changes to the program, so probably better of starting earlier to get grandparented in instead of risking a bad change.</p>
<p>Another way to do it is to just not count on SS.</p>
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<p>Sure, you don’t need to know. Only to make an educated guess and pick the solution which is best for your educated guess. </p>
<p>Just saying… the guy who wrote this software thinks about the SS rules all the time for a living. It is a very, very complex program, and counter-intuitive a lot of the time. You can’t count on the SS office or website to help you maximize your benefits. Seems silly to me to try to “roll your own” in this situation and understand all the nuances (and I am a do-it-yourselfer in many areas of life). But I know when I am whipped by complexity, and this (and tax filing, Turbotax is my friend) are a couple of areas where I would not try to figure it out on my own.</p>
<p>There is nothing to stop making changes for folks who have already started drawing SS, as I understand at least one state pension fund is doing (tho of course it is more unusual). Given that my parents are still pretty physically healthy at nearly 85 and 90, and one of my great uncles did at 107+ I believe I will live many more decades.</p>
<p>If when you are going to die is the only variable, Excel is sufficient. For married couples, divorced people, people with young kids, etc, I found it too complicated to do myself. </p>
<p>I will try to rework some of the scenarios in my Excel spreadsheet for my own good. Even if I were to buy this software I need to make a guess how long I’m going to live.</p>
<p>@intparent, I viewed the TurboTax as a good sophisticated calculator. For years I did my own tax on paper and made mistakes adding things. But when I first bought TurboTax there was an error on how it didn’t account for properly for rental property. I called and got a refund but the following year TurboTax charged more for the software version with rental property.</p>
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<p>Exactly. That’s what I don’t undersatnd about SS. SS adm calculates the payment amount based on average life expectancy. I would think that wil make them come out short since individuals have a better feel if they will live longer than the average or not. Over all they are more likely to be right forcing SS pay more than their actuarial calculation. Do I make sense?</p>
<p>Most people start collecting SS at 62 because they need the money to survive. It is something of a luxury to be able to wait until you are older.</p>
<p>Current tax levels are sufficient to pay 70% of current benefits after the "surplus"is gone, so I think that is the worst case unless they start playing games with means testing.</p>
<p>I have tried to plan with the assumption that I still get nothing from SS. That said, my benefit will be higher than DW’s, and I expect that she will outlive me, so I am thinking I want to maximise my benefit as plan A, and then figure everything else around that.</p>
<p>And a lot of people take it early just because they can. My ex just retired at 62. He is in perfectly good health to keep working, but his wife is 65 and wants to do stuff. She talked him into retiring and taking the smaller benefit. His mom is still going strong at 96, and his dad passed away at 95. So not everyone takes it at 62 because they have to. Some do it for other (less sensible, IMHO) reasons.</p>
<p>An article about software to optimize: <a href=“Social Security Benefits: How To Maximize Your Benefits | HuffPost Post 50”>HuffPost - Breaking News, U.S. and World News | HuffPost;
<p>For years, most of the retirement magazines suggest taking social security at 62. The sentiment has since changed after the Great Recession and the low interest rate due to QE from the Fed.
Sure anything can be changed, even the Roth IRA, 401K. It’s not speculation, I think the current president has put in the budget that requires minimum distributions for Roth IRA . <a href=“3 Public Policy Changes That Could Ruin Your Retirement Plan”>http://www.forbes.com/sites/jamiehopkins/2014/06/04/3-public-policy-changes-that-could-ruin-your-retirement-plan/</a></p>
<p>Yes, anything can be changed, but most things like changes to SS would allow people close to retirement age to be “grandfathered.” I’m 65 and a half. I’m planning to take SS at age 70 (and live until age 95 or so). They’re not going to mess with my SS at this point, even though I haven’t started taking it, because I have no opportunity to make up for what I’m counting on.</p>
<p>If/when they change the rules, they’ll do so to very young people. Just as they gradually changed the normal retirement age from 65 to 67.</p>
<p>Great link.Dr Google. </p>
<p>We plan on taking SS as soon as possible. I would rather have control of my money in my hands, plain and simple.</p>
<p>With regard to decreased benefits if you continue working after taking SS benefits.
There seems to be some mis-information about that.</p>
<p>From the SSA.gov document (first page) about this:</p>
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<p>I wouldn’t count on changes affecting only young people. For example, they could make benefits 100% taxable, or start reducing benefits for the “rich”, because who cares if the rich get screwed.</p>
<p>At some point young people are going to get fed up with oldsters taking all their money and leaving them I.O.U.s.</p>
<p>When you earn more than a certain amount after starting to collect SS (but before age 67), your immediate SS benefit is reduced. For some people, this could make a difference. I believe the limit is $15,000 earned in a year. Above that, your SS benefit gets reduced.</p>
<p>Yes, the reduction does get added on later. That is because while you are working, you are actually contributing to SS. </p>
<p>But for some folks, a reduction NOW would be problematic…and what gets added in later isn’t going to help them now.</p>