Making an early social security claim when you have other assets to spend down

[Jingthing]

I'm starting this topic because it might benefit others.

When to start an old age Social Security claim is a massively important and often difficult decision.

There is no right answer for everyone. 

I'm assuming people reading this already know that taking it early reduces the benefit amount, and the benefit amount goes up considerably every year (month even) up to I think about age 70 (which is past the "full" retirement age which varies somewhat based on your birth year).

A significant majority do take it at the earliest possible time, age 62, but many or even most of those people that do that probably shouldn't have. 

That may surprise a lot of people but it's true. In the mainstream press we're always told never to do that but that's the same mainstream press that talks as if most people have a million or two socked away in savings. 

The very best reason to take it at 62 is because you very seriously need the money.

That is probably the most common reason.

Also if you're in very bad medical shape and know you have a low life expectancy that's another good reason to start at 62.

That said, what about a situation where you think you need the income BUT you do have other assets to spend down that you could spend down to avoid starting early? Typically retirement funds.

The question is (assuming you have enough to spend down and aren't very ill) is it financially smarter to spend down at a higher rate from your retirement saving fund or just start the benefit instead?

I chose to start the benefit early.

I'm kind of thinking I made a mistake and that over the long term spending down my retirement account and waiting much longer to start the benefit would leave me better off in the long term.

I recently read an article calling this situation of spending down instead of taking the benefit - a BRIDGE.

Well, if this is going to be your situation, all I'm saying is strongly consider doing the bridge instead of starting S.S. early.

Of course, you still may decide to start it early.

I'm not saying I didn't consider doing the bridge (even though I didn't know that term before). I did. But I probably should have thought about it harder.

[MeePeeMai]

If one has an IRA or 401K etc. one has to remember the mandatory RMD (required minimum distribution) kicks in at age 70 1/2 in the USA and you are required to start withdrawing your nest egg every year from then on (which will affect your tax liability). 

 

So for example if you wait until age 70 to start pulling money out of your IRA and also wait until age 70 to take your SS benefits then you might be in for a larger tax bill than expected (especially if you are still working or have rental income/dividends or other passive income to claim).

 

It is complicated and very unpredictable to try to make the right decision ahead of time since nobody knows what new tax laws or tax changes will present themselves next year, or with the next president etc.  Health and life expectancy is also a biggy like you said.  Another consideration for many is their spouse and what benefits he or she gets (if any) and what condition your spouse will be in once you check out.

[Jingthing]

Yes but people at age 62 aren't worrying too much yet about required withdrawals at age 70.

 

Do people think their investments are going to beat the EASY high annual increase in their social security benefit as long as they delay the claim?

 

But you're right to add tax planning to the equation.

[MeePeeMai]

It's not just Federal IRS taxes either, it's the State taxes too (depending on which state you claim residency in or which state your funds originate from).  I would say that the tax hit is the biggest unknown (unless you are living off a very small social security check and no other income so basically in a low income bracket).  I always try to figure out which way will cost me the least in taxes and go from there (since I don't believe that retired persons should be taxed at all ...unless they are wealthy).

[MeePeeMai]

5 minutes ago, Jingthing said:

Do people think their investments are going to beat the EASY high annual increase in their social security benefit as long as they delay the claim?

That's a tough one and definitely must be taken on an individual basis. 

 

That's why they always say you should talk to a financial planner so he can sit down with his calculator and do the math for you but I have always done everything myself my whole life (from taxes to car repairs, home repairs and everything else) so I'm not going to change my ways now. 

 

If I make a mistake then it's on me and I can accept that.  If I listen to some college grad in a suit and it turns out that he was wrong, I will never forgive myself for paying someone to make a (bad) decision for me which ended up costing me more than what I paid him for his service in the first place.

[MeePeeMai]

Another consideration for some (and not known to many) is the WEP and GPO otherwise known as the Windfall Elimination Provision and the Government Pension Offset.  These are a big deal for me because I lose 50% of my Social Security benefit when I take it (I'm only 58 now).

 

The reason I get penalized is because I have a government pension for the rest of my life even though I paid into social security for more than 30 years, I still get penalized for having another pension.  It's not fair but it's just the way it is.  Therefore, I plan to wait as long as I can to claim my SS benefits so as to maximize my monthly take and minimize my losses so to speak.

[MeePeeMai]

Another thing to consider (though it is out of our control) is the current state of the Social Security system itself since it is often said that if nothing is done, there will be dire consequences in a few years as the money runs out (since it has been misappropriated for other projects for which it was not intended). 

 

It's depressing to think about but many experts are talking about the possibility that if nothing is done, there will be a 15 or 20 percent benefit cut across the board (to start with) for all those receiving benefits (in order to save the system for a few more years until something else can be done), in other words ... kicking the can down the road.  This would be a disaster for many who rely solely on SS benefits and I hope it never happens.

[Jingthing]

25 minutes ago, MeePeeMai said:

Another thing to consider (though it is out of our control) is the current state of the Social Security system itself since it is often said that if nothing is done, there will be dire consequences in a few years as the money runs out (since it has been misappropriated for other projects for which it was not intended). 

 

It's depressing to think about but many experts are talking about the possibility that if nothing is done, there will be a 15 or 20 percent benefit cut across the board (to start with) for all those receiving benefits (in order to save the system for a few more years until something else can be done), in other words ... kicking the can down the road.  This would be a disaster for many who rely solely on SS benefits and I hope it never happens.

Funny that you mention that.

Yes, I've heard that a lot.

In my opinion that is one of the most common BAD reasons to take the benefit early especially for people already over 50.

But that's just my opinion of course.

[amykat]

Jingthing,  In the past, I read from credible sources that one could stop taking their SS early, pay back what they had received, and restart later for better benefits, in the case that you regret your decision and have funds to do that.

[Inn Between]

I think there are valid arguments for both approaches -- one more mathematically logical than the other. BTW, in Canada, one can start taking a reduced CPP (Canada Pension Plan) as early as age 60, but Old Age Security and Guaranteed Income Supplements, one has to be 65. 

 

On the other extreme, people can wait until they're 70 to receive a bigger monthly payment. But I agree with the logic below (not my writing) and feel the early option is better

 

One of the main differences between the “mathematically correct” and “wise” decision relates to the value of one dollar at different ages. I believe that in general, $1 is worth more to a young and healthy individual than it is worth to an older or unhealthy person. That bias would lead us to recommend taking an early CPP more often. The rationale is that in most cases, a 60 year old has higher expenses than an 85 year old, and most of those extra expenses relate to enjoying life — like travel, dining out, a new car, etc. For the 85 year old, they often don’t have the ability or desire to spend more money — so having a higher monthly CPP is great, but they may not be able to spend it.  

[Jingthing]

Jingthing,  In the past, I read from credible sources that one could stop taking their SS early, pay back what they had received, and restart later for better benefits, in the case that you regret your decision and have funds to do that.

I think that's true. There must be a time limit though to do that. Does anyone know what that is?

 

To add I said I think I may have made a mistake but I'm not sure that I have.

 

My retirement pot is not nothing but its not great either. For me to do a bridge would mean a much higher than 3 or 4 percent spend down. So it really would be a significant spend down over numerous years.

 

 

I use 3 to 4 percent as a basis because that is the classic spend down if you want to be highly certain that you will never spend to zero.

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[lannarebirth]

40 minutes ago, Jingthing said:

I think that's true. There must be a time limit though to do that. Does anyone know what that is?

 

To add I said I think I may have made a mistake but I'm not sure that I have.

 

My retirement pot is not nothing but its not great either. For me to do a bridge would mean a much higher than 3 or 4 percent spend down. So it really would be a significant spend down over numerous years.

 

 

I use 3 to 4 percent as a basis because that is the classic spend down if you want to be highly certain that you will never spend to zero.

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If one has the means, however marginal, I think in almost every case it is better to defer receiving SS payments. Amykat is correct:

 

https://money.usnews.com/money/retirement/articles/2016-01-25/how-to-undo-claiming-social-security-early

 

[bendejo]

That has always been the voodoo part of retirement planning: you don't know when you'll die.  The best you can do with the unknown factor is play "what if."  I spent a lot of time playing that after turning 50. 

I figured my nest egg would have enough to get me to full-benefits age, but I wouldn't have much surplus. Scary.  That would put me squarely at the mercy of the monthly check.  My two biggest fears at this point in life are not being able to live independently (for physical or mental reasons) and being penniless and unable to earn my sustenance .  Should either misfortune come my way I'll figure out what to do when it happens.

I have no concern involving passing on an inheritance when I'm gone, so maximizing what's left isn't a factor.  To hell with the $20 gold piece on my watch chain.

 

Well, I opted for earliest age, which was 62 (I think it has gone up since).  With the current changes taking place in US gov't operations all bets are off in regards to the future.  My assets are unimpressive, I'd say most people I know make more in one year, but if I had spent it down planning to opt for full benefit I would feel very uneasy right now (that's an understatement).  As it happens when Medicare kicked in at 65 I saw a doctor (something I would only do when absolutely necessary) and found I had a condition that could possibly shave years off my lifespan.  If I had known that then yes, I would have opted for minimal age/minimal benefit.  Crazy as this may sound this diagnosis has given me moments of existential relief, in that I can learn of some impending dread and think "I hope it doesn't happen before I die."

 

If you don't get the $20 gold piece reference I'll let Louis explain:

https://www.youtube.com/watch?v=QzcpUdBw7gs

 

 

[Jingthing]

That has always been the voodoo part of retirement planning: you don't know when you'll die.  The best you can do with the unknown factor is play "what if."  I spent a lot of time playing that after turning 50. 

I figured my nest egg would have enough to get me to full-benefits age, but I wouldn't have much surplus. Scary.  That would put me squarely at the mercy of the monthly check.  My two biggest fears at this point in life are not being able to live independently (for physical or mental reasons) and being penniless and unable to earn my sustenance .  Should either misfortune come my way I'll figure out what to do when it happens.

I have no concern involving passing on an inheritance when I'm gone, so maximizing what's left isn't a factor.  To hell with the $20 gold piece on my watch chain.

 

Well, I opted for earliest age, which was 62 (I think it has gone up since).  With the current changes taking place in US gov't operations all bets are off in regards to the future.  My assets are unimpressive, I'd say most people I know make more in one year, but if I had spent it down planning to opt for full benefit I would feel very uneasy right now (that's an understatement).  As it happens when Medicare kicked in at 65 I saw a doctor (something I would only do when absolutely necessary) and found I had a condition that could possibly shave years off my lifespan.  If I had known that then yes, I would have opted for minimal age/minimal benefit.  Crazy as this may sound this diagnosis has given me moments of existential relief, in that I can learn of some impending dread and think "I hope it doesn't happen before I die."

 

If you don't get the $20 gold piece reference I'll let Louis explain:

[/url]

 

 

Yes the earliest age is still 62. Didn't you say you claimed at 62? Yeah I totally get the fear of the nest egg getting too small. That is the key dynamic with doing a bridge or not as per the situation in the OP. Of course fot people still working etc it's a different dynamic.

 

Best wishes with your health problems.

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[cmarshall]

3 hours ago, amykat said:

Jingthing,  In the past, I read from credible sources that one could stop taking their SS early, pay back what they had received, and restart later for better benefits, in the case that you regret your decision and have funds to do that.

This option was removed a few years ago.

[Jingthing]

This option was removed a few years ago.

Interesting I'm seeing references to it up to 2017 but nothing about the option being canceled. Can someone confirm that with a link?

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[cmarshall]

Jingthing,

 

First of all, no, the situation is not different for everyone.  We are not talking about about a preference for pistachio over cherry vanilla here.  Personal preferences don't matter here.  This is arithmetic. 

 

Leaving aside those with terminal illnesses, those with sufficient assets so that SS benefits are just not important to them, and those who must take benefits at an early age, because they lack the resources to delay, it is definitely better to wait.  The people who reject that analysis are the one who cannot understand the crucial difference between an annuity (SS benefits) and an investment.  Add to this cognitive defect, the known fact that naive investors consistently overestimated their investment skills and you have a recipe for poor decision-making with regard to the most important financial decision in later life: when to take SS benefits.

 

So, yes, Jingthing, you made a mistake in taking benefits early.  The SS annuity is the only financial asset available to most of us that we cannot outlive.  The fact is that for nearly all of us we don't know how long we will live and so we don't know how much money we need to cover our cost of living for the rest of our lives.  The naive folks "solve" this problem by making some simplifying assumption such as, an average life span of say, 74 years.  But if you are 62 your average life expectancy is greater than 74 years and in any case assuming the problem away does not lead to good decision-making.  So, we have to accept the irreducible fact that we don't know how long we will live.  The answer is an annuity, the best of which by far is SS.  Funding the gap between the day you stop working and the day you start your delayed SS benefits, for instance, your 70th birthday, is a challenge, but if you can manage it you are in effect purchasing more of the best annuity in the world.  

 

I have been there and done that.  I just passed my 70th birthday and received my first SS benefit payment this month.  Had I started collecting at age 62 my benefit would have been about $1600/month.  My current benefit is $3185/month.  Since my wife is eligible for SS benefits on my earnings record, she will eventually inherit my benefits which will receive Cost of Living Adjustments annually.  I expect SS will be feeding her decades from now, long after I myself have gone up the chimney.

 

By the way, the strategy to avoid suddenly having a big annual tax bill at age 70 from SS benefits and Required Minimum Distributions starting in the same year, is to convert a portion of your Traditional IRA assets to a Roth IRA each year prior to age 70 during which time you are probably in a low tax bracket.  The optimum strategy is to convert enough each year to bring your taxable income up to the top of your bracket so that you are pretty sure that the tax is the lowest you would ever pay.  As of now nearly all of my IRA assets are in the Roth where they will never be taxed and for which there is no RMD.  Eventually, my wife will inherit my Roth IRA as well.

 

Most people's financial planning is hampered by an inability to delay gratification.  The few corporations who still offer defined benefit pension plans, understand this very well.  They routinely offer the option of lump-sum payouts at retirement age instead of the annuity.  When they do so, they always underprice the lump-sum, even after adjusting for the time value of money.  The average employee is eager to grab the pile confident that he can count on a 10% return in the stock market which will never go down.  The decision when to take SS benefits is essentially the same, although the SSA is not taking advantage of us by mispricing either early or late benefits.

 

The option to undo claiming SS benefits by repaying all that you have collected so far is no longer available if you have collected more that 12 payments.  That's too bad, because that was an especially good deal.  If you haven't hit the 12 payment mark, I urge you to suspend and repay.

 

 

[cmarshall]

25 minutes ago, Jingthing said:

Interesting I'm seeing references to it up to 2017 but nothing about the option being canceled. Can someone confirm that with a link?

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https://www.fool.com/retirement/2019/04/09/can-you-undo-your-social-security-benefits.aspx

 

As I noted earlier, the option has been eliminated for those who have received more than 12 SS payments.

[partington]

Just as a counter argument:  the US government does not increase your social security payments if you defer taking them as an altruistic gift.

 

Payments go up when deferred because the US government calculates that they will have to pay out either less, or at best the same,  to an individual over his/her lifetime.

 

This MUST be the case and be calculated using actuarial statistics, or they simply wouldn't do it. Of course each individual is not an average, and could either gain or lose depending on their specific health and lifespan.

 

My simplistic view (and I could be easily persuaded I'm wrong) is that if you claim the money as soon as possible you are certain to have at least some of your lifetime of contributions returned to you, and could, for example, invest it if you don't need it.  I assume the worst and want as much back as early as possible.

 

I also agree with the earlier poster who said $1 at age 80 is worth considerably less than a $1 at age 62. At 62 you can have fun with a dollar.  At 80...nooo.

 

 

[cmarshall]

34 minutes ago, partington said:

Just as a counter argument:  the US government does not increase your social security payments if you defer taking them as an altruistic gift.

 

Payments go up when deferred because the US government calculates that they will have to pay out either less, or at best the same,  to an individual over his/her lifetime.

 

This MUST be the case and be calculated using actuarial statistics, or they simply wouldn't do it. Of course each individual is not an average, and could either gain or lose depending on their specific health and lifespan.

 

My simplistic view (and I could be easily persuaded I'm wrong) is that if you claim the money as soon as possible you are certain to have at least some of your lifetime of contributions returned to you, and could, for example, invest it if you don't need it.  I assume the worst and want as much back as early as possible.

 

I also agree with the earlier poster who said $1 at age 80 is worth considerably less than a $1 at age 62. At 62 you can have fun with a dollar.  At 80...nooo.

 

 

The financially innumerate always chime in with their heartfelt misunderstandings.

 

It is true that the benefits you take at 62 or 70 are "actuarially neutral" with one big exception.  The SSA can afford to be indifferent to when you take benefits, because they are an insurance company managing a large, indeed immense, pool of risk.  Here's their secret.  While you and I have to contend with the problem that we don't know how long we will live, the SSA actually knows to a fairly high degree of precision what the mortality rates in their large pool of risk will be.  This is an example of the statistical Law of Large Numbers, which is a reason that insurance companies almost never go bust, in marked contrast to investment firms, I might add.  

 

So, the SSA knows ahead of time the cost in benefits for our cohort, let's say, the age 70 cohort that includes me.  Therefore they can offer different benefit levels at 62 and 70.  But the fact that, in this scenario, the benefits are actuarially neutral for the SSA, does not mean they are in any sense neutral for you.  You, unlike the SSA, do not know how long you will live.  Therefore, buying more annuity by delaying, to the extent that you can afford it, gives you greater hope of avoiding the dread trifecta: old, broke, and probably sick.  

 

Moreover, the big exception is if you have a spouse who is eligible for benefits on your earnings record.  There is no way for the SSA to factor that in, because your wife may be younger than you, perhaps much younger.  Women, even of the same age, live longer, so having a wife, especially a younger wife means that when you defer you can expect actually to increase your family's lifetime benefit substantially, i.e. free money.

 

It's not that your assumption is "simplistic," but that you have identified the wrong problem to solve with your financial planning.  Getting you contributions back from the SSA is a ridiculous goal, since it doesn't matter.  What matters is not running out of money while you're alive.  Being dead is remarkably cheap.

 

I notice that the innumerate are typically also incorrigible.  Good luck to you, if that is the case.

[sirineou]

48 minutes ago, partington said:

Just as a counter argument:  the US government does not increase your social security payments if you defer taking them as an altruistic gift.

 

Payments go up when deferred because the US government calculates that they will have to pay out either less, or at best the same,  to an individual over his/her lifetime.

 

This MUST be the case and be calculated using actuarial statistics, or they simply wouldn't do it. Of course each individual is not an average, and could either gain or lose depending on their specific health and lifespan.

 

My simplistic view (and I could be easily persuaded I'm wrong) is that if you claim the money as soon as possible you are certain to have at least some of your lifetime of contributions returned to you, and could, for example, invest it if you don't need it.  I assume the worst and want as much back as early as possible.

 

I also agree with the earlier poster who said $1 at age 80 is worth considerably less than a $1 at age 62. At 62 you can have fun with a dollar.  At 80...nooo.

 

 

Well said my friend!! There are graphs that show how much more you would get if you waited , Google it, and they all diverge  at late seventies to early eighty. More money is good, but IMO more time is better. 

A bird in the hand is worth two in the bush.

 

 

 

[gamb00ler]

A few years ago I came across articles about retirement planning involving Social Security written by Kotlikoff.  I can highly recommend reading "Get What's Yours" by Laurence Kotlikoff, Philip Moeller, and Paul Solman.  Available in Kindle format ($11US).  If you still have an active library card you can borrow the Kindle book through Overdrive (likely has a wait list).  Kotlikoff also sells licenses for his own software that will evaluate your specific circumstances and suggest a comprehensive strategy to maximize your SS benefits.  It is best you look at his website for more details >> LINK <<.  I have not purchased a license for his software, but his book is very thorough and expect his program is excellent.

 

For retirement planning, I borrowed a friends laptop with TurboTax (2018) and ran through many scenarios to determine how to minimize my US income tax.   No state tax for me in Vegas.  Once I got the hang of it I could evaluate 10 or more different combinations of retirement income for a year in about an hour.  That does take some practice though.  I ended up doing a 15 year financial plan using TurboTax.  I know tax laws will definitely evolve substantially in that time frame but at least I have a starting point for subsequent years.

 

I'm planning for a happy ending.

 

[gamb00ler]

3 hours ago, cmarshall said:

By the way, the strategy to avoid suddenly having a big annual tax bill at age 70 from SS benefits and Required Minimum Distributions starting in the same year, is to convert a portion of your Traditional IRA assets to a Roth IRA each year prior to age 70 during which time you are probably in a low tax bracket.  The optimum strategy is to convert enough each year to bring your taxable income up to the top of your bracket so that you are pretty sure that the tax is the lowest you would ever pay.  As of now nearly all of my IRA assets are in the Roth where they will never be taxed and for which there is no RMD.  Eventually, my wife will inherit my Roth IRA as well.

Mr. cmarshall is right on the money and IMHO seems qualified enough to make a living as a retirement planner.  So kind of him to take the time to share his knowledge for free to TV members.

 

Using TurboTax(2018) I did exactly as he recommended and using my specific financial circumstances laid out a 15 year plan for balancing Roth conversions, IRA withdrawals and SS payments.  My goal is to pay the absolute minimum in taxes balanced against estimated cash flow requirements.  Sure, there are plenty of unknowns but I will stand by the advice of one of my smartest(and tersest) bosses.  He said, "The plan is nothing, but planning is everything!". 

[gamb00ler]

2 hours ago, partington said:

I also agree with the earlier poster who said $1 at age 80 is worth considerably less than a $1 at age 62. At 62 you can have fun with a dollar.  At 80...nooo.

The issue you have overlooked along with the many who view SS as an investment is that at 80 most people will NEED that $1 a lot more than at 62 (for medical expenses).

[cmarshall]

2 minutes ago, gamb00ler said:

Mr. cmarshall is right on the money and IMHO seems qualified enough to make a living as a retirement planner.

So kind of him to take the time to share his knowledge for free to TV members.

 

Using TurboTax(2018) I did exactly as he recommended and using my specific financial circumstances laid out a 15 year plan for balancing Roth conversions, IRA withdrawals and SS payments.  My goal is to pay the absolute minimum in taxes balanced against estimated cash flow requirements.  Sure, there are plenty of unknowns but I will stand by the advice of one of my smartest(and tersest) bosses.  He said, "The plan is nothing, but planning is everything!". 

Thank you for your kind words.  The planning tool I used was also created by economist professor Larry Kotlikoff, called Esplanner.  It takes a different approach to lifetime financial planning, including retirement, which is to plan to maintain a constant standard of living throughout one's whole life, including spouse if any.  Minimizing taxes is an important sub-goal, but the main goal is to maintain one's standard of living, most particularly without running out of money late in life.  An invaluable tool.  I had occasion to get software support on Esplannyer personally from Larry a few times.  He was very generous with his time.

 

It's funny you mention providing retirement planning services.  I did consider taking that up as a retirement activity helping other folks make better planning decisions, for free.  I worked with my first "client" extensively for months about ten years ago using Esplanner.  Nevertheless, in the end he ignored my advice to continue to make the kind of bone-headed choices that have prevented him from accumulating wealth during his working years.  At that point I realized my plan of providing free financial planning would likely have been a second career of shoveling sand into the wind and gave it up.

 

[lannarebirth]

5 hours ago, bendejo said:

That has always been the voodoo part of retirement planning: you don't know when you'll die.  The best you can do with the unknown factor is play "what if."  I spent a lot of time playing that after turning 50. 

I figured my nest egg would have enough to get me to full-benefits age, but I wouldn't have much surplus. Scary.  That would put me squarely at the mercy of the monthly check.  My two biggest fears at this point in life are not being able to live independently (for physical or mental reasons) and being penniless and unable to earn my sustenance .  Should either misfortune come my way I'll figure out what to do when it happens.

I have no concern involving passing on an inheritance when I'm gone, so maximizing what's left isn't a factor.  To hell with the $20 gold piece on my watch chain.

 

Well, I opted for earliest age, which was 62 (I think it has gone up since).  With the current changes taking place in US gov't operations all bets are off in regards to the future.  My assets are unimpressive, I'd say most people I know make more in one year, but if I had spent it down planning to opt for full benefit I would feel very uneasy right now (that's an understatement).  As it happens when Medicare kicked in at 65 I saw a doctor (something I would only do when absolutely necessary) and found I had a condition that could possibly shave years off my lifespan.  If I had known that then yes, I would have opted for minimal age/minimal benefit.  Crazy as this may sound this diagnosis has given me moments of existential relief, in that I can learn of some impending dread and think "I hope it doesn't happen before I die."

 

If you don't get the $20 gold piece reference I'll let Louis explain:

https://www.youtube.com/watch?v=QzcpUdBw7gs

 

 

 

Not much anymore makes you feel something. Thanks for that. I like and agree with one of the comments; "Louie is the only guy that can make you smile in the middle of one of the saddest songs ever."

[gamb00ler]

5 hours ago, bendejo said:

If you don't get the $20 gold piece reference I'll let Louis explain:

https://www.youtube.com/watch?v=QzcpUdBw7gs

I HAD to bookmark that one.... thank you very much!

[Jingthing]

 

An important factor in claim timing decisions is life expectancy. Some say don't think about that at all, you never know, and they're right usually you never know but sometimes you have a pretty good idea. Yes I think it's definitely true that many people wildly underestimate their potential longevity and in that sense the usual advice, don't take it early unless you absolutely have to, makes good sense.

 

One thing I looked at was the longevity of my parents and grandparents. They had a range from one much earlier than average male death and two somewhat later (but not extreme) female ones. Overall, the average appeared to be about an age where it wouldn't make any difference at all if I took it early.

 

Obviously you get screwed most massively if you take it early and live well into your 90s. While we may naturally want to live that long, taking benefits early is rather perversely betting against that happening.

 

I have noticed (correct me if I'm wrong) that there is a dynamic with life expectancy where it gets older the older you get. 

 

For example someone 20 to 50 may have an average life expectancy at the average national age.

 

But once you get to 60 the expectancy would be higher than that average, and also 70, 80, and 90.

 

Which definitely adds yet another wrinkle to these projections.

[Jingthing]

Can someone definitively confirm or deny that the option to pay back and stop an early claim within one year of starting to stop it has been discontinued or not?

 

Also the option that was mentioned here of being about to temporarily stop a claim between full retirement age and 70. I had never heard of that before. If that option did really exist, does it STILL exist?

[cmarshall]

3 minutes ago, Jingthing said:

Can someone definitively confirm or deny that the option to pay back and stop an early claim within one year of starting to stop it has been discontinued or not?

 

Also the option that was mentioned here of being about to temporarily stop a claim between full retirement age and 70. I had never heard of that before. If that option did really exist, does it STILL exist?

Here, let me work duckduckgo for you:

 

If You Change Your Mind

Unexpected changes may occur after you make your decision about when to start your Social Security Retirement benefits.

If you are receiving Social Security Retirement benefits and you change your mind about when they should start, you may be able to withdraw your Social Security claim and re-apply at a future date.

However, if you change your mind 12 months or more after you became entitled to retirement benefits, you cannot withdraw your application.

You are limited to one withdrawal per lifetime.

Withdrawing your application

Before you make your decision, there are some things you need to know about what will happen if you withdraw your application.

• You must repay all the benefits you and your family received based on your retirement application. The repayment must include any:

 

https://www.ssa.gov/planners/retire/withdrawal.html