The question of the day is when to take Social Security. 
Question of the Day
Eddie asks: “Mish, have you ever computed your break-even on SS? I feel a strange compulsion to do the math, and wondered how many people have done this.“
I waited for full benefits without doing the math. Yet, I generally advise doing the math.
Huh?
For starters, I am old enough to have gotten full benefits at age 66. I knew I would be working, collecting income on this blog off ad revenue, so waiting until I was 66 made perfect sense if ….
If What?
If I was healthy enough. And I am, at least at the moment.
Ready Made Decisions
If at age 62 someone has reason to believe they will not live long, then it may make sense to start collecting as soon as possible. In terminal cases, it’s take the money and run while you are still alive.
I did not do the math for delaying beyond 66 because I wanted some extra income as soon as I could get it with full benefits. I feel adequately covered elsewhere. So mine was a balanced decision.
Those who absolutely need money ASAP may have their choice made for them. Unfortunately, I suspect too many people are in this boat.
Everyone is different. Please consult your advisor and accept responsibility for decisions you make.
Social Security Optimizer
Trowprice has a Social Security Optimizer.
The Social Security Administration has a Retirement Planner.
Neither covered what I stated above that may not be applicable to you.
Team Trump Accelerates Social Security Insolvency
The question of the day was in response to my post earlier today Team Trump Accelerates Social Security Insolvency, Where’s DOGE?
I do not believe reduced benefits changes the math, nor do I think there will be reduced benefits in the first place.
However, resultant inflation from Congress unwilling to restrain spending may change the Social Security math in ways that may be difficult to calculate now.
Social Security rules may change as well.
I was in a race between preserving my health and preserving my wealth. I had a high stress position for years. I started not handling so well at around 62 and my health was declining. I retired at 64 on short notice when family circumstances arose; now 9 months later, I’m getting into great shape and have no stress. I waited until 65 to start benefits because I had funds to bridge the gap until I had been out of work for a year. I love having all my time to do what I choose.
Depends on health and lifestyle. Or if your still working and they will tax it
My spouse and I both took Social Security at 62 because we did not need the money. We took the money and invested it in dividend stocks like IBM, MO, DUK, etc. which at the time – 2006 were paying 5%. Despite the IFC (we reinvested all the dividends) our accounts have more than doubled since 2006 – actually DUK and a few other stocks have trippled. So essentially everyone is different – we had enough retirement income at 62 and did better with the money than the government.
You’re smart and disciplined. More need to follow you.
I don’t know anyone who is over 75 and healthy who doesn’t kick themselves for taking Social Security benefits at 62. PS By the time you reach 62, your actuarial life expectancy is 81 years old for men and 84 years old for women. Have fun kicking yourself in many of your twilight years.
Good point. Also, the break even age for taking at age 62 versus 67 is age 81 – basically life expectancy as you point out.
I’d take the money and run. The US debt problem is going to be a huge issue that needs to be resolved in 2025. This means so many things including reduction of social security payments. I think at some point, social security will get privatized and resemble a 401k plan, where the risk is managed not by the government but by the contributor.
Social Security is an insurance program, so you should claim benefits when you have no other options. Otherwise, claim at the maximum age (currently 70 yo) for maximum insurace payments in the event of future distress.
If you collect at age 62 versus 67, the breakeven age is 81. However, it’s likely much worse than that as you won’t be eating into your 401K and other investments if you collect early. So the break even age may well be into your 90s. Collect early.
The earlier you start withdrawing from your tax deferred accounts, the better. Otherwise, the RMDs are likely to have a huge tax burden per marginal tax deferred dollar that is withdrawn. It is the sum of all income streams that determine the RMD tax burden, per dollar. Everyone’s tax situation is different, but for people who didn’t balance their investments properly between taxable and tax deferred, you can do yourself a huge disservice by not drawing down tax deferred accounts agressively, and in that case the added early SS income is the last thing you want.
For instance, If you retire at 55 and start taking 72(t) SEPP withdrawls, you are in a win-win! Retire early, *and* minimize tax cost of tax deferred withdrawls over your lifetime!
This assumes you are “tax maximizing” roth conversions in addition to 72(t) withdrawls before you draw your social security at 70. A simpleminded “start taking your money at 62” often leads to regrets down the road, for a variety of income levels.
US Social Security is not an insurance program.
US Social Security is a Ponzi scheme – go read the definition.
US Social Security depends upon new contributions to pay current liabilities.
It can’t be any simpler or more obvious.
So I guess my auto insurance payment is not really insurance either?
I pay in each year, but it goes to someone else that has an accident.
OASDI? Old Age, Survivors and Disability INSURANCE
Whatever it is, the Supreme Court said a long time ago,, your premium is a tax, and the government can change how much they payout at anytime and in anyway…
You have the option to forgo auto insurance, a wage earner cannot skip participating in social security.
Your having auto insurance doesn’t entitle you to a payout, regardless of how much you buy.
People who pay into social security expect to extract, regardless of their individual need to do so, with many scheming to maximize their take. Most would prefer to avoid crashes and injury and be perfectly content never filing an auto insurance claim.
Yes, there is more than a resemblance to Charles P’s program.
all structures in society depend on premises, as do projections and caveats, that is to say paper money is a piece of paper and a promise. if that promise fails, you have a piece of paper.
The entire 21st century has been about creating chaos and sowing distrust in an ever more deliberately incompetent government, in practically every nation on this world.
Finding which gear breaks and sends it all to hell is the tricky bit, if the chaos becomes too extreme, too rapidly, it cascades into madness. At that point your only hope of survival is to live outside the system, a feat few can pull off.
in closing social security is the least of the worries of a world of crumbling national governments. Be glad you don’t live in Germany or England…
How can I tell the difference between madness and the mess we’re in now?
Asking for a friend.
madness arises organically, from circumstances and social systems, solar cycles,poor food,strange religions, bad gut biomes,and a host of factors still unknown.
The madness of the mess we are all in was engineered for a purpose. Thesis/antithesis, to drive one towards your goal, create a problem, and then offer a solution.
The world is indeed mad enough on its own, but several groups of individuals are insane enough to beleive they can control the world by manipulating the public and private institutions.
how to tell the difference? Look at who profits from the madness, often they will tell you exactly what they want to accomplish, like the World Health Organizations power grabs, or the WEF and 15 minute cities, “you will own nothing and be happy” – a classic pr
move to prepare the drones for the economic crash.
It is purposefully made difficult to distinguish, a cover story is often useful to accomplish their tasks and hide their true purpose. Covid19 was not a natural event, it was a cover story, to accomplish many goals simultaneously. The acceptance of MRNA therapy, the massive profits, the social conditioning, the destruction of small businesses, and then the unknown long term health effect that we don’t know of, in addition to the condition of the population through the 2 injection system, to prime them for allergic reactions to include death when again exposed to those agents at a later date.
The widespread peanut allergies in children can be traced to peanut oils use in vaccine starting in the 1970’s.
The Covid19 vaccine contained many excepients for unknown reasons, that can trigger death from Anaphlaxsis – thats why people had to wait 15-30 minutes after injection to make sure they wouldn’t die, some did though. Many will die later when its retriggered by exposure to these agents in the wild, or a follow up vaccine.
it was madness, but madness with a purpose and offering a favorable outcome to those running the program, and an unfavorable outcome for those targeted by the program. Thus it becomes a bit easier to see it was not “normal” madness, but manufactured madness.
I started collecting at 62 and am using the proceeds to “invest” in high quality, long-lasting products due to the expectation that crapification will extend into the future for most everything.
I buy a lot of used items to replace appliances. I look for old made in america stuff, generally try to find a duplicate of what i have that has died.
A crockpot for instances, they’re all made in china these days. A good used american made crockpot sells for as much or more than a new chinese made crockpot on ebay,etsy, etc.
I sleep better knowing my american made crockpot won’t burn the house down, like that chinese wall dimmer nearly did. Once bitten twice shy. in fact I bought a spare…
Before you make a final decision I highly suggest you check out the CURRENT law on the books that SS can’t payout more than it takes in. Once the fund is bankrupt then EVERYONE will get their benefits cut so the amount paid out won’t exceed the amount of tax revenue taken in. This is the reason politicians don’t talk about this and say I won’t touch Social Security. They don’t have to because the law is already on the books and the majority of people don’t know about it. There are less people being born and paying into SS. Also, there are more people working for cash so they also don’t pay in. This is why I started collecting at 62. I want to collect as much money possible NOW before benefits get cut.
Same here. I have already collected 3.5 years of (reduced) benefits. With government CPI numbers egregiously understated, the actual value of “inflation-adjusted) benefits declines steadily over time. This under-counting of inflation is only likely to get worse going forward, IMHO.
Social Security benefits will not be cut. FICA will have increased earnings levels, and the retirement age will continue to be gradually raised. Would you vote for a politician who refuses to keep social security payments whole? Neither would 10s of millions of other seniors.
Wrong. Politicians don’t need to say they will cut because the law is ALREADY on the books. Do your own google searches
see link below directly from the GOVERNMENT advising they cannot guarantee benefits.
Laws are be ignored or broken (See Joe R. Biden et al. & DNC) rewritten and re-legislated. There is too much political downside to cutting benefits especially for those politicians seeking to extend their political survival. Increasing FICA deductions, manipulating tax rates and increasing minimum age of retirement are all ways to extend the solvency of this program.
That said to deal with ever lowering birthrates for indigenous western democratic nations with social security/senior pensioner programs is to allow ever increasing illegal immigration to quick fix the ever increasing lack of contribution from new workers with the added side benefit of more votes for those who allow this happen.
I’d like to know what that law is?
Yes, there is a law that requires Social Security to cut benefits if total benefits exceed total revenue. The law requires that benefits be cut across the board in proportion to what payroll taxes can cover. For example, if $100 million in benefits were promised, but payroll-tax revenue brought in only $75 million, all benefits would be cut by 25 percent.
The Social Security Trustees project that the Old-Age and Survivor’s Insurance Trust Fund will be depleted in 2033, which would result in an automatic 21 percent cut to benefits.
To prevent the trust fund from running out, Congress could: Raise program revenues, Cut benefits, Combine revenue enhancements with benefit cuts, and Allow Social Security benefits to be paid from general revenues.
For 2025 the Average Indexed Month Earnings (AIME) max is $13,689 or $164,268 annually. The bend curve is as follows:
(a) 90 percent of the first $1,226 of his/her average indexed monthly earnings, plus
(b) 32 percent of his/her average indexed monthly earnings over $1,226 and through $7,391, plus
(c) 15 percent of his/her average indexed monthly earnings over $7,391.
The only real near-term adjustments needed is to raise the AIME to something considerably more than $165K and adjust the bend curve. Like most people, I would love to have someone explain to me why the AIME is so low. Adding a 4th bend curve % that’s fairly low like 1-2% for high earners (just spit balling > $500K) that is tax with no benefit would generate a lot of revenue in addition to the AIME being raised to, again, say $500K.
If people had a choice today of asking the wealthy to pay a tad bit more to either save the SSTF or balance the budget, I think most people would vote for the former.
I do think the retirement age needs to eventually be raised to 70; however, I read the other day the increase from 65 to 67 is happening over 22 years and is just about to wrap up. Like most people, I’d like there to be a reasonable gap in between age increases. A good guess would be 10 years.
Congress could also budget money to the Trust Fund annually, taking it from somewhere else – like Defense and foreign aid.
I’m not saying there aren’t solutions. If Congress wanted to do anything they would’ve done it by now.
If the folks truly in power wanted the US Congress to do anything they would have forced changes by now.
https://www.crfb.org/papers/analysis-2024-social-security-trustees-report
My family seems to have a longevity thing going on both sides (paternal / maternal) as in 95% or better seem to get past 85 without fail. Assuming cancer due to previous careers doesn’t do them in early, even then they’ve made it past 75 usually failing before 80.
Dad made it to 6 week shy of 97, Mom still with us at 90+ in fair health so the odds lead me to think ‘maxing it out’ for SS makes sense.
8 months to go until “full” then another 3 years 4 months to “max”. Still employed, so however that lasts factors into the game as well.
Not worried about 2.5 years or so of no income until ‘max’ as I think I have enough “cash” to cover expenses without touching IRA/401K holdings. I’ve never considered SS to be something that I can live off of, only a little “extra” that I’m perfectly willing to take if it’s available.
Can’t cover every potential risk, only what you can control. As long as I can sleep at night I’m good.
The thing about working until 70 – I got to stay on my employer medical. It was just a modest HMO, but it was cheaper than Medicare. So saved a bit.
I was forced into early retirement at age 57, started withdrawals from my old style 401k at age 60 and claimed SS benefits starting at age 62. I knew that my income taxes would go up once I reached the Required Minimum Distribution Age of 70-1/2. I think the RMD age is now 73. If you have little in the way of savings (including expected pension or 401k benefits), you should probably work as long as you can. Almost two decades after dropping out of the labor force, I have no regrets. My Medicare benefits were not impacted and my after tax SS benefits are only a little smaller than they would have been had I worked longer.
The right question should be whether should you enable socialism or end it by not taking social security and medicare at all. In the end it won’t matter, cuts are coming and the ill-prepared will suffer and no one will care; I won’t shed a single tear for an ill-prepared clown that wasted all their life spending like drunken sailors and now die broke.
Legalizing euthanasia will go a long way to helping fix the problem just like Canada, UK and other countries are doing now.
You have a point… for all those who reject “socialism” should also reject anything from the government from here on out – including any insurance policies since that’s simply socialism for profit.
Socialism is where the government or worker collectives owns the means of producing and distributing goods (think factories, farms, stores, and restaurants).
Social security is not socialism.
I think you are thinking of Communism, from the root word, communal. The means of production being in the hands of the workers is a direct quote from Karl Marx.
No. I gave the actual definition of socialism. Communism is one step further where the goods themselves are owned by the community collectively.
https://www.merriam-webster.com/dictionary/socialism
Agreed. It is a social program. Social programs do not mean socialism
So you 2 clowns want to be the only country in the world that has no kind of pension type system to take care of our elderly citizens. Some of whom died for your freedoms.
Next you will say America is the greatest country in the world. There are 3rd world shit hole countries that have started their own equivalent of social security/govt pension.
Social Security is not Socialism, however what it accomplished was to get Grandma and Grandpa out of the house so that they would not be an influence on the younger generations. They could therefore make quicker changes to our culture and we ended up with what you see today.
Social Security is NOT socialism. I paid into social security so I’m going to collect what I’m entitled to.
Same here. Maxed out on contributions for decades, and I expect something back out.
What rate of return did they promise you on your contributions?
And/or did they provide proof of ownership in some equities somewhere?
Or did they simply take your money and promise something sometime in the future.
That’s what Charles Ponzi and Bernie Madoff did.
Ponzi schemes aren’t usually backed up by a Trust Fund.
SS is not backed by a Trust Fund… only a book entry that says the general fund owes the SS fund money…
The Fund is defined. It may not be a pile of cash, but it is an entity that is owed money.
most likely much more beyond that.. hence the problems with solvency.. your money has been stolen and spent so I’m not sure what you’re entitled to….
Are you going for Euthanasia? Asking for a friend.
If a check from SS makes a major difference in your financial life, you are already in trouble and it will only get worse. It’s called inflation and there is nobody alive now who is going to try to do anything about it. Other than lie to you.
Not true. Live within your means.
SS pays my bills. I have lived within my means all of my life. I will use my savings to travel, enjoy life and pay for inflation.
70 if you are healthy and have a family history of longevity. I did the math and it would have been problematic to live on the income at 65/66 and not touch the IRA until 70/72.
by working I added another 150,000$ to my personal (non IRA/401k) savings. always good to have money outside of retirement accounts for home repairs, etc.
Also my employer paid healthcare, so I didn’t have to sign up for medicare, other than the free bit, until I was 70.
If you can structure you debt so its gone by the time you retire, that will make a very large difference. I have so many friends and acquaintances going into retirement with a large mortgage, a practice I find insane.
The additional 25% income that deferring retirement to 70, makes an outsize difference in the choices available in retirement.
I’m doing fine and still have a couple years before I tap the IRA.
My folks are 101 and 102 so I better not blow my money all at once.
Wow. God Bless them
It varies. People who view Social Security as a frill or an “extra” – they usually take it early.
People who view it as a necessity will try to wait, to maximize the payment.
That’s the opposite of how people should think about an insurance policy. If they are flush today they shouldn’t touch it. The goal is for the money to cover you when/if an “accident” occurs causing you not to be flush. It is dry powder, there when you need it, to protect you from financial emergency situations concerning lifetime cash flow.
Billy Joe and Bobby Sue … Take the money and run.
I retired early at 62 and I did not do any math.
I had a busy retirement: had a little parttime job belonged to a local golf club skied with my friends in the winter hiked and hunted in the fall. We visited Florida in February and March with my son.
I had a great retirement Now at 85 I am resting
First you need to know how much money you spend each month. Stick to a budget.
If when you retire will you need to rely significantly on SS? Then you need to work as long as you can to gain the extra $$. When you retire, you stick to your budget and when you can, you save the extra $$. In about 10 years you will need the extra $$ factoring in inflation and heath care costs.
If you basically don’t need to rely on SS then take it when you like.
“Social Security rules may change as well.”
Government never leaves well enough alone. Government starts a program, then expands it. No doubt rules will change. We just haven’t seen what they will be, yet. Speculation of raising the tax cap on income and means testing to receive benefits. Musk and Zuckerberg, among others, are not hurting for income in their senior years.
life is change, all things change.
if it becomes means tested and the wealthy don’t qualify then they shouldn’t contribute to it. The rule should be if you earn > $1m/year or whatever number makes sense, you are exempt from SS (contribute and receive).
I see a lot of comments from leeches here asking to lift caps, if it is implemented then make it retroactive by taking that cap differential off the top of people currently receiving social security or make it a flat 30% extra tax to make sure “you paid for it.”
Most people as they get older in today’s world find themselves living in a Debt Trap.
They are this way as inflation forces them to use Debt so as to maintain a lifestyle which was taken as a Given when younger.
Many obligations accrued over years of providing a roof over head of family, unexpected health issues, unforeseen financial setbacks as it has been a long time since any real growth actually has occurred..
Taking early retirement and finding a check in the mailbox enables these souls to reduce Debt and live longer as Stress levels are reduced. Also your struggling children can be helped out, if you and spouse are not under the Gun every waking moment.
It will be at least a decade even if things go right for the economy to return to a sustainable level of growth. The Government has not only bankrupted itself it has dragged your whole family into the gutter along with it. This is the situation most people find themselves in.
There are those who have come out alright financially, but the Bulk of people have not.
Children are usually “struggling” to keep up with all their frills and bad habits. Then they get divorced and the struggling ramps.
Much of what you describe comes from falling living standards imposed on general population by power elites.
Past election results say time for change is upon us.
Young people always will make mistakes in judgement. They have rest of their lives to get things right. All part of maturation.
Life should not be a time whereby one or several mistakes ends any future chance of recovery. That breeds a hopelessness mentality.
This, what is happening currently. Country no longer will accept it.
What people accept as a higher standard of living is usually the opposite. No one’s standard of living is improved by a $1,000 smart phone and a 500$ a month streaming services,internet,sports ball package for instance.
Living in a big city is not a higher standard of living than living in the country on your own land and enjoying nature, clean air, and clean water.
Most people crave social status and will waste there money on a pretend life style that satisfies no one.
fast food, fast coffee, fast cars, fast debt piling up buying high end appliances that die more frequently.
People have been taught (mostly by tv and the internet) to make a lot of bad choices. Look around you as the obese fill their shopping carts and waddle into their Escalades etc.. Life has turned into a bad movie..
Divorce is the biggest thing that will destroy a saver to benefit the spender – legalized theft.
The government is flat broke. Why wait until they are broke-er?
Break even age is 75. But that is irrevalent when SS is going bust.
One has a choice between taking it now and investing it for themselves or waiting and hoping that it is still there down the road.
its not 75 for everybody but thats close enough. Mine is 76 & 7 months
Most folks I know that are in good health will not enjoy the extra money at 77 as much as they could at 62. Travel and grandkids are more fun at 62 than at 80.
Fair point no doubt. You are correct. I describe it a different way.
You can enjoy the hookers and booze alot more at 62 than you can at 77, if you can even perform by then…………thats a joke.
But you bring out a great point. Some things you cannot put a price, financial value or maybe even quantify in financial terms.
Its never about the money per se, early retirement is about the extra time, not the extra money. I was fortunate to have lots of downtime between careers as the 20th century smashed into the 21st.
work 2 years, have 2 years off. I got to travel etc and learn how to live frugally. Fortunately I’d paid my mortgage off 15 years early, so I had a home base to make plans and travel from. It was very nice having the time but it also reinforced the value of a steady income to inflate my bank account before it ran into the danger zone.
if one is healthy, and by that I mean energetic, curious, and self motivated, Retirement at any age will give one time to rediscover the world. The key is to stay healthy and try not to sit on your backside watching tv all day, thats a path to tears..
SS will never go bust when you can make payments from nowhere…
It all comes down to longevity and I think everyone here here would agree that it is better to live long and modestly than to die soon and rich. Since we don’t know how long we will last it’s better to save enough and to live modestly enough. It is good to be able to pass some wealth to your kids when you pass away because intergenerational wealth is very important for their possibilities but the thing you most want to avoid at all costs is to be a burden to your children in your old age. Have enough to spare them that.
Then again, some folks feel it is better to burn out than to rust.
Living the life of Dirty has too many drawbacks for me.
Diddy I meant.
I was thinking more of the life of Neal Young.
No one needs to be a burden to their children.
No one.
Ever.
It’s your choice.
not everyone has children, not everyone wants to spend their days in an alcholic haze. Its fine to grow old and choose the way you spend your hours. To reflect on the past and compare the beauty of age to the beauty of youth.
Life is a process, aging is a path, keep your vehicle in good shape and enjoy the journey.
It’s a marijuana haze these days.
YOU CANNOT do the math without KNOWING (to the penny) what your CURRENT spending is NOW and then ASSUMING A MUCH HIGHER RATE OF SPENDING than the bullshit Government Inflation stats which are ALWAYS under-stated.
In our case, I have tracked our spending to the penny since 1994. I retired in 1992 (at 38, sold a business, and my stock)…..we DOWN-SIZED immediately and bought NO NEW CARS, no Motorcycles or Boats and take those savings and SPEND THAT MONEY on full-time traveling (in a Diesel RV pulling a Honda Accord V6)…all paid off.
We spend HALF of our time in Southern Europe simply due to the climate (great in Winters) and we travel around Spain, Portugal and Greece with Albania mixed in….
Our Soc Security pays for travel meals. ALL other expenses are done with our Banked Monies where I trade options (half time) and we also have a large balance making us 7% plus in Interest Income (I am a pro Bond trader – – I buy UNDER-PAR mid-rated Bonds and make money on the return of capital).
Soc Security is simply a way to buy good wine and four to six meals out a month and we gourmet-cook our own Food. We both took our checks at 62. It is not enough to even worry about the delta with waiting.
I should add that we are JUST NOW beginning to burn off SOME of our saved capital flying Lie-Flat Seats and ONLY staying in Suites in Europe until we get back to our homes there for the winter months.
If I didn’t have a 9 figure trust fund I might have done something like that later in life. Got first tier of the trust fund at 21, so I started travel and spending then.
Best of luck to you.
No kids I take it?
It depends, but……
It’s fairly simple. If you need the money take it as soon as available. If you don’t need the money, defer as long as possible, unless you are concerned about yourself dying (life expectancy) and leaving your heirs less (someone disabled), then take it and save it as soon as available without penalty (usually full retirement age if you still earn much). The amount you save and invest will generally provide the capital to create enough income to offset your slightly lower ss benefit in the future too, if needed.
Understand the difference between need and want. Sticking to the plan is critical. If you need the cash flow, you don’t have a choice! Other than that it’s about life expectancy, what you want, and whether there is anything for your heirs to inherit when you die.
Learn to want what you need, and give up needing what you want as soon as possible.
The nice thing about retiring at 70, I already own everything I could possibly need. My income is spent on monthly utilities, insurance and groceries, which leaves a lot leftover to accrue in the bank.
I’ve owned new cars, I’ll never own another one. I don’t mind most new cares are gadget ridden money sinks. I don’t own a boat. I don’t have swimming pool. I don’t own jet skis, Atv’s, big screen or little screen tv.
I do own land and trees and gardens and tons of guitars and tools and enough computers to start a data center.
Nice. Is there a wife in there? A lady friend? A mistress? An iron in the fire? LOL.
Ah, women just over complicate things
Women are like lions, they are beautiful, but I wouldn’t want to live with one…
I cannot disagree with you there my friend. Happy New Year!
ss nonsense talk let’s see the longer you wait the more money you get why don’t you guys just wait till you are 100 just imagine?
Age 70 is the cutoff for increasing benefits. There is no point in delaying filing at that point.
George if you are going to participate in the forum, its best if you understand at least the basic rules of social security. After age 70, your social security income will never grow, so there is no point in waiting past 70.
you should set up an account on the .gov site and you can manage your expectations by viewing your employment history and doing what-ifs, to calculate optimal retirement age using the provided calculators.
its what i did from age 60, to figure out when to pull the trigger and plan my working life.
– The question of the day is when to take Social Security.
Most excellent question, and one my Wife and I have had to ponder and make a decision on this past year. I did not read any comments, before I write my response, as I want it to be authentic to my personal experience, without bias.
Full Disclosure: my Wife and I have been working with, a very reputable and successful “Financial Advisor” for roughly 30 Years.
I will start with the obvious, and that is every circumstance is very unique, so no advice from me, but rather my personal experience with this subject matter, as it’s so recently has been on my plate, and dealt with, and made our decision.
So without getting into details obviously, my Wife has medical issues that we have been dealing with and will continue too, for the rest of Her life. That did play into things. I am healthy, but my time is not all mine, and not always flexible.with this in mind, what to do?
First our advisor had situated us into a retire earlier portfolio due to our situation. We diligently invested most bonuses (1/2 always), and invested 1/2 our raises. That allowed us to live on less, and get used to that lifestyle, that we would face soon enough.
Second, He put aside enough for one mandatory vacation per year, no matter how small or where, but 5-8 days away someplace (camping was a favorite) each year. As we grew our portfolio, our vacations got better, until our ultimate UniWorld European Cruise down the Danube River, and it was exquisite! That was 10:years ago!
Third, He had us pay our home off, with extra payments and lump sum pay downs whenever possible. That was accomplished also in the last 10 years (As a side note, we have always paid cash with trade-in for our vehicles, and drove them min. 100K, but always shot for 200K.
I tell you this, because it played into our decision making. So the decision was made to retire “At 62” based on the following: We were financially stable, had very little debt, and a nice cushion invested. Not knowing our quality of life down the line, also played into our decision making.
As a result 62 was it, for the following reasons (For Us).
1. If we are collecting, and they cut S/S by 20%, we would be grandfathered in hopefully.
2. We are not needing to work once retired, so earlier is OK for income
3. 2,080 is Full-Time (Hours) employment. 2,080 x $Hourly Rate is your income ($20 PH = $2,080.00 x 20 = $41,600.00 Per Year). So We figured out @ an est. (was not far off) $2,500.00 per Month x 12 = $30,000.00 per year. Retire at 62 instead of 68 and that’s the equivalent of $180,000.00 of income for the first 6 Years! A No Brainer for Our Situation, so we did so. My Wife has a couple more years, but a Pension too from Her employment, so all is well!
From our time with our Advisor, your ability to retire earlier (I.e. Collect S/S) is directly related to your financial situation at that time, so don’t get caught up in the check coming, but rather when you will need the check, and how much it needs to be (Unique).
We still invest to add to our portfolio, but we also take large chunks out now, to do things, like I bought myself a convertible sports car I always wanted, and after 3 years I am selling it. Had fun, but the Wife isn’t able to as much any longer, so a good call to get it early. Trading my old truck in and the car for a new truck! Be my last vehicle, as we will move to 1 when that’s time to sell.
All decisions made PRIOR to retirement, will get you where you may need to be, but if you wait, forget about it, as you will be at the mercy of the things going on around you, and not enjoying those things around you. At least that’s my advice, one example, and outcome.
Good Luck Out There! PLAN AHEAD!!!
P.S. If you own a Home, then Maintain it, because Maintenance is your savior to large unforeseen expenses.
Look for a good Registered Social Security Analyst Advisor(RSSA) Most CFPs and financial advisors have not entered this arena. Not very well understood by most people .
1 example not mentioned. What if you have kids under 18? You can turn on your benefit and now your kids get 50% of yours up till 19 or HS graduation. Had 1 client was waiting which when we did the math, there was no reason to wait because he had 2 kids that would get 1/2 his, both for 2 years plus. Everyones situation is unique and has to be looked at on its own merits first.
PS. I am an RSSA but not taking on new clients at the moment
if rates come down again to 4% sometimes a reverse mortgage can help you delay your social security to get the extra 8% on the wait until age 70. Assuming your living past 79 and until at least 82(on avg) it works in your favor
a reverse mortgage, ie how to turn an asset into a debit.
yes but as mentioned above, not all decisions have to be financial in the black or need to be quantified in currency
For instance, old boss had a client years ago……Wife died, down to 1 income, house paid off, but was getting harder for him to manage.
He did not want to move away from his grand kids. His routine was golf every day possible with his buddies, drink beer after, nap, see his grand kids more than most, then start that routine over.
He wanted to keep that routine. And there was still plenty of equity when he died for the grand kids to get the house proceeds
He died a very happy and content man………If he moved farther away to what he could afford he would have lost most of that and been miserable
You put a price on that. I won’t
its all about what people value, I would rather have a small paid for house, than an afternoon of drinking everyday.
As I have aged, the importance of alcohol has left me. I had 2 drinks on christmas eve, and that was the 1st drink I had since last New Years.
If health is important as you age, alcohol should be on the list of things to avoid, there are a number intoxicants less damaging to oneself, should the need arise.
I would see a reverse mortgage as a ship of last resort. Its sort of like pawning your house.
But as you say, each to their own. I’m certain my lifestyle wouldn’t make some people happy, but that doesn’t matter really. Its all about keeping enough gold to make the golden years, truly golden.
“If health is important as you age, alcohol should be on the list of things to avoid”
I 100% agree! It’s relatively poison in a bottle/can. I thought when they banned cigarette advertising, they would add a much worse for you item such as alcohol.
I quickly came to realize , that way too much $$$ is in that commodity. There is no way the rich and powerful. Will ever give up that source of income, and control over the people that consume it.
I would venture to “Guess” there is more profit overall, made in alcohol than oil across all forms of related income. (Including therapy, fines, accompanying items, gambling, giving it away at strip clubs, I am talking EVERYTHING!!
Papa Dave would know I bet…
1) Making alcohol from local fruits and vegetables is easy to do and impossible to control. It is not easy to grow and cure tobacco.
2) Check out the histories of the families that control cigarette empires. Not as addictive as the China opium trade, but very workable.
Excellent point Lisa, but the amount of people far exceeds those days. I am not suggested doing away with it, but rather making it much harder to get.
No commercials/Ads is a start for certain. I would toss in a limit to scenes with alcohol in weekly shows watched by many. Only for sale in Liquor Stores with much larger penalties for under age, or buying for people.
Just a better approach to how it’s presented.
I’ll drink to that!!!
Our Financial Advisor, told us never to do a reverse mortgage. We have children and several grandchildren. I don’t need to get into the details.
Many folks don’t understand what happens to the principal owed when unpaid interest is repeatedly and regularly added to the principal. It’s called compound interest.
it is not for most people. only works in unique situations and when rates are 1/2 what they are now…. I was just throwing it out there..
Hilarious stuff!!!
Europe: The Fall of the Holy Renewable Empire
https://www.gatestoneinstitute.org/21244/europe-germany-renewable-energy
Fast eddy you gotta put down the bong man, you’re in the wrong forum/wrong topic again.
Surely you must enjoy a little humour from time to time … 🙂
when I want a laff, I look at my 401k statement….
Syria https://senecaeffect.substack.com/p/the-syrian-disease-death-of-a-petrostate
Something not mentioned so far is taking SS before “full” retirement age kicks in a reduction if you are still working. They keep the amount for you and give it to you when you reach full. Someone correct me here if needed, I just found this out myself.
Correct. Almost no point in taking early if you are working full time
Just wanted to add a bit of useful information for those deciding when to take social security. Your yearly earnings are indexed to inflation based on the year you turn 60.
Your earnings from age 61 or later are not indexed (actual unadjusted dollar amounts are used). So those who work beyond 60 are shortchanged. see: https://www.ssa.gov/OACT/COLA/awifactors.html
Also, only your highest 40 years count towards your benefit calculation.
It’s highest 35 years. I was confusing it with the FERS supplement, which uses 40 years.
that is an excellent point and over looked by many. And I tell you its brilliant in how SS was setup in that you cannot back load your benefits. You know like all the Federal State & local government workers do by getting excessive overtime in the last 3 to 5 years before retirement to skew their pensions higher. This does not work with SS because of your excellent point.
Also why some people wonder why there benefit hardly goes up if at all even when they work past 60 and are making more money. Its not more compared to some of the years that are indexedd for inflation.
I will take it as soon as I can get it.
you might want to run some numbers first before making that decision..
I already did. I used the greedy algorithm.
no way that ever backfired. sail on my man… sail on..
Thanks for posting this discussion, Mish.
Looking at many of the comments so far, I think it was probably a Godsend (for many people anyway) that Congress created Social Security 90 years ago.
“It’s all a guess”; “Take it early to live”; “You don’t need calculations, just do it”
These are the type of people that likely would not have saved enough while working to support themselves through a potentially long life with assets or insurance because they can’t or won’t make the financial calculations necessary to reduce the risk of living too long with too little saved
With the (planned?) disintigration of multi-generational households Social Security has indeed become necessary. People generally don’t plan ahead 20+ years ahead nor are they able to accumulate sufficient assets to pay for 10-30 years of idleness in old age.
I started collecting at age 62. I can invest the money better than the government. If I die early, then my husband wouldn’t have collected any money. My husband started collecting at full retirement age of 66 1/2 for the same reasons
At some point, the reforms that come will truncate benefits for higher income/asset folks. We don’t what they will be. It may be that there is an income test based on other income, an asset test, or some combination of the two. Who knows. What I do believe is that you will be better off collecting sooner rather than after the reforms start if you are a high-income person. Personally, rather than collecting the max at 67 or later, I will take SS circa 64-65 in an attempt to fly under the radar of collecting the higher amount. It is all a guess.
Why do people play all these financial number games, seemingly forgetting we all DIE?
Maybe they want to leave something behind for someone else.
maybe they want to still be able to eat, and have shelter, etc, before they die.
He seemed to be implying that if we remembered we’ll die one day that we wouldn’t be concerned about food so I gave him a reason that had nothing to do with our self.
the problem when talking to humans, is the self, is all about the self. when the ai chatbots are in the forums, then its just a merry go round of circular reasoning and answering questions with questions.
So if one is human, one should realize, until death occurs, the very real matters of living continues, whether retired or gainfully employed or a government employee (that 3rd category that cannot be defined as useful but sill painfully employed)
Take ir at 62, ASAP. When you’re on your deathbed you’ll be glad you did. Life is short.
Statistically, in reality, its more often long than short. And there are very few opportunities to make extra money over 70.
I barely clear 7$ a week, as a male stripper these days, so you sir are absolutely correct in regards employment gains vis a vis gainful employment vs effort and gym membership and the dry cleaning bills for those “costumes”.
if it wasn’t for the tax write offs, I’d give it up and date Ophrah.
There’s always sex work.
Life is short, especially towards the end. Retire asap and enjoy it while you are able. I’ve seen too many people wait only to die before retiring or shortly thereafter.
almost everyone (statiscally) dies after retiring, its a foregone conclusion. The variable we are here to discuss is how long is that time between the 1st social security check hits direct deposit, and that shoveful of dirt hits the coffin?
Anything we can do for each other in helping to calculate the value of “X”, that unknown period of time, will help to make those moments useful, comfortable, enjoyable and relaxing.
IOW, if you retire, you die.
if you live, you die, rule #1 of the natural universe. Think of it as a phase change.
I think one assumption that is often overlooked is whether the Central Bank and government move even more toward policies that inflate the USD away and then change the way inflation is measured again so that the cost of living adjustments are even lower than they are now. Do the calculators include an inflation adjustment that can be managed by the user or just assume the the cost of living adjustments will reflect reality over the next 10, 20, 30 years? If the government continues to step in and again halt the deflationary part of the cycle when asset bubbles pop, I would bet that inflation will be higher during the next decade than it was in the 1970s and they will again change the way CPI is calculated to show that it is really closer to 2% and those whining about rising costs are creating a “vibecession.”
Won’t probably happen or be talked about until it’s a crisis and something has to be done, but I expect the rules to change to collect more taxes from those with deferred savings who are drawing social security. RMD’s could be forced to start much sooner than 73. A new rule from a couple of years ago is now forcing me to pay an RMD on my mom’s IRA that I inherited although I’m still working and in the higher tax brackets.
I’m retiring in less than 4 months with a modest FERS federal pension just before my 60th birthday. I’m blessed, but I earned it.
I’m not a multi-millionaire like many on here, but that federal retirement is really appreciated because there’s no way I’d be able to retire before 65 without the retiree health benefits (not free, but heavily subsidized).
I plan to move to a low cost of living area and pay cash for a house. I’d have to burn through a lot of assets including my stash of gold before I’d ever be ‘forced’ to work again (much to the chagrin of certain posters here). I’ll live in a cardboard box down by the river before I ever work again.
I don’t need social security but plan to take it when I turn 62. Based on family history, I don’t expect to (nor do i really want to) live past 80.
I bet you will live past 80.
Bill Clinton went vegan, and it’s kept him out of the lake of fire so far. He’s highly motivated.
Vegan is a suboptimal nutrient diet. For Bill it may have been the functional equivalent of fasting without the diabetes benefit. A carbohydrate (plant based) diet will impact your insulin sensitivity in a bad way.
Humans are omnivores for a reason, it ensures survival, and it provides diversity in nutrients and bacteria, further helping to ensure survival.
My wife was one of the folks who had the health challenges so she took it early at 62. Fortunately her health has improved. Me being a 1961 baby I’ll hang on as long as possible in the working world and even after so-called retirement. I’m an ants in the pants kind of guy, and would like to keep working in my broadcast or media industry world in some capacity. Not sure I’d want to be on call 24/7 for technical repair work in my 70’s, but who knows?
Mish’s comments on when to take SS are correct. It’s highly situational. But I do have a couple of comments to help make sure that your calculations are correct. It’s also important that you set up an account with the SS Administration. Their web site is actually quite good.
1) When doing the math using the SS’s on-line calculator tool, you need to be careful to input wages subject to SS into the calculation if you are still working prior to taking SS. In other words, the default position of your SS benefit on your annual statement is that you continue earning a salary up until the point you begin taking SS. This may or may not be true. As an example, if you are age 60 and looking to calculate your future SS income options for age 62, 65, 56 and 70 and you already stopped working, you need to make sure you input $ 0 dollars for future annual income in the calculator tool. If you don’t, your SS benefit will be over stated.
2) It is also important to do the math of Medicare Part B premiums and D (drug plan premiums) as these will be mostly deducted from SS at age 65.
3) the number provided on the SS calculator and your current SS earnings statement are gross amounts. SS is partially subject to federal taxes on up to 85% of your benefit if you are above the earnings threshold, which are ridiculously low and not subject to annual CPI inflators. And some
States, about 15 of them, tax social security at the state level.
Note: SS does not mail annual statements anymore. They are included as a pdf file when you establish a registered account with SS.
4) If you need the money, as many do, and opt for taking SS at 62, your payout does not reset to the Full Retirement age payout at age 67. Many people assume it does. It does not. In other words, taking SS early comes with a life time reduction in your monthly payments. Yes, you are earning SS starting from an earlier period but if longevity is in your DNA, it’s a big hit long term.
Thanks! #1 is important. If one has variability in income (commission, for example) it’s an incentive to work hard your last pre-Social Security years. Not only is it more immediate income, you also set the bar higher for Social Security payout.
It pays to know your breakeven age for social security. Since social security is an annuity, it is designed to pay you the same amount during your lifetime regardless of when you begin payments. This assumes that you have a normal life expectancy. I took social security at age 65.5, six months earlier than my full retirement age. Therefore, I could have waited 3.5 years until age 70 and drawn a larger benefit, foregoing all the money I could have collected between age 65.5 – 70. My age when the money I took early would equal the accumulated larger payments would be about 82.4. I believe that the extra money I have collected since age 65.5 has been a greater contribution to my life at a younger age, and I am willing to strart falling behind once I reach age 82.5.
Either you’ve expressed yourself poorly, or you don’t understand Social Security. If you take early benefits, you are paid less (between 25% to 30% depending on DOB) forever,
if you take standard benefits, you receive 100%,
if you take differed benefits, you receive 125%.
I’m taking it when I turn 62. God only knows if it will be solvent or they don’t place a restriction on your age if things get more difficult in the country. I don’t see the Fed’s messing with folks pulling in money from Social Security, but see them playing games with those who haven’t. I got a bit more than a year and can’t wait.
I’m in the same time frame. I am going to take it 7/2026 just in case.
To JK and Snowman. You may need to rethink this. SS is not going away. But they could reduce benefits. That would hit you if you opt for early.
The only fly is if they do means test SS. But that would depend on other income and the threshold would likely be high.
I don’t follow the logic that if you take benefits early (lower benefits) and they ultimately reduce benefits, that you would necessarily be hurt more if you took them early. Too many other variables to consider. For example, they must just truncate the benefits at the high end, which would make it better to take a lower amount earlier.
if you take it early and take a 25% initial hit, (reduction in benefits) and then they do an across the board 50% cut, you just divided 75% in half and if you are lucky they’ll still make you pay taxes on it…
– I don’t follow the logic that if you take benefits early (lower benefits) and they ultimately reduce benefits, that you would necessarily be hurt more if you took them early.
> Two things going on here.
1. Taking them early “Before the Drop” of an “Estimated“ 20% reduction across the board. This is being discussed, and quite possible, but no guarantees. I was advised, for “My Situation” to take it now, so as to avoid the 20% drop, as I and everyone else, would most likely be “Grandfathered in” based on the reasoning, that they would not “Take Away $” already allotted. If we waited 4-6 years, then we would perhaps get 20% less.
2. The other is what Mish refers to, and that’s “Means Testing” and you and I and everyone else can’t escape that, as it’s based on your IRS Yearly Income. In this example, high earners will get hit, and lower earners not much if at all. I’m not a high earner, but rather a high investor of assets. It shows up as collateral, but not income. It is convoluted a bit, and some of that, is simply because we truly don’t know what going to happen, but I took steps just in case, For Me.
What about a wealth test, heaven forbid?
Why didn’t you vote Democrat then if you want to tax the wealthy more? LOL
alot of us voted democrat, whether we wanted to actually vote democrat or not, especially those no longer in the realm of the living.
Its just strange how many democrat voters there are since the computerized/early voting system was implemented.
I’m still in favor of in person voting with an ink pen and paper. like when we had a democracy back when I was a wee lad.
I know a guy who started taking it the instant he turned 62, but he’s extremely unhealthy, obese, hard-drinking, eats crap, zero exercise and unbelievably high blood pressure. He’s unwilling to make any changes. Also unemployed. He figures he doesn’t have long to live.
sad, but so many in the same boat. the world is floundering so many institutions and cultural systems gone, many have lost their ways. Video games replace exercize and fresh air, and actual social games with peers and relatives.
We played softball and baseball when I was a boy, and we did it outside with simple tools, balls,bats,gloves, and a cool hat.
it gave us espirit de corps, when we had no clue what that was. and it burned off the sugar from the Kool-aid (soft drinks were rare).
so many good things gone, replaced with hurtful things that destroy the soul and body.
What about the top 10% that seem to be making all the money in the markets? They in theory don’t need it, wouldn’t they take now knowing this could all change at any time, i.e. get it while its still there??
Wonder if eventual reforms will include a harsher form of means testing? Currently penalizing people who collect and still work is still a form of means testing.
It will and it should.
Then why didn’t you vote Democrat then if you want to tax the wealthy more? LOL
Probably. Even now, after Medicare and drug benefit premiums, surcharges and Federal income tax, I am probably left with less than half of my gross SS benefit as spending money.
If you are in the top 10%, $3-4k/month doesn’t make much difference.
Get it while you can.
Absolutely agree. The country is insolvent. Printing money and exponential debt is not assuring.
So you’ll get paid in inflated dollars.
People, despite thinking everyone is gonna die tomorrow/soon/before they should, are statistically gonna live a lot longer than they planned on. Unless you have a really good reason beyond general fear or conspiracy theories, everyone should wait till 70. Also remember Medicare and taxes are gonna be withheld from whatever amount you get. You’re gonna need it all.
Except I’ve seen firsthand dozens of older family and friends…you are only ahead by passing more onto your heirs because only one couple did anything beyond 80. It goes unneeded and basically unused.
If it will help you live a better life between 62 and 80, take it early. The benefit is for the retiree not their heirs. If you don’t need it, then it can be about living beyond 80 and having the ability to save the larger benefit for heirs.
I’m taking it early as the extra money later will be superfluous relative to its utility earlier in a more active retirement period. I was lucky to see this reality firsthand, nearly all financial planners focus on a total benefit number without factoring in utility.
After taxes and Medicare (increases every year) are deducted, the benefit will be down to nothing. Where do you think “MAGA” came from? It is filled with 60somethings who were the first generation to have their pensions ended, so they froze and didnt save enough for retirement (especially investing in stocks), and were forced to take SS at 62 .. why do you think they are so inflamed? They know how bad 62 is. And they think Donald will save them? Not all Fed employees are dumb. The Feds know there are lots of suckers that every time they have a backache, and they think they are gonna die tomorrow, will jump at the chance for quick money of any amount.
You really should consult a financial advisor.
If you have no other income or assets, you will have to take it as Mish said, because you’re poor
But if you have other assets or income, as many do/will, you can use that for your early “utility” use and then get the larger SS payments later in life when you’re not doing much. So you could be worse off or better off by taking SS early.
So it definitely is not as simple as “I want to spend money while I’m younger”. That is exactly why financial planners focus on a total benefit number – given all the nuances of taxes owed, interest earned, risk aversion and yes, utility. Most people can’t make good financial decisions under these complicated calculations (kinda like diagnosing your own internal medical ailments), so seek good help
I can take the benefit and invest it to outperform the differential increase and allow my IRA/Roth IRAs to grow faster on larger numbers or I can spend it. I’m not looking for the total benefit number. It’s not total benefit number because I already have enough to live on (retired at 54). The break even, assuming you get a return on your early draw while also providing massive risk avoidance by having it available, is going to be further along than 81 or 82. I have been around a LOT of 81 or 82 year olds. My mother died at 60. My grandfather right at 81. My other grandfather 83. Only my grandmother made it to 95. None of them, after 81, did one darn thing that required a higher premium, it just got socked away for heirs. Sure, that has value too but that’s not how I see social security.
Drawing early allows me to defer drawing other funds as much OR flexibility to draw after tax and let tax deferred ride, allows me to invest any that I don’t need.
My viewpoint is that I’m not interested in total benefit that might be larger long after I need it, to pass on to heirs that should be saving on their own. I’m interested in the largest total benefit that actually improves my life while I’m most likely to be healthy enough to enjoy it… and that will occur with an earlier draw.
I’ve run the numbers, factored in taxes, interest, cap gains, dividends, taxation of social security. The only thing that might delay it is the impact to health insurance premiums.
It’s a highly individualized decision. If I assume a reasonable rate of return and only 50% taxable at a low rate by augmenting with ROTH IRA or already-taxed accounts, I can get the break even much higher.
Some have correctly said we are likely to live longer than we think but after 80 I don’t see much movement or “living” that necessitates the larger monthly amount.
– I’ve run the numbers, factored in taxes, interest, cap gains, dividends, taxation of social security. The only thing that might delay it is the impact to health insurance premiums.
> Excellent point, and it does factor in, and very big I must say, if needed a bunch. If you have assets that you plan on taking $ from, and you have earned too much, as a result, they tack that excess on, above your amount allowed.
We were shown/told this, so when we start taking some now, we grab the MAX of our ceiling for the lowest tax% and cap it just below. Get as much as possible at the lowest tax amount, and place what’s not needed in our safe deposit box, for future use. There are work around to this issue, but in can be costly, so be careful.
Your medical bills may be higher when you are older.
yes that is one reason to take care of your health when you are young.
and take care of your health when you are old. Its not magic, its like growing a garden. If you dump trash in the garden it will not grow well, if you feed it properly, water it, keep away pests, etc it will reward you with healthy bountiful growth.
you get one body,take care of it, and the mind that resides within, together they can and will care for each other.
I got a flier from SS a couple of weeks ago. It specifically said the average 65 year old will live to 85, and that one third of 65 year olds will live to 90.
They were definitely gently encouraging people to delay claiming.
Lifespan calculator: https://media.nmfn.com/tnetwork/lifespan/index.html#0
well never believe everything you read for starters, and yes consider the source.
Jimmy Carter collected like 15 times what he put in. Madness
I know you don’t like checking facts before you post so you can be first. But it makes you seem impulsive and not very bright. Carter deserves such payments as much as anyone, but probably was not even in the Social Security system: https://money.usnews.com/money/retirement/articles/do-retired-presidents-receive-social-security