Social security income - best time to take?

[ZDR]

I'm retiring now at age 62 so being the nerd that I am put together a spreadsheet based on drawing SS at age 62 and 66 & 8months (full retirement age). Using the estimates provided by SS.gov, the crossover point for me is at age 83. It seems like an easy decision to take it now but I'm curious to hear others take on the best age to draw your social security income.
I know there are other implications like medicare auto enroll when taking it early and potentially some tax implications but that is still not 100% clear yet.

 

[manitou1]

What medicare auto enroll?

 

[SteveCNJ]

I'm 64 still working and planning on taking SS at my full retirement age of 66 and 4 months. Compared to if I took SS at age 62 I will be to the good at age 77 having waited. What I can't calculate are the taxes I'd be paying on the SS during the years of ages 62 and on as I believe 85% of the SS would be taxable. Based on the diminished income due to taxes I'd probably be ahead a few years earlier than age 77.

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[n816kc]

Working the math on that myself just last week. Good friend of mine reminded me there is no guarantee for tomorrow. He’s a little older and has lost a few friends in the last couple of years. His advice is to take it as early as you can and enjoy life while you’re able to live it to the fullest. Something to consider.

 

[ZDR]

I'm 64 still working and planning on taking SS at my full retirement age of 66 and 4 months. Compared to if I took SS at age 62 I will be to the good at age 77 having waited. What I can't calculate are the taxes I'd be paying on the SS during the years of ages 62 and on as I believe 85% of the SS would be taxable. Based on the diminished income due to taxes I'd probably be ahead a few years earlier than age 77.

I am aware of the 85% of SS income being taxable when taken early. Is there a difference on how SS income is taxed after full retirement age?
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@manitou1 - from what I have been told, if you take SS before age 65, your enrollment in medicare is automatic and the payments are deducted from your SS income. I do need to verify that though. it seems like it would be more of an 'opt in' system...

 

[Squincher]

My SIL worked for the SSA her entire career and her advice was to take it at 62. According to her, the Gov't only offers more money to wait because they usually end up paying out less money in the long run.

 

[Laelkhunter]

If you are still planning to continue working, anything you earn over approx $19,000.00 or so you will have to give back 1 dollar for every two you get from Social Security UNLESS you have reached you Full Retirement Age. Check the tables for your age to find out what your FRA is. After that, you can make as much as you want with no payback penalty.

 

[SteveCNJ]

@manitou1 - from what I have been told, if you take SS before age 65, your enrollment in medicare is automatic and the payments are deducted from your SS income. I do need to verify that though. it seems like it would be more of an 'opt in' system...

Enrollment in Medicare Part A maybe automatic. I believe everyone has to enroll in Part B themselves.

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[SteveCNJ]

My SIL worked for the SSA her entire career and her advice was to take it at 62. According to her, the Gov't only offers more money to wait because they usually end up paying out less money in the long run.

I would say depends on an individuals health and family history. Also most importantly is your financial situation.

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[87TT]

Enrollment in Medicare Part A maybe automatic. I believe everyone has to enroll in Part B themselves.

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At 65

For me the difference was right at $10,000.00 more I would get by taking it at 62. I would have to wait until I was 80 to break even.

 

[LaGriz]

If you were born in 1955 or later, you must wait until you are 63 and 2 months to collect the 80% of your SS that your older brother got at age 62 1/2. I pulled the plug at age 64 and started my SS claim 4-5 months later. Having no kids, and being debt free since 2008 helped me do this. I participated in savings plans (401-K and Roth) Not perfect or seamless, but overall came out well on the investment side. I'm tight if not frugal and that truly helps. Its all an educated guess, as we don't know what changes will occur.

You should do a "risk analysis" and figure out if you can swing it or not.

Many Factors:

1.) How long do you expect to live? Heart disease, cancer, diabetes in the family? How is your health?
How long did the males in your family manage to hold on to their health? If everyone has died
before age 70 why wait?

2.) Do you have any issues with health care or a younger wife to keep your insurance a bit longer? Medicare begins at age 65. Can your wife cover you on her health care plan? Look into COBRA.

3.) Will you work part time, have rental income, or have a revenue stream outside of SS?

4.) Do you worry that SS benefits might not always be available? Want to get some of that SS money
before it all dries up. This thought played a role in my choice.

5.) Worried what will Congress do, especially if the Socialists get there way? Same can be said for some of the GOP members as they try to appease their colleges on the left. What the hell, its not
going to effect them much if at all. Those Gutless Bastards! LOL!

I'm 18 months in and I like it! Your results may vary.

LaGriz

 

[Opah]

OK play back just a little, after FRA Full Retirement Age, there is no payback penalty, make as much as I want and collect my SS ?
02 of 1959 need to check that out, I am 62 and very happy with my Job I am a SMO and love it. I work 4 days Fri, Sat, Sun, Mon and have Tue, Wed, Thur off, great money I supervise so not physical, and I enjoy the company of those I work with.
I plan to work until I feel like not working and Then I plan on having a fabrication shop to piddle with some I deas I have. So I need to Find out my FRA.
66 plus 8 months FRA for me, so 67 there abouts

 

[zion zig zag]

You also need to figure in spouse, her (or his) age and her benefits into the equation.

 

[Billy Goat]

62.

 

[AZmark]

If you are still planning to continue working, anything you earn over approx $19,000.00 or so you will have to give back 1 dollar for every two you get from Social Security UNLESS you have reached you Full Retirement Age. Check the tables for your age to find out what your FRA is. After that, you can make as much as you want with no payback penalty.

This was my situation, even though I was semi retired I started my own electrical contracting/consulting business and landed a job at a power plant that paid well for my part time work. Since I was making more that the minimum allowed I would have had to pay back the $1 for every $2 plus pay income tax. I worked out the math and it was much better to wait till 66. So at 66 the penalty is gone and I started drawing at 66. At that point the amount of tax on the SS income would have been the same with or without my contracting work. I say draw at 66 or whatever age full retirement benefits become available. Unless you cant work, are disabled, or some other issues.

 

[Laelkhunter]

Yes I agree AZmark. If you are not planning on working, then I would take the SS as soon as eligible (my opinion only). With the way things are going, and the way things are possibly going to get, I don't know how much longer SS will be funded, so I would take what I could when I could-Again my opinion only.

 

[wyosteve]

One other thing to factor in. If you keep working after you start drawing SS and make above a certain amount, your Medicare premium will increase so it lowers your actual SS 'take home'. I believe the standard Medicare premium is around $160. Unfortunately, mine is going to be $475 in 2021 and it comes off the SS payment.

 

[ZDR]

This was my situation, even though I was semi retired I started my own electrical contracting/consulting business and landed a job at a power plant that paid well for my part time work. Since I was making more that the minimum allowed I would have had to pay back the $1 for every $2 plus pay income tax. I worked out the math and it was much better to wait till 66. So at 66 the penalty is gone and I started drawing at 66. At that point the amount of tax on the SS income would have been the same with or without my contracting work. I say draw at 66 or whatever age full retirement benefits become available. Unless you cant work, are disabled, or some other issues.

Does 401K 'income' count against the minimum allowed income as well or is it only income earned through working?

 

[LostArra]

My SIL worked for the SSA her entire career and her advice was to take it at 62. According to her, the Gov't only offers more money to wait because they usually end up paying out less money in the long run.

In an actuarial view it's break even for the govt. That's why they give you a choice. If there was any possibility they would "lose" there would be no option. Each individual's actuarial view will be different.

One other thing to factor in. If you keep working after you start drawing SS and make above a certain amount, your Medicare premium will increase so it lowers your actual SS 'take home'. I believe the standard Medicare premium is around $160. Unfortunately, mine is going to be $475 in 2021 and it comes off the SS payment.

IRMAA can be a bitch

 

[FLAK]

IMO, retire absolutely ASAP.
In my 20 years at current job, I've seen too many not live long
enough to see retirement, or retired and died within the year.
I'm mid 50's and already thinking hard.