Social security income - best time to take?

[ZDR]

Doing some research this morning and came across this article which explains the earnings & tax implications fairly well:

The 2020 Social Security Earnings Test: A Complete Guide | The Motley Fool

Here are all of the details older workers need to know about claiming Social Security benefits before leaving the workforce.

www.fool.com

The good news is 401K distributions do not count as earned income in the SS earnings test.
The bad news is they surely tax the heck out of you if you work...

 

[Newtosavage]

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.

Exactly my plan.

 

[texag10]

Disclaimer: I'm a CFP and coach/consult financial advisors at a large financial services/advisory firm. This is not advice, there is no advisor relationship between myself and anyone I interact with.

You need to actually sit down and talk to someone who will listen to your situation and preferences and give you relevant insight. People just saying "start at 62" or "defer until 70" might be giving you great OR garbage advice dependent upon your situation.

Some factors to consider, like the earnings test, health, spouse's benefits, etc. have already been mentioned. Other things to consider are other income sources (pension, rental, royalties, annuity), your withdrawal rate, survivor's benefits, legacy goals, etc.

 

[VAMountainHunter]

I'm 67. Started mine as soon as I could. If you die you get nothing. Lost my wife of 28 years 7 years ago. She was shot and killed. You never know - live today like it's your last because it could be.

 

[mtwarden]

My original plan was to retire fully (collecting one good pension already) at age 62. It had almost zero to do with monetary concerns and everything to do with time off; then at age 60 I went from full time to part time. Now I work two days one week and three the next (half time), so I alternate between 5 days off and four days off. This has drastically changed my outlook on things as now I have a lot of time to hike/hunt/fish- two days (or three depending on the week) of vacation nets me 9 days off!

I'm about to turn 63 and my new plan is to start collecting SS this coming July and continue to work until I hit the $18,000 mark- it will give me two "paychecks" for almost 6 months, retiring fully at age 64.

At least that's the plan for now; it could change to 65 as it would be nice to get some cheap insurance via Medicare.

 

[LaGriz]

texag 10 has it right,

Like I said your circumstance may be very different than another. One factor for me was what might be happening at work.

My job was in the Oil field as a product line project manager for a service company. In 2017 they expanded my role to include operations. This put me on call on every weekend. Answering calls from clients at 3 AM, assisting crews with problems while they worked through the night. Lining up trucking, personnel, third party rental equipment, and the like. Late that year they let the coordinator for a sister department go, eliminating his role. This event added to my load as I was now on call for that department as well. The new department was related to my previous service, but included services that I had never performed in my field career. I had to dig deep and learn this new product line. The nature of the service included many more late night phone calls from clients. Equipment involved required HASMAT shipping with low grade explosives. Secured a blasters license to be qualified to take delivery of said explosives. The manager situation changed 3 times between 2017 & 2019.
With each change, came new demands on my time. I dislocated and broke my shoulder in September 2018 while hunting elk in NM. When I returned to work (Dec.) in a light duty role (at full salary) I learned that my manager had removed my access to Sales Force (not telling me) and that inhibited my ability to perform my job. More slights occurred going forward. At this time, the Field Hands compensation was under constant assault. I risked much standing up to the this guy and the base manager on their behalf. It was a stressful time. They fired the manager in the spring of 2019. My fellow office personnel needed my help with the work load, They had all stepped up to cover for me when I was hurt. The whole time we were hemorrhaging employees and loosing customers as they cut back on projects. I was now qualified for COBRA insurance. The health care issue was big factor in all of this.

I was having trouble sleeping thru the night. Found myself dosing off in meetings and started to feel like I was unable to keep up to the growing work load. I enjoyed the camaraderie with the remaining group, I covered for others while they took vacations in June. When I gave notice in July of 2019 I found management seemed relieved. I was one employee they did not need to impact. My life insurance went away when I became unemployed. Could have done better here. The Premium for COBRA was $650 a month. I had to cough this up for a year. Several co-workers got let go in October. Had I waited I'm sure I would have been let go too. They collected unemployment benefits that got enhanced by the COVID relief bill. This could have been my fate had I stayed. You never know what's coming next.

LaGriz

 

[texag10]

My original plan was to retire fully (collecting one good pension already) at age 62. It had almost zero to do with monetary concerns and everything to do with time off; then at age 60 I went from full time to part time. Now I work two days one week and three the next (half time), so I alternate between 5 days off and four days off. This has drastically changed my outlook on things as now I have a lot of time to hike/hunt/fish- two days (or three depending on the week) of vacation nets me 9 days off!

I'm about to turn 63 and my new plan is to start collecting SS this coming July and continue to work until I hit the $18,000 mark- it will give me two "paychecks" for almost 6 months, retiring fully at age 64.

At least that's the plan for now; it could change to 65 as it would be nice to get some cheap insurance via Medicare.

Not sure if this factors into your plans or not, but there is a special version of the earnings test for the year your retire in which as long as you don't exceed the earnings limit/12 in any month AFTER you claim, your prior earnings for that year do not count towards the limit.

Straight from the source: SSA doc on earnings limits

Relevant section is bottom of page 4.

 

[mtwarden]

^ well crap, my plan is not going to work pulling the pin in July. I didn’t realize they looked at a full calendar year, thought it was a year from when you first collected.

if I’m reading that correctly, they will ignore more wages prior to July, but I can’t earn over $1500 a month (if over they dock my SS) (I’m earning ~ $2800/ month part time)

it looks like if I want to earn $18,000 AND collect SS I need to start collecting SS in January and then pull the pin when I hit that magic $18k sometime in June or July.

Please correct me if I’m wrong.

Thanks!

 

[mtwarden]

I just got off the phone with SS, the gentleman said I could collect SS mid year and as long as I didn’t exceed the $18,000 (after starting to collect SS) I was good to go, even though I was exceeding $1500 a month.
Phew! Plan A still in effect!

 

[MallardSX2]

I would take it as soon as you can before they decide to take it away. I will start drawing on mine the day I can. Besides, its just a bonus to me anyhow. I have saved by other means.

 

[Newtosavage]

I would take it as soon as you can before they decide to take it away. I will start drawing on mine the day I can. Besides, its just a bonus to me anyhow. I have saved by other means.

Same

 

[11boo]

I turn 62 soon, and will be taking my government cheese ASAP. No one knows what tomorrow holds.

wait, that’s my cheese. The Gov has just been playing with it

 

[Wib]

Pick your cherries when u can in terms of taking SS, or living off your 401K (or other investments) allowing your SS to grow to a bigger number the question for many.

 

[SDHNTR]

Consult a professional! There is some genuinely bad “advice” on this thread! Any wealth advisor or financial planner worth his salt can run a detailed analysis on your unique situation with regard to your and your spouse’s work history, age, health history/life expectancy, available benefits vs pension, savings and investments, and Medicare impact, right down to the dollar. Eliminate the guesswork and get your questions answered definitively and quantitatively. Doing what Joe Schmo on the internnet did should be of no consequence to you. This is a very individual decision. Don’t shoot from the hip and don’t take advice from a nameless person on the internet.

Ask your CPA or Attorney or trusted family friend for a referral to a pro! You only get one chance to do this right.


Yes, I do this for a living. And No I will not be giving advice on the internet.

 

[Squincher]

Consult a professional! There is some genuinely bad “advice” on this thread! Any wealth advisor or financial planner worth his salt can run a detailed analysis on your unique situation with regard to your and your spouse’s work history, age, health history/life expectancy, available benefits vs pension, savings and investments, and Medicare impact, right down to the dollar. Eliminate the guesswork and get your questions answered definitively and quantitatively. Doing what Joe Schmo on the internnet did should be of no consequence to you. This is a very individual decision. Don’t shoot from the hip and don’t take advice from a nameless person on the internet.

Ask your CPA or Attorney or trusted family friend for a referral to a pro! You only get one chance to do this right.


Yes, I do this for a living. And No I will not be giving advice on the internet.

Shoot, I'd go just to find out for sure how long I'm going to live. I mean, he's a professional and that is the real variable in all of this, right?

 

[Rich M]

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.

Did you check to see what it would be at age 70? Supposed to be a bit more then?

 

[ZDR]

Did you check to see what it would be at age 70? Supposed to be a bit more then?

It is 22% higher if you take it at age 70.
If you go to the social security site, you can set up an account and run payout estimates using your actual earnings that were reported for SS purposes. Was a useful tool. You can also view payouts at any age between 62 and 70.

 

[Steve O]

Well, with the newest pork filled relief bill out of Congress today, the best advice is probably to get it as soon as you can before there is nothing left...

 

[Broomd]

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.

It's crazy how many people work their whole lives devoted to a business or company and before they can actually retire to walk the beach or hunt Africa, they end up incapacitated in some fashion or they keel over and die.
I say take it as early as one can. Enjoy life, it's fleeting and there are no guarantees.

Being debt-free by about 45 should be the goal for everyone, imho, it alleviates all the stress of payments and financial slavery. One can concentrate on early retirement and the enjoyment of life.

 

[Broomd]

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.

Yep, THIS ^^^^^^

And remember if you retire, WEAR out, don't RUST out. Lack of movement kills.