Taking SS early (62)

[JustABritCrazy]

I’ll be 63 next month. Retired at 60 with a decent pension. I had originally planned on waiting until 67 or 70 to take SS. My break even was age 79 and half between taking it at 62 or waiting. I called it the actuarial crapshoot. After a lot of thought I decided to take it at 62 and as my wife is also retired she can draw off of my account. Main factor in taking it now is watching my dad and uncles as they aged. My dad is 90 and started having issues in his late 70s. His brothers died at that age range. My mom’s brothers made to their late 80s but had health issues also starting in their late 70s. Figured use the money now as opposed to having some nursing home get it. The extra 800 a month isn’t going to be doing me any good then. I’m using the SS funds to get major projects done on the house and not touching my retirement account

 

[JustABritCrazy]

Forgot to add. I was ready to leave my employer and not ready to quit working so I started a consulting business. Business is doing far better than I ever dreamed of and my income from it is way over the maximum limit you are allowed to earn. So I’m going to get hosed come tax time. Did not see that coming. Something else you need to factor into the decision process. I am going to continue taking SS. Financial guy said I’ll end up getting some of it back through increased benefits.

 

[pacoalcracker]

J, once you stop working you will get back what they took from you in monthly payments over a 13 year period. Make sure to let them know when you are done working so they can start the payment increases.

 

[wyosteve]

One other thing to keep in mind is that until you start drawing, you don't get the annual cost of living raises from SS. They vary each year, but generally around 3%, give or take. A few years ago it was 8.7% if I remember correctly.

 

[pacoalcracker]

wyosteve...that is wrong. The COLAs apply to your SS entitlements beginning at 62 whether you are drawing or not. Sure, you dont get to spend them if not drawing but they still apply and accumulate until you do file and draw.

 

[Mojave]

That is the problem with the 62 year retirement.

I retired from the military 12 years ago. So there is that.

Worked for the government for the past 12 years, so now I have to be 58 to retire. But then they don't give you the full retirement percentage that you would get at 62 1.1%

If you retire at 62, you are not allowed to make more than something like $25,000 a year until you are 67.

So December after my 67th birthday is the golden ticket.

1. Retire from my job.

2. No working cap of $25,000

3. Draw Social Security at 100% rate

4. Continue to draw everything else I already have going

The good news is that passive income (real estate, stocks, whatever) doesn't count against the $25,000

 

[mtwarden]

I was working a half time job and had turned 62, figured I’d continue to work until I hit the $25k amount, collecting a pay check and SS. Called the local SS office and they said fine.

Posted something up on this forum and someone said that’s not correct, checked further and they were right, SS office was wrong . They look at it weekly and they would have been reducing my SS by x amount; so much for that plan.

 

[flathead#2]

What about income from other sources such as rental property? Will I be penalized for that?

 

[SDHNTR]

I’m not quite there yet myself, but I do this professionally, and have this exact conversation daily. Again, let math do the talking. For most people, assuming good health, the “take the money while you can” mentality is an emotional decision based on feelings, not quantified factors. Compute the break even point. Unless you are terminally ill, and/or have no after-tax other funds to source income from, taking Social Security early at 62 is a bad idea in most cases. In fact, waiting until 70 is much more advantageous. You are paid handsomely to wait, with an 8% ish guaranteed rate of return.

And like so many of these questions that pop up here regularly… a formalized, written financial plan is your friend. It will answer these questions mathematically.

 

[riversidejeep]

I'm 65 now, retired when I was 55. I took SS just as soon as I could at 62, I would rather have a better bottle of bourbon now than a better quality of adult diapers later.

 

[mtwarden]

If you can wait till 70, that generally equates to you don't really the SS money. If that's the case, then I think it's fair to say that if someone collected SS at age 62 and invested that SS money (including any annual rates) it pushes the break even date way later.

Not rocket science math, anyone can do it (you have to make an educated guess on the annual raises and an educated guess on annual earnings investing it) to see where that break even point is. It's a lot later than some tend to think.

It was mid 80's for me (using a 2.5% annual raise and 5% annual earning); the average US male lives to the ripe old age of 74.8 yoa.

 

[SDHNTR]

Not rocket science math, anyone can do it (you have to make an educated guess on the annual raises and an educated guess on annual earnings investing it) to see where that break even point is. It's a lot later than some tend to think.

You don’t even need to make a guess, educated or otherwise. It’s easy to compute on any financial calculator. You get paid about 8% to delay benefits. You aren’t beating that with guaranteed investments.

 

[KenLee]

I was working a half time job and had turned 62, figured I’d continue to work until I hit the $25k amount, collecting a pay check and SS. Called the local SS office and they said fine.

Posted something up on this forum and someone said that’s not correct, checked further and they were right, SS office was wrong . They look at it weekly and they would have been reducing my SS by x amount; so much for that plan.

WTF? First time I've heard this. Sneaky Bastids

 

[JustABritCrazy]

My business is a sole proprietorship LLC. I make my income from it is on a per job contract basis. For tax purposes I take my “salary” lump sum between Christmas and New Years. When I do that, I try to keep it below the SS maximum. For this year it’s $23,400. Given that my wife is drawing on my account the early penalty hit is about $400 per month. As I said previously would rather have the extra money now as opposed to a nursing home getting it. While most of my male relatives made it past 80 there wasn’t a lot of golfing, hunting and wood working going on which we’re all things they loved to do.

 

[pacoalcracker]

If you are a male, it does not matter when you take it. SS admin has it all figured out for you. More smaller payments or fewer larger payments and that's all she wrote. You are NOT getting anything over on them. Sure, you could be one of the lucky 10% outliving the SS actuarial tables but I wouldn't count on it. Now, if you have a wife much younger than you or a wife who will rely on your SS earnings then it pays to take it as late as possible which is 70...not for your benefit, but for hers. She has an 80% probability of outliving you, by a lot.

BTW...at this point in time and going forward.....you are not guaranteed anything and that is just a fact. SS is going to get "touched" in some fashion pretty soon, like it or not. Medicaid is the first to get hit, then SS and then Medicare. You will witness it before DJT is out of office.

 

[JustABritCrazy]

BTW...at this point in time and going forward.....you are not guaranteed anything and that is just a fact. SS is going to get "touched" in some fashion pretty soon, like it or not. Medicaid is the first to get hit, then SS and then Medicare. You will witness it before DJT is out of office.

I also factored this into my decision to take SS at 62. The deficit is going to require everything to get cut. Figured I might as well get as much out of it as I could.

 

[MallardSX2]

If you are a male, it does not matter when you take it. SS admin has it all figured out for you. More smaller payments or fewer larger payments and that's all she wrote. You are NOT getting anything over on them. Sure, you could be one of the lucky 10% outliving the SS actuarial tables but I wouldn't count on it. Now, if you have a wife much younger than you or a wife who will rely on your SS earnings then it pays to take it as late as possible which is 70...not for your benefit, but for hers. She has an 80% probability of outliving you, by a lot.

BTW...at this point in time and going forward.....you are not guaranteed anything and that is just a fact. SS is going to get "touched" in some fashion pretty soon, like it or not. Medicaid is the first to get hit, then SS and then Medicare. You will witness it before DJT is out of office.

Let me guess…..you’re from Pittsburgh?

 

[pacoalcracker]

Mallard....Pitt isn't in Northeast Pa is it? To answer your inquiry better, I'm not a democrat and I voted Trump each time and I'm behind they guy all the way. The reality of the situation goes far beyond DJT...36T in debt, adding 2T to it every year and it's highly unsustainable and it's going to start getting rectified over the next 4 years or it will never get done and land the USA in real trouble...the kind the country will not come back from. So yes, it's going to require cutting everything and anything. Taxing the wealthy more isn't going to do it...tariffs isn't going to do it.....dialing back on every single entitlement will happen in conjunction with the other two mentioned. Lower class does not pay taxes and the middle class can't take on higher taxes any longer. Things are going to BREAK real soon.

The only other way out is to grow the economy at a 4-6% GDP for at least 8 years..but probably will take 10 years of that GDP...that is how Clinton did it and was able to balance the budget and be debt-free...the last time it was done too. However, with the economy in the shitter with a .5% GDP, possible USA and even a global recession...I don't see that happening, at all.

 

[Holeintheheadgang]

I retired at 62 and continued to work till 64. The last two years, I really caught the retirement cancer!
It was a good job with benefits, but every time I turned around, the job got in the way of what I really wanted to be doing.

One thing I have learned watching myself and friends retire is that it's like a fingerprint, no two situations are the same. If it were as easy as a math calculation, it would be easy.

My only regret is not drawing sooner.

 

[Mike Islander]

I'm waiting till 70. I enjoy my job and will earn far more during those 3 years beyond SS FDA (full retirement age). I'll get over $1000 more per month from SS. Even if I die a year later, I'll have enjoyed working and made a nice chunk of money. More importantly, when I die wife gets $1000 MORE per month above my FRA rate the rest of her life, because she would receive my age 70 benefit rate.

We will have better finances than me retiring at 67. And we're happy with life now. I play a good bit and still work.

Hmmm, maybe I'll just keep on working and enjoy the extra $6500/month SS. Even taxed, it's still a nice little surcie.