Taking SS early (62)

[SDHNTR]

Swing...miss! LOL You're watching the wrong YouTube "guru".

Taxes bite hard — especially on SS and investment income

Social Security benefits are up to 85% taxable once combined income exceeds ~$44K (married).

Add capital-gains/dividend taxes, and your real “5–6% target” quickly shrinks:

6% gross return

− 15% capital-gains/dividend tax → ≈5.1%

− 3% inflation (average 2010-2024) → ≈2.1% real

And that’s before state taxes or any advisor fees.
So your so-called “easy 5–6%” becomes 2–3% real after-tax, best-case.

Delaying SS is like buying an inflation-proof, risk-free, 8% bond backed by the U.S. government — no market crash can touch it.

please, no more facts!

 

[Mule3006Elk]

Somewhat related. < 5%, per mult online resources, have retirement savings with more than 1 million. Not total assets. For those of you in the know professionally is this stat fairly accurate?

 

[mtwarden]

How about you guys start your own teacher thread and get back to SS at 62…

Mule3006 everything I’ve seen about taking early is you break even 75-77 or so. I really don’t care if I’m theoretically losing money when I’m 77. I’m going to get what I want done before then-all that money will be for is scumbags trying to take it away from me by “treating” my ailments.

Message sent to offending party—could have deleted post, but would have had to deleted several other who quoted it and replied

 

[Mike Islander]

No SS checks to invest if you take early social security:

Remember, folks, if you continue to work when you start claiming SS at 62, you won't actually get ANY social security checks to invest (assuming you make a decent wage).

What? No checks? WTF?

That's right. Because you are still earning significant income SS will effectively act as if you never claimed SS and wait till you make less money before starting your SS. And the checks they don't send don't earn any interest. They don't exist. There is no SS to invest.

If you are a decent wage earner and continue to work, SS won't actually start paying you anything until age 67. Most of those payments will count as taxable income. You can invest that money. Whatever you earn is subject to income tax. So if you continue to earn a decent wage, you have to consider that reduction in your calculations.

Bottom line is that unless you have tax free income to live on, early SS won't give you any actual money to invest.

So who benefits from early SS?

Situation. ~~ Early SS helps? ~~ Why.

Still working, earning >$50–80K. ~ No. ~. Earnings Test wipes out checks

Retired, no wages, low income Yes No withholding, little tax

Retired, moderate income + Roth/tax-free sources Yes Can actually invest the checks

Retired, wealthy with large taxable income No SS mostly taxed, delay earns higher benefit

Poor health, short life expectancy Yes Won’t live to break-even age

 

[30338]

My crystal ball is cloudy. Mom died at 62. Dad alive at 94. Planning on taking it as early as possible while also considering how to minimize taxes along the way.

If we thought boots, backpacks and rifles were somewhat dependent on the individual, this decision financially is off the charts individualized. I would not be in any position to tell others what is right for them and their situation. To each their own.

I will say Berger bullets are the best for everyone since that shouldn't be controversial.

 

[KnightExtreme]

No SS checks to invest if you take early social security:

Remember, folks, if you continue to work when you start claiming SS at 62, you won't actually get ANY social security checks to invest (assuming you make a decent wage).

What? No checks? WTF?

That's right. Because you are still earning significant income SS will effectively act as if you never claimed SS and wait till you make less money before starting your SS. And the checks they don't send don't earn any interest. They don't exist. There is no SS to invest.

If you are a decent wage earner and continue to work, SS won't actually start paying you anything until age 67. Most of those payments will count as taxable income. You can invest that money. Whatever you earn is subject to income tax. So if you continue to earn a decent wage, you have to consider that reduction in your calculations.

Bottom line is that unless you have tax free income to live on, early SS won't give you any actual money to invest.

So who benefits from early SS?

Situation. ~~ Early SS helps? ~~ Why.

Still working, earning >$50–80K. ~ No. ~. Earnings Test wipes out checks

Retired, no wages, low income Yes No withholding, little tax

Retired, moderate income + Roth/tax-free sources Yes Can actually invest the checks

Retired, wealthy with large taxable income No SS mostly taxed, delay earns higher benefit

Poor health, short life expectancy Yes Won’t live to break-even age

This is IF You wait till you at FRA and if you wait till a longer period you get a little extrra over time. And why some can wait to 70 you can get a slight higher perecentage of more benefits. The concern some have is RMD's the Fed's make you start removing $ from your retirement accounts though they bumped up the age to I think 73 but don't quote me on that as I am not there Yet! (Taking distributions from your Retirement Accounts as to Traditional IRA's & maybe Pensions. (Which is also considered income) as I understand it but it is all New to me as I applied at 67 four months after my FRA which was 66 & 8 Months. which was 4 months longer but I am in decent health but once you take "Meidcare" they subtract funds from your benefits ti cover CMS (CMS is the Admin Part of Medicare which if not on SS Yet they want 3 months at a time unless like me your enrollment into Meidcare I had to pay for 5 months and it was some $), but you have to Pay also for Part B & D if you on the Basic Medical Health Medicare or you take an Advantage Plan but once you go that way you can't go back if you do they can hold any health conditions against you which increases your Plans Costs!. As they do not tell you that but someone I know got a Call and they told him he would get $200.00 a month if he switched but that was not true he did not meet all the requirements and now he can't go back. And His Advanatge Plan provider stopped offering their plan so he had to find another. But it similar to Part D's when they do a "Formulary" and drop Meds you need or they increase the Cost as they are only Good for 1 Year. And Also be careful - read the Fine Print - as Once you enter all the meds you take It populates several drug plans BUT not all of these plans cover all your meds! a few cover say 4, others 3 and others 2 so you can have out pocket costs for those not covered! I have had 3 Part D Plans so far. 1 Dropped 1 of my Insulins and another stopped offering their Plan. So you have to be very careful and each year you are able to change like right now is the Enrollment Period. If your Plan stops their plan you then can change with little to no penalty. But your costs can increase as they do every year like Part B does about 15 to $20.00 each year it is automatic ( so this where the Cola comes in so it really barely covers these increases). But most would know that! But if you aren't well off every penny counts... (A lot more no one talks about with Medicare) Also when you apply for SS the month you want to start receiving SS is not the actual Month you start I chose Sept yet my SS Benefits did not start till OCT! Another unknown fact and they don't explain that when you complete the Application. My office advised they did not have a place to fill out the App (to know all the questions 9 pages) and suggested doing it Online. They did provide a copy of the App because they want a lot of information???
KnightExtreme

 

[LostArra]

Another gotcha not mentioned that can especially go along with RMDs is IRMAA.
Look it up.