Taking Social Security Early Isn't As Dumb As Many Think

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Figuring out when to start taking Social Security benefits is one of the most important financial decisions that retirees will ever make. With the promise of higher monthly checks for those who are able to wait before claiming their benefits, most experts advise putting off your Social Security start date as long as possible.

But despite the higher payouts available from waiting, taking Social Security before benefits max out at age 70 isn't always a dumb move. Here are three situations in which waiting as long as you can before receiving Social Security benefits doesn't always make sense.

1. When the odds are against you
Most analysis of Social Security focuses on what's called the breakeven date, which refers to when those who wait to collect larger benefits finally catch up with those who took smaller benefits early. Those who take benefits at age 62 receive only half the money that those who wait until age 70 get, but in return, early filers get eight extra years of those smaller payments.

Source: Social Security Administration.

Even if you assume a zero return on the money you take early, most breakeven dates occur in your late 70s. If taking early benefits allows you to keep other assets invested and earning better returns, the breakeven date can extend into your early 80s. For instance, dividend ETFs Vanguard High Dividend Yield (NYSEMKT: VYM  ) , iShares DJ Select Dividend (NYSEMKT: DVY  ) , and SPDR S&P Dividend (NYSEMKT: SDY  ) all pay income in the 3% yield range and have produced strong capital gains as well, and those who've been able to keep more money invested in those ETFs by taking early Social Security have reaped strong returns lately.

So as you approach the age-62 early benefits date, if you have reason to believe that your life expectancy will fall short of your breakeven date -- and your decision won't adversely affect other family members -- then considering not waiting could give you more money than waiting for larger benefits that you won't be able to take full advantage of.

2. When spousal benefits offer you a double-dip
One of the most popular Social Security strategies lately involves married couples who try to make the most of their joint benefits. Under the file-and-suspend strategy, a spouse can apply for a benefit based on the other spouse's work record while still waiting until later to collect benefits based on his or her own work record. Spouses have to wait until full retirement age, currently 66, to use this strategy, but in some cases, couples get more money from Social Security than they'd get simply by having both spouses wait until age 70 to file for benefits.

3. When you're consciously making a lifestyle decision
As you age, it's difficult to predict what your life will be like even just a few years into the future. Long-held dreams of a vacation lifestyle can go up in smoke if injuries, illnesses, or other health complications strike.

Deferring Social Security benefits is a bet that you'll get more use out of having bigger monthly checks in the future than from having a more modest income earlier. Taking benefits early may not maximize the dollar amount you receive over your lifetime, but it may give you that money at a time when you'll enjoy it the most.

Look at all the factors
To be clear, many people do have dumb reasons for taking Social Security early. Fears that Social Security won't be around to pay benefits are highly overblown, and being paranoid about losing benefits down the road can lead to bad decisions. But with several legitimate reasons to consider taking benefits early, you shouldn't shortchange yourself by assuming that it's always smartest to wait as long as you can.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 07, 2013, at 12:03 PM, prginww wrote:

    Dan, your payout chart is way off. Knowing the facts before you write an article is the best.

  • Report this Comment On April 07, 2013, at 12:09 PM, prginww wrote:

    @BugsMalone - The payout chart comes directly from page 1 of the following PDF file from the Social Security Administration, so your assertion is incorrect.


    dan (TMF Galagan)

  • Report this Comment On April 07, 2013, at 12:30 PM, prginww wrote:

    Dan, I work for a school district that does not contribute to Social Security, although I have contributed in the past and am eligible for benefits. But the benefits will be reduced because of the Texas Retirement pension I will be receiving and the district that did not contribute to SS. Would you recommend taking SS early because of this? Thanks!

  • Report this Comment On April 07, 2013, at 12:32 PM, prginww wrote:

    And #4, it is likely that you'll be more active in your early retirement years than the later retirement years. What good is another hundred bucks or so a month, when you don't have the capability to spend it?

  • Report this Comment On April 07, 2013, at 12:33 PM, prginww wrote:

    I'm think it says on the SS website that a person who takes early benefits gets two-thirds of his $$, not one-half.

  • Report this Comment On April 07, 2013, at 12:40 PM, prginww wrote:

    @gpr2013 -

    As the graphic shows, if you take SS at age 62, you get 75% of your full-retirement age (66) amount. If you wait until 70, you get 132%. 75 / 132 = 56.8%. Admittedly, that's more than half, but less than two-thirds.


    dan (TMF Galagan)

  • Report this Comment On April 07, 2013, at 12:58 PM, prginww wrote:

    Due to a family history of short lives, I am planning to retire at 59 1/2 when I can start withdrawing my IRA and 401(k) funds. At 62 I hope to get enough SS to pay for my health insurance premiums until age 65 when Medicare kicks in. Since no one has made it to 80 yet in my family, I am going to try being the first, and to have a lot of fun along the way. If I don't make it to 80, I will have enjoyed what years I had, and if I do make it to 80, I will have great memories, and except for the possibility of health care expenses shouldn't have large expenses any more so my SS should be enough to live the simple life style I enjoy now. If health problems take more than I have saved, I just don't see how I could ever plan to have saved enough anyway.

  • Report this Comment On April 07, 2013, at 12:58 PM, prginww wrote:

    My advice is retire as early as you can and collect SS. You may get more later but you don't have the strength to spend it any more. By that time, you'll be spending your time in the nursing home waiting to die. If you take it at 62, you still a few years to enjoy your life.

  • Report this Comment On April 07, 2013, at 1:06 PM, prginww wrote:

    So, with the break-even payouts in your 70's using zero rate of return on your nest egg it pays to wait since that is well below life expectancy, especially at age 62 when the decision needs to be made. Additionally, using zero NET rate of return is a good assumption given the current low interest rate environment and the COLA. Furthermore, adding a younger non-working spouse increases the incentive to wait even more. This analysis is actually quite complicated but can be solved by plotting 3 scenarios, 62, 66, and 70. The $ scale should be as the NPV of each stream of cash flows including interest income discounted back to age 62. The NPV's can be calculated each year to make a plot vs age.

  • Report this Comment On April 07, 2013, at 1:09 PM, prginww wrote:

    All of this talk of "waiting until 70" or so for SSA is just that, talk. I semi-retired at 62 anf got early retirement while working part time and still work part time. Unless you're wealthy, which is who these waiting strategies are directed at, my advice is-take whatever you can get when it first becomes available.

  • Report this Comment On April 07, 2013, at 1:13 PM, prginww wrote:

    Take it right away.....they may not have as money later or it will be de-valued.

  • Report this Comment On April 07, 2013, at 1:23 PM, prginww wrote:

    @youmee and @wisconsin46 are correct. The plus side, (if you choose to call a plus side) if some life threatening illness were to befall you, the SSA will allow you to collect the max amount before age 70.

  • Report this Comment On April 07, 2013, at 1:28 PM, prginww wrote:

    i plan on being dead by 65. family history leads me to think this. plus i've already used and abused this body, lol. i'm going early (if i make it that far!)

  • Report this Comment On April 07, 2013, at 1:39 PM, prginww wrote:

    If it's true that "Fears that Social Security won't be around to pay benefits are highly overblown," then it's only because the economists and the politicians that make the rules keep telling us that Social Security won't last. I say, take it now while there's still some to take.

  • Report this Comment On April 07, 2013, at 1:43 PM, prginww wrote:

    I work in health care and most people don't live to be 100 and often end up in nursing homes way before if they do eventually paid for by MEDICAID not MEDICARE. Medicare only covers nursing homes when rehabilitative potential exists and then for limited periods. Medicaid is for long term care after people exhaust their savings and most do very quickly. I would take as early as possible if I were near that age especially with Medicare you are going to get back everything you paid in and then some people never factor in Medicare and what the medical care they need as elderly would cost if they had to pay 100% out of pocket. I look at some of the information from our patients that are on Medicare and if they got these bills and actually tried to pay them with no Medicare? They would be broke in no time. Criticize Medicare all you want we don't have one elderly patient that would opt for anything else.

  • Report this Comment On April 07, 2013, at 2:07 PM, prginww wrote:

    MAKE SURE if you take it at 62 that you NEVER have to go back into the job market.

    Economic hardship from unemployment and a Chapter 13 bankruptcy to save the home can cause poor decisions. Long story short, the SSA now wants all of the money they paid in monthly benefits back since I returned to the workforce.

    Even though no longer receive the benefits, the money they siezed counts as a payment and now I have to pay income tax on money they are keeping even though I will never be able to collect SS benefits again according to them.

    End result is, you will need a lawyer to get it squared away and then have to pay him too.

  • Report this Comment On April 07, 2013, at 3:31 PM, prginww wrote:

    Is this a paid for "news" story by Motley Fool to get clients? I have noticed that since the "NEW" yahoo home page has started there are dozens of these "news" stories from Motley Fool which end up promoting their financial advice. SHAME ON YOU YAHOO!!!!

  • Report this Comment On April 07, 2013, at 3:32 PM, prginww wrote:

    Is this a paid for "news" story by Motley Fool to get clients? I have noticed that since the "NEW" yahoo home page has started there are dozens of these "news" stories from Motley Fool which end up promoting their financial advice. SHAME ON YOU YAHOO!!!!

  • Report this Comment On April 07, 2013, at 3:49 PM, prginww wrote:

    Another factor to consider is that if you have minor children when you begin collecting Social Security, your children qualify for a monthly benefit as well. This effectively extends your breakeven point & can be a reason to begin to collect early.

  • Report this Comment On April 07, 2013, at 3:50 PM, prginww wrote:

    We have never regretted taking ours at 62. Why should we let the government have that $2600 a month. Trying to get people to wait is a farce.

  • Report this Comment On April 07, 2013, at 3:51 PM, prginww wrote:

    @ gpr2013... FYI, I took early retirement and I get about 1/2 of what I would have had I waited... So regardless of what the SS website says, 50% is correct...

  • Report this Comment On April 07, 2013, at 4:07 PM, prginww wrote:

    janas joplin sang about "getting it while you can".

    that's good advice when it come to social security which may or may not be there in the future.

    some of us paid in for decades and are "entitled" to some benefits" if anyone is, so get it while you can, is my advice.

  • Report this Comment On April 07, 2013, at 4:16 PM, prginww wrote:

    Do whatever you want. Take it early or take it late. It is a crap shoot because the future is unknowable especially about how long you will live and how your health will hold up. Somehow, I do not believe that they will carve on your tombstone "He maximized his Social Security". Of course I could be wrong.

  • Report this Comment On April 07, 2013, at 4:23 PM, prginww wrote:

    Not having to work five days a week - priceless.

  • Report this Comment On April 07, 2013, at 4:33 PM, prginww wrote:

    Dan, Thanks. I recently read an article about why everyone should wait to receive SS and the financial journalist was way too simplistic. I retired early from work because waiting 4 more years did not increase my retirement benefit by a significant amount. I then decided to take SS at 62 because my monthly benefit is only reduced by 25% (same amount in the bucket just divided by more payments). My retirement benefit is right at the taxable limit so ok there. I am single so if something happens to me all the money I paid in over 35 years will be gone. These things along with understanding the real time value of money makes it a very good thing.

  • Report this Comment On April 07, 2013, at 6:02 PM, prginww wrote:

    I took SS at 62. Quit my job and spent my time learning about finance, investing, etc. I'm up 7.7% for 2012; SS is an 8% increase each year after 65. So I'm well on my way to matching the benefits of waiting while I am enjoying retired life. My investments are conservative enough to weather any crises yet solid enough to create growth through dividends, interest and non-taxable gains. Another advantage of early SS is my income is lower so I have headroom to move IRA funds to Roth (tax free) without generating taxes, piecemeal each year. This will also lower my RMD later on.

  • Report this Comment On April 07, 2013, at 6:07 PM, prginww wrote:

    You will never know if you made the right decision until you die. Then, who cares !

  • Report this Comment On April 07, 2013, at 6:08 PM, prginww wrote:

    @cpenn43: Some of my Texas school teacher friends have gone back to work in other jobs after a full retirement as a Texas school teacher. Most have been in their late 50s or early 60s. They will be able to boost their SS benefits by gaining more years of service and higher salaries. Just a thought. In fact, some of these friends have actually worked in different school districts in non-teaching jobs that contribute to Social Security.

  • Report this Comment On April 07, 2013, at 6:20 PM, prginww wrote:

    75 / 132 = 56.8% Is the wrong formula.

    The correct formula is: 132/75=1.76. So waiting until 70 gives you 1.76 times the amount you would receive at age 62. Another way to show this is 1320/2=660 NOT 750.

  • Report this Comment On April 07, 2013, at 6:23 PM, prginww wrote:

    You left out one important consideration. I started taking my SS at age 62 because my son was only 11 at the time. We will collect about $90,000 in TAX FREE benefits for him by the time he turns 18 and is no longer entitled to them. While not many folks over 62 have a child under 18, for those of us that do, it makes the decision to begin taking benefits at age 62 a slam dunk (assuming that the person expects to keep his/her earnings under the 14K or so annual threshold until age 66).

  • Report this Comment On April 07, 2013, at 6:41 PM, prginww wrote:

    I have worked since age 16.

    At age 59, I lost my job.

    I applied for 270 different jobs.

    Got 4 interviews.

    All 4 said thanks, but no thanks. You are (1) too old and (2) too sick.

    So I applied for Social Security Disability,

    Jan, 2013.

    My wife still works, full time.

    We cannot live on her income only.

    Will I qualify for Social Security Disability?

    Some people say, definitely yes. You are more than sick to qualify, Other people say, no - your wife makes too much money.

    What do I do? Totally confused,.

  • Report this Comment On April 07, 2013, at 7:03 PM, prginww wrote:

    It surprises me that no one speaks about "means testing" when writing these social security breakeven articles. This term is being run up the flagpole more and more often. I don't believe social security will run out of money although it will probably have to pay lower benefits in the future as Congress has replaced the money with IOUs. However, what will more likely happen is those who saved their money for retirement will be "means tested" out of being able to draw all or some of their social security. This will happen even though you and your employer paid into the program. You'll be told you are too wealthy (incidently, this won;t just be the 1%ers), don't need it and won't receive socail security so it can be paid to others. Just remember the term - "means testing".

  • Report this Comment On April 07, 2013, at 7:04 PM, prginww wrote:

    Didn't see this mentioned. My situation was this. Divorced at age 61, hadn't worked in 10 years. Found a part time temp job slightly over minimum wage and began collecting SS at 62 based on previous wages. Kept working parttime just to pay for my medical insurance and expenses until Medicare eligibility. Benefits were reduced by 25%, BUT, when my ex dies, I will be eligible for his SS benefit as his wages were substantially higher than mine and we were married over 10 years. Not that I wish him bad health, but it will give me a pretty good boost in my SS benefit. I should recover that 25% and maybe even more in the future, once I give up that temp job.

  • Report this Comment On April 07, 2013, at 7:24 PM, prginww wrote:

    Dan - I can't be the only one who thinks this way, but I never see it mentioned in articles about when to take Social Security. I have plenty of assets in my traditional IRA to live on which can be left to my heirs. My Social Security "fund" can not be left to my heirs (I'm not talking about the spousal benefit). Why would I draw money from an IRA and pay taxes on it rather than accept the same amount from the government, tax-free, while keeping my IRA intact? Am I missing something?

  • Report this Comment On April 07, 2013, at 8:01 PM, prginww wrote:

    Just once I would like to see an analysis that does NOT assume you will live forever. Nobody in my family has lived to see 80 yet. It kinda makes the choice a no brainer. We'll never see our breakeven point no matter how soon or late we start collecting.

  • Report this Comment On April 07, 2013, at 8:53 PM, prginww wrote:

    If both spouses have about equal earnings history and one is a lot younger (in my case 14 years) than the other, then the younger spouse can take SS as early as possible, and move up to the possibly higher benefit when the older spouse dies. If the younger spouse dies first, then he or she should have taken the early benefit anyway. Either case, early benefits for the younger spouse makes sense.

    I also agree that taking benefits early to preserve assets that can be left to heirs makes a lot of sense.

    A third point is that once a worker has 35 years of good earnings, more years of working is not likely to appreciably increase SS benefits. So if you start working at a good job at 21, by your late 50's, you have likely accrued most of your SS benefit. Another reason to plan for an early retirement, live off after-tax money until age 62, then start SS.

  • Report this Comment On April 07, 2013, at 9:09 PM, prginww wrote:

    On April 07, 2013, at 6:41 PM, Iamoldandlost wrote:


    Your application for social security disability

    (SSDI) has NOTHING to do with either you or

    your wife's income or assets. It is based SOLELY

    upon your proving you have a disability according to social security definitions, AND if you are

    approved, it will be based upon YOUR work

    history ALONE. How long you worked and how

    much you made. Your wife's income or any

    other assets have nothing to do with it. Your

    wife can earn 200,000 a year and you will

    still get it and still get the same amount.

    Just realize that if Soc Sec finds out you can

    do ANY gainful work, even if it's only for

    a dollar an hour, even if it could never

    support you,...they can try to take your

    ssdi away. It is based strictly upon whether

    or not you can work. Not the type of work.

    You don't have to report income changes

    but you do have to report any paid work.

    Unpaid work, is considered a hobby and

    usually isn't a problem. But they can review

    you every few years so you need to save

    a record of all doctor visits and all rxs to

    fill out the forms.

    Don't worry about your wife's work or is immaterial to this.

  • Report this Comment On April 07, 2013, at 10:21 PM, prginww wrote:


    You do not have to wait until your ex husband dies to claim social security benefits based on his contribution record. Since you were married at least 10 years, the only restriction is that he must file and begin receiving his benefits first. Once he has done this, you can file for benefits based on his wage record. You do not need his approval and I doubt he will ever know unless you tell him. Even if he elects to suspend receiving his benefits at a later date, you will still draw based upon his record of contributions.

  • Report this Comment On April 07, 2013, at 11:10 PM, prginww wrote:

    i worked 34 years got really sick in & out of hospital for a year got disabled took SS nearly 14 months to get disablity started had to go outside nomral approval system to find doctors able to confirm my diagnosis. i'm very rare and very lucky to be alive. Well SS called and apologized for delay, i had a high income that put me in top 1% of monthly payments..i've had no issues with SSDI or SS for that matter doctors watch me fairly close still i should be dead but i'm still here getting the checks.. hope all can live well and enjoy the time we have being alive....God bless you all.

  • Report this Comment On April 08, 2013, at 2:14 AM, prginww wrote:

    If you compare taking the early Social Security benefit option at age 62 ($750 per month X 12 months/year X 16 years), with taking the full retirement Social Security benefit option at age 66 ($1,000 per month x 12 months/year X 12 years) you can see that the total Social Security benefits earned by age 78 (the breakeven age) are exactly the same - $144,000. Only after age 78 do those retiring at age 66 start to surpass those retiring at 62, in total Social Security benefits received. Furthermore, by waiting until age 66, inflation (and Bernanke) is eating away at the purchasing power of your benefits. In other words it is better to receive your benefits sooner (in current dollars), than later (in inflated dollars). Even if you don't need the Social Security dollars right away, you can probably find an investment that will provide a better return on those dollars than you will earn from the government by waiting to collect your benefits at age 66 or later. "A bird in the hand is worth to in the bush!"

  • Report this Comment On April 08, 2013, at 5:58 AM, prginww wrote:

    yea a friend of mine had a discussion with me..and i was shocked to know that he took SS at 62... he reitired from 1 place and gets a pension, then worked at a 2nd job until he qualified for their he gets 2 pension checks, then took his SS at 62..i said why...he said i might get sick later and cant enjoy my money....i was blown away...somebody like him i was sure he would wait until the max age to collect....

  • Report this Comment On April 08, 2013, at 9:45 AM, prginww wrote:


    We all notice YOU fail to provide any facts along with your childish post :)

    Got anything of value to say?


    Didn't think so.

  • Report this Comment On April 08, 2013, at 9:50 AM, prginww wrote:

    My own thoughts:

    All three levels of American government are and have been spiraling out of control fiscally for years and years despite the lies uttered by the government employees who try to pretend all is well.

    To make matters worse, we see the current President cutting SS benefits while he continues the fad of federal politicians to engage us in a new foreign war every six months. Next up: Syria and North Korea.

    So, except for the lame government employees who created their very own selfish and greedy "public employee pension systems" where THEY get to retire at age 50 (17 years before us), social security may not even be fully operational in the near future

    And again: don't be fooled by the liars of government who keep chanting that all is well. They cannot maintain a new foreign war every 6 months and have funding left over for us.

  • Report this Comment On April 08, 2013, at 12:21 PM, prginww wrote:

    I looked at the obituaries on Sunday and discovered a common occurrence. About 40% of the deceased were at an age where they never received any SS benefits, or only received them for a short time. The government encourages people to wait until the later date, not out of concern for their welfare, but because the statisticians realize that hundreds of thousands of citizens who wait until age 70 will never reach it and therefore never collect a dime of the money they paid in.

  • Report this Comment On April 08, 2013, at 6:11 PM, prginww wrote:

    When to take SS is a complicated decision. We don't know exactly how long we will live, so one's mindset comes into play.

    I'm of the opinion that waiting until full retirement age is a good compromise for collecting SS retirement benefits.

    I also suggest working part time in retirement and take the SS benefit and keep putting money into a Roth IRA, as permitted by law (to the full amount of IRS recognized annual taxable compensation).

    Certainty is "perfect knowledge that has total security from error." All we can do is the best with the information we have available, and avoid making errors.

  • Report this Comment On April 08, 2013, at 6:16 PM, prginww wrote:

    There are a few "points" being made here that are a bit off bse. Some referring to when "everybody dies" or their family has never made it to XX years. In the same section shown above is a life expectancy calculator which, while VERY general, will give you a hints as to whether you should be taking benefits sooner or later. There are also far more detailed calculators for free on the net. My family all died early, they were also all smokers, drinkers and/or severely overweight. Looking at those obituaries today, it's likely they had an average life expectancy of 65 or 70 and they collected SS even sooner. As we get healthier the early draw date has moved. My life expectancy is 15 years longer than my grandparents was and I'm likely to beat that, at 61 I run, do martial arts, eat healthy, don't smoke, drink seldom. Do your calculations based on facts not generalizations and you'll be far better off.

  • Report this Comment On April 08, 2013, at 6:16 PM, prginww wrote:

    I started collecting at 66 two-plus years ago and continue to work. My benefits have increased because of the higher earnings I have made since 66. But the main reason I started early was because my BEP was in my 80's assuming a 4% earnings rate AND because I knew benefits would stop if I died before hitting the BEP.

  • Report this Comment On April 08, 2013, at 6:49 PM, prginww wrote:

    I would like the system much better if Congress was not exempted from social securtity and our health care system. Instead they have their separate programs. If they had skin in the game, there would be more focus on long term solutions to SS and Medcare.

  • Report this Comment On April 08, 2013, at 8:42 PM, prginww wrote:

    Many reasons to take S.S early. Mine enabled me to pay debt, with out borrowing capital, as a semi-retired business person. All while keeping my income below 14K thresh hold. Also the 75% limit is true but not factual. The CPI adjustments to my S.S payment will put my break even point past 80. If i ever get there! All in all taking it early at 63 was a very good deal.

  • Report this Comment On April 08, 2013, at 8:49 PM, prginww wrote:

    Always start your SS as early as possibe, if you don't need the money invest it. For most people the odds you favor you.

  • Report this Comment On April 08, 2013, at 10:32 PM, prginww wrote:

    At 68 I took the money and ran to my Favorite Fidelity funds. I'm still working so that $2400 is going into my funds that have averaged 16-30% gain over the past 5 years. If I had waited it'd only be another $80 per month at age 70. I think I'll end up with more than that $80 p/month. And if I want to play a bit more dangerous I'll throw some of it at the American Electric Ferrari (Tesla).

  • Report this Comment On April 09, 2013, at 12:10 AM, prginww wrote:

    I couldn't afford health insurance, so I took my benefits early. Although it would be very nice to receive larger monthly payments, now that I'm a widow at 76 I get my husbands benefits in addition to my own.

  • Report this Comment On April 09, 2013, at 9:08 AM, prginww wrote:

    I am a retired CPA. Best advise I saw was to run atleast 3 scenarios, die young, medium and old. You may also consider the spousal benefit since the spouse will get the higher benefit going forward. Also consider life expectancy for a healthy couple is now into the late 80s. I am not a socialist so I don't feel a need to use this social program until necessary.

  • Report this Comment On April 09, 2013, at 12:19 PM, prginww wrote:

    I put together a spreadsheet last doing the calcuations as Dan cited.. The percentage diffences are clear on the SS Admin page. I used my levels which are higher but agains the 75% and 56%.

    Here are my assumptions:

    1. I have sufficient non-earned income that I will not have to work for additional income. That is key.

    2. I used the 2012 rates as stated on the SS Admin page.

    3. My retirement age is 67.5 because I was born in the mid to late 1950's. The current retire age is due soon.

    3. I "accumlated" the value of my 62 SS payments in unspent assets with a 5% gain annually vs. 67.5 and 70. (2 separate columns)

    4. I paid back the difference of the 67.5 and 70 rates out of the accumlated funds. Remainder continued at 5% gain annually.

    Outcome, I had money left in both 67.5 and 70 columns at age 100: $487K and $331K respectively.

    I would be happy to send a copy of the excel 2010 spread sheet to others so they can check my calcs, but it is pretty clear. IF you have enough assets to retire without the need to work more than the SS limits, it is better to take it early. The pile of money you live more than makes up any difference for spouse benefits. Well unless you die before halfway to your retirement age.

  • Report this Comment On April 09, 2013, at 4:24 PM, prginww wrote:

    I want to thank a friend of mine who found an issue in my spreadsheet, though I wish he would have told me last week. Turns out I was not multiplying the difference by 12. I have corrected this. At this point the 67.5 number crosses to zero at 94. The 70 crosses at 86. I think the idea of holding off if you don't have a job you enjoy, is still pretty clear for me. Thanks, Doug.

  • Report this Comment On April 09, 2013, at 7:31 PM, prginww wrote:

    Took it early and changed my mind.

    I started collecting SS payments as soon as I could at age 62. After six years of collecting I had extra cash so I canceled my original application by paying back the SS income I had received and reapplied for SS as a 68 year old. My SS payments increased by 36%. The net result - by "investing" in additional social security income I was getting a guaranteed 8% return on the moneys paid back to the SSA. Plus, in the event of my demise, my spouse will receive the resultant increase for the remainder of her life.

  • Report this Comment On April 09, 2013, at 11:19 PM, prginww wrote:

    I took SS at 63. I am now 68 and am not sorry. The government has a history of changing the rules to the game. When you are 33 you don't care what they do. You don't want to find out at 66 that you are not paying "Your fare share" and some bureaucrat proclaims you don't "Need" money. Both Social Security and Medicare are now viewed as government "entitlements" instead of a funded trust accounts.

    Next comes the theft of your IRA / 401K. You don't need that either. Sorry for this pessimistic view of the government, but my parents grew under communism and Obama's socialism is not must better.

  • Report this Comment On April 10, 2013, at 1:44 AM, prginww wrote:

    I was quite surprised by the low quality of comments to this article. many people really do not have a real number, but just a "gut feel" or blindly believe some anecdotal story they have been told or just create a red herring type of argument.

    Comment #1. At least half of us will live longer than the break even point(s).

    Comment #2. Retiring before age 65 leaves you with one really big health insurance bill for you to pay each month. Let's hope your house is paid off or you have a second big payment each month.

    Comment #3. There is a COLA for your SS benefit, so inflationary effects are minimal for anybody who has actually done some real calculations.

    Comment #4. The table in the article is correct for calculating relative difference in your benefits and with the COLAs will work very well over relatively short time frames.

    Comment #5. Your "bucket" is not a fixed amount. Only your benefit each month is fixed. How much you receive is based only on how long you live. Remember it is normally a 50:50 proposition you live past the break even point.

    Comment #6. The SS Trust fund holds Federal Treasury Notes, not IOUs. They are the first notes to be [aid back. they are essentially the same notes you hold in mutual funds, pension plans. etc.

    Comment #7. You have to take RMDs from your IRAs and 401ks , so you will be paying the deferred taxes. If you want to plan for an estate, use Roth IRAs, not RMDs.

    Comment #8. Yes, you might get sick and you might not get sick. You need to plan for the might not get sick scenario so you do not run out of money because you were "lucky" enough to be healthy.

    Comment #9. SS benefits have not been cut. Even the chained CPI proposal is not as bad as some say because the differences in the indexes have shrunk the last ten years. Medicare benefits have not been cut nor will they be under Obamacare or the Ryan Plan. Reimbursements have been reduced to cut costs only.

    Comment #10. Congress has been enrolled in SS and Medicare since 1984. They are not exempt. Only Congressmen who were in office before 1984 have any benefits under the older pension system. This is an urban myth from the right.

    Comment #11. I check Fidelity and they only had two funds that returned over 16% and none at 30% over the past 5 years.

    Comment #12. Do not compare yourself to a "special case" when you are not one yourself.

    Comment #`13. Actually do the calculations with real numbers.

    Comment #14. The closer you get to mean testing, the closer you get to what would now appear to be a welfare system and you know what cons think about people they perceive as getting something for nothing. Be care about you wish for.

  • Report this Comment On April 11, 2013, at 7:50 AM, prginww wrote:

    Social Security is really social insecurity. Who can survive off that amount per month? Even if you own your home and collect a pension or retirement check, that is really not that much money to pay for anything these days.

  • Report this Comment On April 12, 2013, at 1:28 AM, prginww wrote:


    SS was never ever meant to be your sole or primary source of income when you retired. It was to be just one part of a more comprehensive plan. For myself it amounts to something less than 35% of my retirement income and I do not have a big pension. I saved, invested, and did not spend beyond my means.

    By the way, I think the average SS check is for about $1,260 per month. That is not chump change for many people.

  • Report this Comment On April 12, 2013, at 2:21 PM, prginww wrote:

    There is a tax consideration you did not mention (maybe because every body has a different tax situation) but i must point out in my experience that my early SS was not taxed because of my low taxable income until 70 1/2 years old and i was mandated to start IRA RMD. Had i waited, my check would be larger, but so would my taxable portion of SS. In my case starting early meant more in my pocket after taxes.

  • Report this Comment On April 12, 2013, at 3:21 PM, prginww wrote:

    Why were tax implications omitted from this article?

    I could never find a point where 85% of the Social Security wouldn't be taxable income.

    I retired in January after turning 68. Thanks to COLA 85% of my Social Security benefit is taxable income even before I include the amounts that I receive from pensions.

    At least I will be in a lower tax bracket for a couple of years before the IRS' RMD starts pushing me into higher tax brackets.

    I thought a 401(k) was a cool idea in 1984. I could save for retirement and defer taxes until I retired and in a lower tax bracket.

    I didn't realize that all the capital gains would be taxed as ordinary income and that, in retirement, I would be in the same or higher tax bracket as I was when working.

  • Report this Comment On April 12, 2013, at 3:53 PM, prginww wrote:

    You forgot to include: Maybe the rules will change if I retire later and I'll end up with less money. Here in Wisconsin, it's been a MAJOR reason we've had so many teachers reitre in the past couple of years.

  • Report this Comment On April 13, 2013, at 9:28 PM, prginww wrote:

    It is refreshing to see an article that doesn't assume we can all just logically wait until age 70 to take social security. Life issues are more than pure logic and mathematics maximization. Real world issues like having to pay for expensive health insurance as self employed at age 59 until Medicare kicks in is the primary reason my spouse is applying for SS at age 62 this year -- so we can make it. We cannot risk going forward without health insurance and to pay the p remiums, we need to SS benefit. it is a different working world out there since the 2008 financial meltdown. Pure and simple...

  • Report this Comment On April 13, 2013, at 11:07 PM, prginww wrote:

    The endless ruminations on how to age in a finantially competent manner can suck the joy and confidence out of life and leave you as a stress bunny or as a depressed person; either option allowing one to sink into mental incompetence. I know not when the time will come to retire or take ss and I try to have it concern me about on the level of seeing an unfamiliar dog walking freely a block away. Living like this yields one with a spate of quirky decisions under ones belt, some good, others regrettable. Such is what makes a full life, I think. Thanks to all for a good read.

  • Report this Comment On December 03, 2013, at 7:23 PM, prginww wrote:

    Has anyone had experience with <a href=" security disability lawyers in Minnesota</a>?

  • Report this Comment On May 18, 2014, at 1:51 PM, prginww wrote:

    The decision on when to retire also depends on your present work situation. Giving up a high-salary position to retire causes a substantial drop in monthly income. It is most important to be debt free if that will occur. Being debt free may contribute to your ability to retire early because in the final analysis, cash in minus debt payments and expenses is what you really live on. You really don't want that margin to be thin because a coming inflationary period can eat it up quickly.

  • Report this Comment On December 07, 2014, at 2:52 PM, prginww wrote:

    I am 65 and started collecting my ss at age 62. I was so worried about doing . However, these words stayed with me from day one. Take it now; collect less for LONGER.

    I have not regretted it yet. I retied early, age 55 (pension) and the 62 all end well...or began... ;0)

    One question I have. I heard you can pay back all u received at 62 and start with full benefits? Anyone know about that....not sure it would that would be a good thing? to do that?

  • Report this Comment On January 03, 2015, at 3:58 PM, prginww wrote:

    Take benefits based on your own situation. I left work to care for our late in life children. When I turned 62 I still had 2 children under 18. I received SS benefits for them until 18. WOW! I had no idea! I received double benefits. When our financial planners told my husband I should not have taken SS benefits, I told them to shut-up. You have to consider your own situation.

  • Report this Comment On February 06, 2015, at 1:26 AM, prginww wrote:

    Nice to find comments here that reflect not all of us are married & have a spouse who is still in the workforce. Since most SS articles refer to that marital situation & advise you to wait as long as possible to claim it. I'm single & will be 62 in July. I simply don't understand being advised to wait 4 yrs for a lousy extra $500 which is the difference in the amount I can get now vs waiting til I'm 66. By that time the extra $500 will be taken to cover the rising cost of my real estate taxes, food & utility bills anyway. As for waiting to 70 -what are the odds I'll be in my right mind, good heath and maintaining my home? Because of Lupus, Cancer, Heart disease & early dementia many friends and family members didn't make it to 55.

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