Social Security shell game

Lawrence00

Lawrence00

Senior Member
I reach full retirement age next year so am looking at the numbers and thinking. A recent thought was that the government doesn't have our best interests at heart ... ever. So this attempt to influence us to wait until 70 and "you'll get more money" must be best for them.

Some bean counter in the government has plans. More people will pass away in that roughly 3.5 years so the government has the opportunity to collect more and never pay the deceased anything.

I'll be taking the money as soon as I reach full retirement age next May.

I will be continuing to work at an income much higher than that 35 year average so each year my payments will increase according to the current rules.

All the social security payments will either be going into interest bearing accounts or into business opportunities where I can have a lot of control.
 

I agree with your decision.

I retired at 62 y/o and immediately took Social Security because I had investments in the stock market and wanted to take as little money out per month as possible. So, I balance the money I take out of investments with Social Security. The market has increased exponentially in the past 4 years so it confirmed my decision. I've made much more than I would have if I'd waited to take Social Security.

Also, as you mentioned we never know how long we are going to live.
 
You also need to consider where you fall in the tax brackets with and without taking SS. There are also RMDs to consider from the tax perspective as well. The AMT, IRMAA, NIIT, and Social Security “tax torpedo” are taxes and surcharges you may never have heard of, but they could cost you money.
 

With my current job health insurance is free so they can't rip me off with the Medicare related one. I won't be near that NIIT unless one of my websites starts making big money.

I started young with computer programming, partially because manual labor trades take a toll on those workers. As long as my brain works I can keep programming. Some of my ancestors are long lived so I might be collecting those social security checks for 30+ years.
🙏🙏🙏🙏
 
Lawrence00 said:
I reach full retirement age next year so am looking at the numbers and thinking. A recent thought was that the government doesn't have our best interests at heart ... ever. So this attempt to influence us to wait until 70 and "you'll get more money" must be best for them.

Some bean counter in the government has plans. More people will pass away in that roughly 3.5 years so the government has the opportunity to collect more and never pay the deceased
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if that’s the plan it’s failing miserably. The most popular age to start SS is 62. The least popular is 70.

People take SS at 70, not to get a bigger check, but to help ensure they don’t run out of money in their old age. Leaving a few dollars on the table is a lot better than living into your 90s and finding the money is running out earlier than expected.
 
The difference between claiming at 62 and claiming at age 70 is 8%/annually compounded. It is a sizable difference.

However, it is up to each individual to decide not only what your finances are, but to also do a risk assessment of your health. I have 2 (separate) friends who have been fighting Stage 4 cancer and its reoccurrences since they were in their 50's. Obviously it makes no sense for them to try to wait until they're 70; they may never make it that long.

I claimed a year after FRA. My spouse waited until age 70. In both cases we didn't really need the income, but healthwise for me there was no point in waiting till age 70. My genetics give me a barely average mortality projection; i.e., about 17+ yrs.

But my spouse's SS is less because his pension is State agency-based and they withdrew from SocSec about 30 yrs ago. He had his 40 qtrs in so he qualified for benefits, but his SS is reduced by the maximum penalty of 60% due to WEP legislation. Spouse has poor genetics plus diabetes (controlled without insulin) but had a stroke at age 50, with a good chance of developing dementia.

So since we didn't need the money, it made sense to wait until he qualified for the max SS at age 70. Doing so gave him an additional $100+/monthly, so except for the fact we pay taxes on 85% of our combined SS, it offsets his Medicare premium and gives us a bit extra to spend, LOL.

If we had needed the additional income, then the calculations would have been different, of course. But SS was never intended to be more than minimum income support; it was hard enough getting the Social Security legislation passed and validated by the courts back in 1935.

Great trivia facts: the very first Social Security lump sum payment was to Ernest Ackerman, a Cleveland motorman who retired only one day after Social Security began. Five cents were withheld from his pay during that period, and he received a lump-sum payout of seventeen cents from Social Security!

The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont. Her first monthly retirement check was for $22.54.
 
I imagine physical health can play a large part in retirement plans. I said to my boss, "I think I'll retire."
He said, "I would to if I could." 63 1/2 years young. Only regret are the dreams that work keeps calling
me in. I can't punch in, work for free and can't sign for anything or I may screw up my retirement! ... :cool:
I have had a lot to do so it's not like I just sit around fishing a lot. Too much labor stuff for that.
 
Brookswood said:
if that’s the plan it’s failing miserably. The most popular age to start SS is 62. The least popular is 70.

People take SS at 70, not to get a bigger check, but to help ensure they don’t run out of money in their old age. Leaving a few dollars on the table is a lot better than living into your 90s and finding the money is running out earlier than expected.
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That is my wife's thinking and she's an actuary and certified risk manager. I go w seadoug's idea of preserving your own assets and take the SS asap, although I did wait till full retirement age since I had other income and would have given much of the payments back in the form of income tax. (We each manage our own retirement accounts as we see fit which is a form of diversification.)

I'd say it depends mostly on the amount of retirement savings and how big a % is SS of the total amount of the predicted retirement spending.
 
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I took mine at 62 and never regretted it. That was 15 years ago. Back then every article I read said to wait until at least full retirement age (FRA) or even to age 70. Truthfully, due to a heart condition (since corrected) that made me feel literally like I would die sometimes, I didn't think I'd make it to FRA. Add to that, I found my half siblings at age 50 and was told that our older sister, who I could be a twin to (they told me) and who also had a heart condition like mine, decided to wait for FRA but died before she was able to collect. Another reason is because I had to wait 11 years after retiring...that was long enough.

I've noticed over the last few years that some financial analysts are changing that hardline wait until FRA stance when authoring articles about SS. They are admitting that waiting for FRA is not for everyone and that the decision for each person should be based on their personal circumstances. Also pointed out (and I did see this during the time I retired) that if one takes SS early and invests it well, that could outweigh the benefits of waiting. I have found that to be the case. I'm averaging about $611 more a month from investment earnings on SS benefits I invested than what I would have been getting had I waited for FRA. I also considered the break even age which for me it is 78.
 
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Anybody who tells you they know best when you should take SS is either stupid or a scamster. It is a VERY INDIVIDUAL decision. People who think they know the best age for the rest of us usually believe everybody else lives the same life they do. Sure. We all copy some know-it-all’s life style. No doubt about it.
 
Lethe200 said:
The difference between claiming at 62 and claiming at age 70 is 8%/annually compounded. It is a sizable difference.

However, it is up to each individual to decide not only what your finances are, but to also do a risk assessment of your health. I have 2 (separate) friends who have been fighting Stage 4 cancer and its reoccurrences since they were in their 50's. Obviously it makes no sense for them to try to wait until they're 70; they may never make it that long.

I claimed a year after FRA. My spouse waited until age 70. In both cases we didn't really need the income, but healthwise for me there was no point in waiting till age 70. My genetics give me a barely average mortality projection; i.e., about 17+ yrs.

But my spouse's SS is less because his pension is State agency-based and they withdrew from SocSec about 30 yrs ago. He had his 40 qtrs in so he qualified for benefits, but his SS is reduced by the maximum penalty of 60% due to WEP legislation. Spouse has poor genetics plus diabetes (controlled without insulin) but had a stroke at age 50, with a good chance of developing dementia.

So since we didn't need the money, it made sense to wait until he qualified for the max SS at age 70. Doing so gave him an additional $100+/monthly, so except for the fact we pay taxes on 85% of our combined SS, it offsets his Medicare premium and gives us a bit extra to spend, LOL.

If we had needed the additional income, then the calculations would have been different, of course. But SS was never intended to be more than minimum income support; it was hard enough getting the Social Security legislation passed and validated by the courts back in 1935.

Great trivia facts: the very first Social Security lump sum payment was to Ernest Ackerman, a Cleveland motorman who retired only one day after Social Security began. Five cents were withheld from his pay during that period, and he received a lump-sum payout of seventeen cents from Social Security!

The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont. Her first monthly retirement check was for $22.54.
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a big factor is the spending down of assets to delay ..

one has to live on something and spending down invested assets can make delaying to 70 not the best choice.

to equal ss at 62 and not spending down a balanced portfolio, would take delaying until 70 until age 92 to equal out
 
My best advice: Research and study SS like it's the biggest test you've ever faced. Recognize it for the million dollar plus decision it may be. Use credible sources with nothing to gain by your decision, look at your family longevity, personal health, and how long your savings will last if you have to draw from them every month. Stop worrying about "beating the system" and consider what your finances will be like if you make it to your 90s.

Too few impending retirees spend as much time seriously researching SS strategies as they do considering vacation details or which new truck, car, refrigerator, lawnmower, etc., to buy.

Friends who've claimed much-reduced benefits at 62 or 66 have asked, "You delayed DH's SS to 70? What if you both die early?"

My response, "What if at least one of us doesn't?" .
 
mathjak107 said:
a big factor is the spending down of assets to delay ..

one has to live on something and spending down invested assets can make delaying to 70 not the best choice.

to equal ss at 62 and not spending down a balanced portfolio, would take delaying until 70 until age 92 to equal out
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That's presuming people have invested assets that might not be needed later on. 'taint necessarily so. Sure, it will work out for people with big portfolios or those who've lived in rent controlled apartments for decades, or recipients of publicly funded, generous pensions, but it's not the situation most face when coming up on retirement.

Here's the Average Net Worth and Retirement Savings Among American Households by Age | The Motley Fool
This comes from Motley Fool this past week:

"The chart below shows the median (half have more and half have less) retirement account balance and the median net worth among American households based on the age of the reference person.
Age GroupMedian Retirement SavingsMedian Net Worth
18-34$18,880$39,040
35-44$45,000$135,300
45-54$115,000$246,700
55-64$185,000$364,270
65-74$200,000$410,000
75+$130,000$334,700
All Households$87,000$192,700

$200K won't last very long for people taking SS at 62 (average check at age 62 is $1275/month). Let's be generous and say $1800/month. $1800 doesn't go far these days.

Augmenting that $1800/month with portfolios of several million would work out well, but $200K? Forget it. Presume drawing $1200 draw per month to bring income up to a still low $3000 - that'll run the portfolio dry by age 76. Then what?
 
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then those you speak of cant delay taking ss if they retire at 62 because they can’t afford to delay .

its a catch 22 situation.

if they have to little saved they have to little to live on with no ss so del is not an option for most who stop working .

unless they have a pension that covers things , in which case the pay check didn’t stop.

in fact if they have a pension that covers things then the ss money if they filed early could be invested.

so in any case they either can’t afford to delay or if they do they will spending down money delaying that either could be invested if they had ss or stay invested if they had ss.

so each situation is going to be unique and has to be evaluated
 
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StarSong said:
That's presuming people have invested assets that might not be needed later on. 'taint necessarily so. Sure, it will work out for people with big portfolios or those who've lived in rent controlled apartments or decades, and recipients of publicly funded pensions, but it's not the situation most face when coming up on retirement.

Here's the Average Net Worth and Retirement Savings Among American Households by Age | The Motley Fool
This comes from Motley Fool this past week:

"The chart below shows the median (half have more and half have less) retirement account balance and the median net worth among American households based on the age of the reference person.
Age GroupMedian Retirement SavingsMedian Net Worth
18-34$18,880$39,040
35-44$45,000$135,300
45-54$115,000$246,700
55-64$185,000$364,270
65-74$200,000$410,000
75+$130,000$334,700
All Households$87,000$192,700

$200K won't last very long for people taking SS at 62 (average check at age 62 is $1275/month). Let's be generous and say $1800/month. $1800 doesn't go far these days.

Augmenting that $1800/month with portfolios of several million would work out well, but $200K? Forget it. Presume drawing $1200 draw per month to bring income up to a still low $3000 - that'll run the portfolio dry by age 76. Then what?
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I take it you mean that $200K won't last if the retiree's only monthly income is from SS, therefore must start withdrawing from that $200K (?) :unsure: If that $200K is invested well, however, part of the living expenses could be withdrawn from the earnings, leaving much of the principle intact. People are living comfortably without having that one million.
 
Talked to SS a couple days ago. Not that it was my plan, but if I ask for benefits on Jan 1, they will not give me even a penny because I am still working and earn more than some imaginary number. May 1, 2025 is apparently a magical day, and if I ask for benefits then, I start getting $3K a month, which I will do, and it will all go into American Express savings each month earning about 4.25%
 
Lawrence00 said:
Talked to SS a couple days ago. Not that it was my plan, but if I ask for benefits on Jan 1, they will not give me even a penny because I am still working and earn more than some imaginary number. May 1, 2025 is apparently a magical day, and if I ask for benefits then, I start getting $3K a month, which I will do, and it will all go into American Express savings each month earning about 4.25%
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I think you're mixed up unless your birthday is in May of 1963 in which case May of 2025 would be your first chance to start SS. Check ssa.com to manipulate the SS start dates and get the projection from any month from age 62-70. I'm pretty sure that will you will then be better informed.

I hesitate to take advice from call centers where perhaps the agent doesn't understand fully the question(s) or callers may misunderstand the answer especially wrt to a decision this significant.
 
againstthegrain said:
I think you're mixed up unless your birthday is in May of 1963 in which case May of 2025 would be your first chance to start SS. Check ssa.com to manipulate the SS start dates and get the projection from any month from age 62-70. I'm pretty sure that will you will then be better informed.

I hesitate to take advice from call centers where perhaps the agent doesn't understand fully the question(s) or callers may misunderstand the answer especially wrt to a decision this significant.
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If you are working and have not reached full retirement age, they will take back, not give you, dollars over a certain amount. At age 62 it is like $17K is the maximum you can earn before they withhold your money. In the "year" of your full retirement the max you can earn switches to about $60K but still I was over.

So they said piss off, call us once you stop working, or reach full retirement age. (she was actually a nice lady. added drama for entertainment)
 
Lawrence00 said:
If you are working and have not reached full retirement age, they will take back, not give you, dollars over a certain amount. At age 62 it is like $17K is the maximum you can earn before they withhold your money. In the "year" of your full retirement the max you can earn switches to about $60K but still I was over.

So they said piss off, call us once you stop working, or reach full retirement age. (she was actually a nice lady. added drama for entertainment)
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Retirement Earnings Calculator @ SSA.COM

Got it thanks, however you changed your explanation from "they won't give you a penny" to "they will take back" or using their terms they will reduce your benefit. The SSA does recalculate at FRA so the trimming of benefits only lasts till then, it's not permanent.
 

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