Social Security shell game

[Knight]

Soc. Sec. @62. 21 years later still drawing on it. Use began as fun money & still is.

 

[ElCastor]

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.

A lot depends on your current financial situation. I started at 62. As time passed I discovered (at least back then) that up to age 70 I could in theory pay back what I had collected and restart at a significantly higher rate. So I did the math and computed what the payoff would be on the payback cash which I could in theory put up at age 70. This enhancement in the Social Security payment could be interpreted as interest income on the payback cash. The numbers worked for me and I did it. That was then, this is now. Times, rules, and returns may have changed and everyone's situation could well be different, so do the math.

 

[StarSong]

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 (?) If that $200K is invested well, however, part of the living expenses could be withdrawn from the earnings, leaving much of the principle intact.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.

Yes, that's exactly what I meant.

If the market does well, and people happen to have invested well, they can do ok. But that's a very big gamble when SS is one's only income, especially if they don't live in supported or rent controlled housing or have a generous pension. A fair percentage (even on this forum) of seniors' only financial support is SS plus some government programs for people with low incomes.

My point was that while $200K sounds like a lot of money (and indeed it is), it won't last for decades when the principal is being chipped away monthly for daily living expenses, never mind big emergencies.

 

[dilettante]

I'm not sure that anyone who hasn't at least been doing their own income taxes each year for some time is halfway competent to make such a decision. Seek financial guidance that takes into account where your family history and personal health falls in actuarial tables.

Unless you are facing dire financial circumstances or a poor lifespan projection taking SS prior to FRA is rarely advisable. Every situation is unique though.

Many completely fail to consider the tax implications of "clever" reinvestment, and then there is the fact of inevitable market drops and crashes.

 

[OneEyedDiva]

Yes, that's exactly what I meant.

If the market does well, and people happen to have invested well, they can do ok. But that's a very big gamble when no SS is one's only income, especially if they don't live in supported or rent controlled housing or have a generous pension. A fair percentage (even on this forum) of seniors' only financial support is SS plus some government programs for people with low incomes.

My point was that while $200K sounds like a lot of money (and indeed it is), it won't last for decades when the principal is being chipped away monthly for daily living expenses, never mind big emergencies.

You are on point Star.