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A good case for taking Social Security benefits early

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  • J.K.Logic
    07-05-2018 04:26:10 PM
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    When should you file for Social Security if you have a young child?

    This is a q&a discussion that I thought brings up a very good point about a way to look at taking SS benefits early, as opposed to full retirement age.

    One quote from the article that I think stands out is:

    Realistically, money earned today is worth more than money earned in the future.


    This discussion is about a woman wondering if her husband (64) should retire at 66 or 70, and how the math works out. She is 46 and they have an 8 year old. She was also wondering about the offsetting benefits for their daughter.

    The ultimate advice was to take the benefits early. But the finer details were to basically sit down and do the math, and try your best to assume all the variables, like how much will your husband earn either way, if he were to live to say, 90. And how much would your child benefit now vs waiting, etc etc.

    Makes me think even more now that taking benefits early is a more viable path over full retirement IF you find yourself in a situation like this one. Definitely recommend reading the article.

    Also, anyone here considering early vs full retirement age that is in a similar situation? What's your take on this?

  • JFoster
    07-11-2018 09:24:04 AM
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    I'd say take the money and run. One of the reasons the government keeps bumping the age requirement up is that they are not only trying to deal with the heavy influx of the boomers retiring at the moment, but also to discourage those who want to take it early. Like the quote says, money earned today is worth more than earned in the future. If you think about it, you're quite literally gambling with money owed to you. What says you'll reach 90. Even with social security, the whole idea about "being in the present" might actually apply now.
  • JaredS
    07-31-2018 11:34:59 AM
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    I'm actually of the opposing opinion, especially if you're financially able to wait until you reach your full retirement age (which is dependent on the year you are born.)

    If you begin drawing your benefits the first day you're able to then your monthly benefit is reduced by 30%, with the percentage dropping each year thereafter until you reach full retirement age. That winds up being a whole lot of money in the long run.

    I stress that this may not be possible for everyone for a myriad of reasons, but I'm of the belief that the longer you wait to begin collecting your Social Security benefits the better.

  • bryce28
    08-22-2018 07:16:35 PM
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    JaredS Wrote:

    I'm actually of the opposing opinion, especially if you're financially able to wait until you reach your full retirement age (which is dependent on the year you are born.)

    If you begin drawing your benefits the first day you're able to then your monthly benefit is reduced by 30%, with the percentage dropping each year thereafter until you reach full retirement age. That winds up being a whole lot of money in the long run.

    I stress that this may not be possible for everyone for a myriad of reasons, but I'm of the belief that the longer you wait to begin collecting your Social Security benefits the better.

    Yeah, you're probably right to make the financial bet that you WILL live long enough to make the math make sense. What it boils down to: is taking it yearly, say at 66 instead of 70.. so that's 4 full years of reduced monthly benefits + forever reduced benefits.. compared to not getting any for those 4 years and getting full benefits thereon.

    What is the year that the math works out to where you start to eclipse those 4 years of waiting? Is it mid 80's? That's the whole argument really, unless you need the money now. If you can afford to wait, you are assuming you live long enough to surpass that age.

  • Kuya
    08-03-2019 05:51:28 AM
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    Greetings! I find this a fascinating as well as pertinent discussion. I am a 60- year- old US citizen and serve as a missionary here in The Philippines. I was wondering--since hitting the six decade mark in March-- what the earliest possible age is to begin receiving even the bare minimum amount(whatever that is).The cost of living is much cheaper here,of course.The US Dollar goes far here.One USD is about 50 pesos.For that reason,it may not be such a bad idea to collect early.In the old days the minimum age was 65. I am a bit out of touch now,but in looking at the entries which precede mine it seems that the retirement age is now 70. Is that correct? Is sixty-too young to initiate the process? I think it was 62 before. I only found this website and registered today.It is a big help.This is very timely.Good forums and information. Thank you for any advice!
  • J.K.Logic
    08-05-2019 01:32:59 PM
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    Kuya Wrote: Greetings! I find this a fascinating as well as pertinent discussion. I am a 60- year- old US citizen and serve as a missionary here in The Philippines. I was wondering--since hitting the six decade mark in March-- what the earliest possible age is to begin receiving even the bare minimum amount(whatever that is).The cost of living is much cheaper here,of course.The US Dollar goes far here.One USD is about 50 pesos.For that reason,it may not be such a bad idea to collect early.In the old days the minimum age was 65. I am a bit out of touch now,but in looking at the entries which precede mine it seems that the retirement age is now 70. Is that correct? Is sixty-too young to initiate the process? I think it was 62 before. I only found this website and registered today.It is a big help.This is very timely.Good forums and information. Thank you for any advice!

    Glad to have you on the site!

    This should help:

    Full Retirement Age

    It shows the full retirement age based on when you were born. Generally speaking you can start taking early Social Security at 62. And full retirement age is now between 65-67 depending on when you were born.

    Given that you are 60 now, if you are exactly 60, that would put your birth year at 1959? In that case your full retirement age is 66 years and 10 months. If your birth year is 1958, full retirement would be 66 years and 8 months. And for anybody born in 1960 or later, full retirement age is 67.

    Breaks it down too on the site for how much your benefits would be reduced if you take it early vs full. For example, if you take it as early as possible, 62, your benefits would be reduced by 30% of whatever you would have received if you waited until 67. And for every year you wait, it's less a reduction.

    Of course on the flip side, if you wait to 68-70, your payments would actually go up. So its all about circumstance.

    Your payouts will be less if you take them 5 years early, but then again you'll get 5 years of payments now vs none.

  • William A. Wilds
    04-14-2020 03:21:03 PM
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    But if you do the math, it takes decades to make up what you did NOT collect between age 62 and 70. the differential in the monthly payment should provide the numbers for your individual equasion. But lets use round numbers...

    lets say that at age 62 you qualify for $1000 per month. That is $12000 for the year. But you decide to wait one year because then youd get $1100 per month. That is an increase of only $1200 per year. Keep in mind that you are already $12000 BEHIND! in this scenario, it would that TEN YEARS to just get even. Exponentially, the math gets even mor ridiculous.

  • J.K.Logic
    04-14-2020 03:51:37 PM
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    @William A. Wilds Thumbs Up It really is just a math problem. Short answer is, using your example, if you live beyond 78.5 years, its better to take benefits at age 67 vs 62. Unless you need the money now. Here is how it all works:

    The math works like this. Lets say we use your numbers of $1000/month for early as possible benefits, at age 62. That would mean full retirement age is, lets say 67. And that would be 30% more, or about $1430/month.

    Lets say you are 62 now. Here is what you would get over the next decade in SS if you went early vs full:

    EARLY: $1000/month x 12 months x 10 years = $120,000
    FULL: $1430/month x 12 months x 5 years = $85,800

    Difference is = $34,200 more by going early. That gets you until age 72. Now, lets go for the next ten years until age 82.

    EARLY: $120K + $1000/month x 12 months x 10 years = $220,000
    FULL: $85.8K + $1430/month x 12 months x 10 years = $257,400

    If you live until 82 you are better off taking full benefits as you come out $37,400 ahead. And of course its $430/month better from that age on, every month.

    Question is what age will it be a wash and what age do you expect to live to, morbid a question as that is?

    It will be a wash, under this example, at approximately age 78.5. Here's the math:

    EARLY: $1000/month x 12 months x 16.5 years = $198,000
    FULL: $1430/month x 12 months x 11.5 years = $197,340

    Hope that helps!

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