Author Topic: Why Smart People Take Social Security at 62  (Read 296 times)

Offline Lee2

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Why Smart People Take Social Security at 62
« on: February 11, 2018, 09:37:53 PM »
I am not so sure that is the best for those of you who have family who lived into their 80's and beyond but for myself I took it at 62 and now at almost 70, I wonder if I was correct in doing so. For those of you coming up on 62 etc, hope this article gives you something to think about, not to mention that you might live longer without the stress of working, I am pretty sure that I might not be here had I continued to work, what are your thoughts?

https://finance.yahoo.com/news/why-smart-people-social-security-141800065.html

When should you claim Social Security benefits? That's tough to answer, especially since 91% of older adults don't understand the factors that determine how much their Social Security benefits will be. 

You can claim Social Security benefits any time starting at age 62, but your standard benefit amount is based on retiring at full retirement age (FRA) -- which is 67 if you were born after 1960. For each month before FRA that you claim benefits, benefits will be reduced, while benefits will increase for each month you delay after FRA, up until age 70.

Because Social Security provides guaranteed income for life, many financial experts advise you wait as long as possible to claim your benefits. But there's also an argument to be made that smart people claim benefits at 62 instead of putting off their claim. Here are four reasons why it makes sense to claim Social Security as soon as possible.

1. Claiming early makes early retirement possible
Claiming Social Security when you're 62 could make early retirement affordable when it wouldn't otherwise be.

If you're miserable at work -- or can't work anymore due to health issues or an inability to find a  job -- claiming Social Security so you can leave the workforce could save your sanity or your life.

Even if you don't hate your job, studies have shown a link between early retirement and improved health outcomes.

One Dutch study found men who had taken early retirement were around 2.6% less likely to die during the next five years compared with men who stayed in the workforce, while other research found extra years of retirement reduced the risk of serious conditions, such as heart disease, by as much as 20%. That research noted the "retirement effect on health is beneficial and significant."

Smart people who want to reap these benefits of early retirement will claim Social Security at 62, if that's what it takes to make leaving the workforce possible.

2. Claiming early makes retirement more enjoyable
Early retirement tends to be the most enjoyable part of retirement for most seniors because they're still young and healthy enough to do activities they enjoy. Because these activities -- like travel -- require money, smart people claim benefits at 62 so they'll be able to do the activities they want while they still can.

More than one-third of current retirees responding to a Nationwide retirement survey said health problems were stopping them from having the retirement they had hoped for. Among recent retirees responding to that same survey, 80% indicated their health issues occurred earlier than planned.

While a small number of retirees -- around 23% -- said they wished they had waited to claim Social Security so they would have more money to handle health issues, claiming benefits before you're sick means you'll have more cash to enjoy life while you still can.

Ideally, you should make a plan to cover healthcare later in your retirement years -- such as investing in a health savings account -- and use your Social Security income starting at 62 to indulge your passions before it's too late.

3. If you wait, you may not live long enough to break even
One of the best arguments for delaying Social Security benefits is that you'll have a larger guaranteed income for the rest of your life once you eventually begin claiming benefits. The problem is, you'll also have a number of years when you get $0 in benefits that you'd have otherwise received.

You need to account for these missed benefits when you factor in whether you should delay claiming. There's some simple math you can do to find out how long it will take you to break even if you delay benefits. You can also refer to this chart, which shows the number of years it would take to make up for missed benefits with extra income you get by delaying your claim. 

If your benefit at a full retirement age of 67 would be $1,404, claiming at 62 would reduce your benefit to $983 -- but you'd get five extra years of benefits. It would take you 11.7 years of receiving a higher benefit starting at 67 to make up for those years of missed benefits. You'd be 78.7 before you broke even. The only problem is, a 2017 report from the National Center for Health Statistics estimated average life expectancy for Americans in 2016 at 78.6.

Sure, you might live longer -- but you might not. And if you don't live long enough to break even, you've given up extra income that could have made the life you did have left more enjoyable.

4. Rising costs of living mean future benefits buy less
A dollar today is worth more than a dollar tomorrow, thanks to inflation. This is true of Social Security benefits, too. While benefits are supposed to keep pace with rising costs due to an annual cost-of-living adjustment, the metric used to measure annual Social Security raises doesn't accurately reflect actual rising costs in the spending categories where seniors put most of their money.

Social Security cost-of-living increases are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), but urban wage earners and clerical workers don't spend as much of their income on housing and medication as most seniors do.

Unfortunately, both healthcare and housing costs are rising faster than Social Security cost-of-living adjustments. 

This means that the Social Security benefits you'll get when you're 67 or 70 won't buy as much as the Social Security benefits you'd get five or eight years earlier at age 62.  Claiming benefits as early as possible, before rising costs further erode the actual value of Social Security, just makes sense.

What's the best choice for you?
While all of these arguments are powerful ones for claiming benefits at 62, there are some caveats. First, if you work before full retirement age, your Social Security benefits could be reduced. You'll get credit for this reduction later, but there's no sense in claiming benefits early if you'll immediately lose them anyway because you're still working and earning too much income.

Retiring and claiming benefits early can also pose risks, including the potential that you'll have too little money to live on later in retirement if you don't have enough savings. You can't live on Social Security alone -- especially if you've claimed at 62 and taken a reduced benefit -- and you don't want to retire until you're sure you have the money you need to sustain you.

But if you have enough to live on and you've decided you want to leave the workforce, claiming benefits at 62 is likely a smart move so you can start reaping the rewards of all those years of Social Security taxes you paid.

:) Happily married since 1994 & live part of the year in Cebu and the rest in S. Florida.

Offline BudM

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Re: Why Smart People Take Social Security at 62
« Reply #1 on: February 12, 2018, 01:09:57 AM »
From what I am seeing, anyone who is investing in health care with an HSA, has to give up contributions to it when signing up for Medicare.  I am trying to check in to it more as far as what if since you can not use Medicare overseas?  I am now less than away from 65 but, debating if am going to sign up for it.  I am keeping my former employer group insurance as I am overseas and I am only a vet, not one of those military retiree guys so I don't have that stuff nor VA health care.  Am planning for another 30 years at least prior to kicking out but apparently, as I am seeing now, my HSA will be flushed once I clear out the funds that will be left in it.  I still don't regret retiring early though and drawing SS at 62.  I thought it out and did it for my sanity.  In fact, I was only 59 for one month when I pulled the plug on those yokels.  I gave them notice though that they only had a few months left to abuse me any longer.
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Offline Lee2

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Re: Why Smart People Take Social Security at 62
« Reply #2 on: February 12, 2018, 01:23:55 AM »
Medicare is automatic when you turn 65, part B and so on is by choice, those are the ones we have to pay for. In my case my govt insurance made me take part B, a friend who retired from the post office did not have to take it, so I suggest you check with whoever provides your insurance before refusing to take part B or beyond.
:) Happily married since 1994 & live part of the year in Cebu and the rest in S. Florida.

Offline FastWalk

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Re: Why Smart People Take Social Security at 62
« Reply #3 on: February 12, 2018, 07:36:30 AM »
It is a good topic for the Philippines,  due to the possible lower cost of living it allows more choices.  For my wife and I if we need some more money when I turn 62 we will take the SS then.  If not will wait because wife is younger than I and the survivor benefit I believe is limited based on what I receive.  The extra amount over her likely life span should easily be more if I waited till 70.  But if things go poorly we could take it early.
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Offline BudM

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Re: Why Smart People Take Social Security at 62
« Reply #4 on: February 12, 2018, 10:08:01 AM »
I already had checked on my govt health insurance.  I don't have to take B or beyond.  And if something happened that I by chance had to go back to the US or move to a territory for extended period for whatever reason, I don't have to pay the penalty to start B up.  And according to what I have read elsewhere, which I will find out before it happens, people not drawing SS at that time, have to sign up for Medicare. But, if you are already drawing SS prior to 65, then both are automatic and they take the B payments from you.  I am stopping that before it happens.  And according to something else I read, which I don't know if I will confirm or not, you are allowed to refuse A.  Why, if it is no cost for most?  Well, maybe because of certain reasons similar to mine but I can not fathom throwing that out the window and not have it there for an emergency situation.  As a reminder, I said that I had read that but I do not know if that is fact.  Or if I even need to know.
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Offline BudM

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Re: Why Smart People Take Social Security at 62
« Reply #5 on: February 12, 2018, 10:17:42 AM »
It is a good topic for the Philippines,  due to the possible lower cost of living it allows more choices.  For my wife and I if we need some more money when I turn 62 we will take the SS then.  If not will wait because wife is younger than I and the survivor benefit I believe is limited based on what I receive.  The extra amount over her likely life span should easily be more if I waited till 70.  But if things go poorly we could take it early.

My wife does not have an SSN so I have to pay for other avenues.  And like you said, the possible lower cost of living allows more choices for things but I see prices continue to go up.  About the only major things I see a break on are labor and health care.  Diesel fuel among others are shooting up from a year ago.  I did not move here based on cost of living but I don't like rising prices just the same.  Another home, when my boy finishes high school in 13-14 years, could be on the horizon.  And if so, it would not be someplace where I have been.
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Offline suzukig1

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Re: Why Smart People Take Social Security at 62
« Reply #6 on: February 12, 2018, 11:23:20 AM »
My thoughts on the subject are:

If you need (need not want) the money at 62, then take it.

If you can get by without that "extra" money at 62, then wait.

My wife does not qualify for SS survivor benefits so that is not an issue with me.
« Last Edit: February 12, 2018, 11:31:59 AM by suzukig1 »

Offline Lee2

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Re: Why Smart People Take Social Security at 62
« Reply #7 on: February 12, 2018, 07:18:54 PM »
Another thing about taking SS is, that if you have an American birth certificate child with a SS number, they may also be entitled to receive some SS on your record. I do not know how this works but it might be worth looking in to for those of you who are going to get or are getting SS and have children, and the wife may be entitled to some SS as well for taking care of the child, so you probably should get her an ITIN number  which can be used for a tax deduction filing jointly as well, either way.
Social Security Benefits for Spouses and Children
Benefits For Your Children
:) Happily married since 1994 & live part of the year in Cebu and the rest in S. Florida.

Offline Gray Wolf

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Re: Why Smart People Take Social Security at 62
« Reply #8 on: February 12, 2018, 10:52:16 PM »
Former spouses are also entitled to benefits. My ex got half of what I draw monthly added to her monthly benefit check
Louisville, KY USA

Offline suzukig1

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Re: Why Smart People Take Social Security at 62
« Reply #9 on: February 13, 2018, 10:38:29 AM »
Spouses or former spouses that are not U.S. citizens and are not U.S. residents and have not lived in the U.S. while married to the SS spouse for at least 5 years do not qualify for SS survivor benefits.  My wife does not qualify for SS survivor benefits.
« Last Edit: February 13, 2018, 11:05:22 AM by suzukig1 »

Offline BudM

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Re: Why Smart People Take Social Security at 62
« Reply #10 on: February 13, 2018, 06:03:01 PM »
It is true about children.  Not well known though.  My son has a Philippine birth certificate so he does not have an American birth certificate.  Two or three months after I began drawing, I was sent a notice from the SSA that my son might be eligible for benefits off my record.  I did not yet have his Consular Report of Birth Abroad (his version of an American birth certificate) nor did I have a SSN for him.  So, I hurried up and set an appointment with the Embassy to get his CRBA and put in the SSN application.  Before the end of my first year, his benefit began with back payments.  Someone has to be assigned to manage his benefit (me).  It is not to be considered as another source of income but expenses for him can be taken out.  His formula used to cost over 100 bucks a month and what he uses now still costs almost 1.5k pesos three times a month so I been taking that out along with some other expenses.  Most of it goes into an NFCU account for him and US Savings Bonds.  I do plan on using some of it to help me pay for his schooling and then after he turns 18 he has access to the account.  It will be fairly significant and I hope he uses it wisely.  So, me drawing it at 62 allows early benefits for him too.  I did not feel too good about taking it but I then thought, crap, they won't let my wife, who I plan to have the rest of my life get a survivor benefit from my account when I kick out.  Oh yeah.  If by some chance I got run over prior to him becoming an adult, some of my benefit would be factored in to his and increase it.

And it sure is not a reason to have more kids.
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Offline suzukig1

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Re: Why Smart People Take Social Security at 62
« Reply #11 on: February 13, 2018, 09:20:06 PM »
With all of this talk about people dying and what happens after, here's some other information that people aren't always aware exists.
As a resident of the U.S. they would then be eligible for SS survivor benefits (once they reach the appropriate age).

https://www.uscis.gov/greencard/widower#children

Green Card for a Widow(er) of a U.S. Citizen

Widows or widowers who were married to U.S. citizens at the time of the citizen’s death may apply for a green card.

Until October 28, 2009, you had to have been married to the deceased citizen for at least two years at the time of the deceased citizen’s death, in order to immigrate as the widow(er) of a citizen.  Congress removed this requirement, effective October 28, 2009.

To immigrate as the widow(er) of a citizen, you must prove that you were legally married to the citizen, and that you entered the marriage in good faith, and not solely to obtain an immigration benefit.


Children of Widow(er) of a U.S. Citizen

Your unmarried children under the age of 21 (known as “derivatives”) may be included on your immigration petition.


Offline Gray Wolf

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Re: Why Smart People Take Social Security at 62
« Reply #12 on: February 14, 2018, 12:11:12 AM »
Spouses or former spouses that are not U.S. citizens and are not U.S. residents and have not lived in the U.S. while married to the SS spouse for at least 5 years do not qualify for SS survivor benefits.  My wife does not qualify for SS survivor benefits.

My former spouse was a US citizen, living in the US her entire life. She gets half the amount I receive monthly. My current wife, Filipino by birth, a Naturalized US citizen, having lived in the US since June 2000 will qualify for full survivor benefits upon my death... with proper notification, death certificate, SS records, etc, etc.
At least, that's my understanding. Hope I'm not wrong. Glo would kill me now for the insurance payoff instead  :D :D
Louisville, KY USA

Offline Gray Wolf

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Re: Why Smart People Take Social Security at 62
« Reply #13 on: February 14, 2018, 01:00:59 AM »
Is Social Security to blame for so many men dying at 62?
“A lot happens in our early 60s. Some change jobs, scale back working hours or retire. Our health-care coverage may shift. We may have fewer financial resources, or we may begin collecting Social Security," Fitzpatrick told The Wall Street Journal. “About one-third of Americans immediately claim Social Security at 62. Ten percent of men retire in the month they turn 62.”
http://www.foxnews.com/health/2018/02/13/is-social-security-to-blame-for-so-many-men-dying-at-62.html
Louisville, KY USA

Offline Lee2

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Re: Why Smart People Take Social Security at 62
« Reply #14 on: February 14, 2018, 01:18:00 AM »
Yup, got to keep active, couch potatoes have more of a chance of leaving this world early but IMO it is more about genes than anything else.
:) Happily married since 1994 & live part of the year in Cebu and the rest in S. Florida.

 


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