Best Time To Start Collecting Social Security

[dburanich]

One of the things I absolutely love about the Cafe is the many different subjects you can discuss and get some very good advice based on the experiences of other members. Mine right now is Social Security. I have not yet started collecting Social Security as I am older than 62 but younger than my Full Retirement Age (FRA). In my case that is 66 years and 2 months. My wife is a few years older than me and began collecting from her account but does does not receive that much since her working history is much less than . She was the stay at home Mom and we are very thankful that we were able to do that. I turn 65 in April 2020. I have already signed up for Medicare as well as my supplemental plan. I still work a full time job. If I were to begin my Social Security benefit now they have about an $18k annual limit I can make without affecting Social Security. After that, they keep $2 for every dollar above the $18k maximum. Doesn't make much sense to file now as it would end up taking quite a bit of the benefit amount. To me, my optimum time to collect Social Security is at my FRA which would be June 2021. It would also increase my wife's benefit substantially as she can switch from collecting from her benefit to mine and receive 50% of my benefit. That would be a substantial increase for her. They have a rule that in the calendar year you reach your FRA the maximum you can earn is about $48k. After that $48k is met they take $1 for every $3 you earn over the limit. That may possibly be a little more livable. Once I get to FRA in June 2021 there are no limits on how much I can make but they are considered earnings and a certain amount is taxable income. The verbiage I am confused on is the term "Calendar Year" Does that mean the months just before you reach your FRA which would be January 2021 in my case or does it mean 12 months before you reach FRA, June 2020. I hope some of you have come across this previously and can share your knowledge. Other than that I will take the trip to the Social Security office and wait in the very long lines.
Thanks in advance for you help.

 

[BillM]

The way I understand it, if you wait until 66 and 2 months (June 2021) you will be subject to income restrictions for one half of 2021. I waited until I was 70 to start drawing SS and I think that is the best strategy for anyone who does not need the income from SS while they are working. Your SS monthly amount goes up 8% for every year you wait until it maxes out at age 70.

 

[Pa]

Dave, I hope there are others here who can provide a better perspective on your rather complex situation. Mine was much simpler but at least I can explain how I went about making a decision.

I took a very attractive early retirement offer when I was 61 years old. I elected to take SS when I first became eligible at age 62 because my calculations showed that I would have to live 18 years beyond my full benefit age to collect the additional amount I would between first eligibility and full benefit age. That would put me 83 years old, which was a long way from 62!

Things have worked out very well for us so I have no regrets.

 

[JeeperDon]

I turn 65 in April 2020.... still work a full time job.

That's the saddest part of your post . Quit the work stuff and get out and have fun! My 2¢... Medical stuff comes out of nowhere to slow you down. It's never too soon to run at full retirement speed!

I'm like Jim, took social at 62, retired and just taught college part time for 3 yrs (age 62-65). I moved from expensive NY to Albuquerque at 65. I'm 73 now, for two more months anyway. Don't forget that you have 'mandatory withdrawals' of your IRA stash at 70.5, so that will be an income bump. Might as well have an earlier bump in your early 60's.

 

[dburanich]

The way I understand it, if you wait until 66 and 2 months (June 2021) you will be subject to income restrictions for one half of 2021. I waited until I was 70 to start drawing SS and I think that is the best strategy for anyone who does not need the income from SS while they are working. Your SS monthly amount goes up 8% for every year you wait until it maxes out at age 70.

I thought about waiting until 70 but collecting at FRA does cause me to lose the 8% annual increase but it takes more time for my wife to start drawing 50% from my account. She cannot get it until I start filing. The increase she would get offsets the 8%.

 

[dburanich]

Dave, I hope there are others here who can provide a better perspective on your rather complex situation. Mine was much simpler but at least I can explain how I went about making a decision.

I took a very attractive early retirement offer when I was 61 years old. I elected to take SS when I first became eligible at age 62 because my calculations showed that I would have to live 18 years beyond my full benefit age to collect the additional amount I would between first eligibility and full benefit age. That would put me 83 years old, which was a long way from 62!

Things have worked out very well for us so I have no regrets.

An early retirement offer such as yours does make the decision easier. I may have done the same thing. Sounds like to made a good decision. If it were just me, I would wait since I am still working. But the minute I start collecting my wife's benefit increases quite dramatically. That's what tips the scale in my decision.

 

[Butlerkid]

We both worked 30+ years at good paying jobs....and saved most of our money. My husband is 7 years older than me. He started his payments when he was eligible. I am getting a SS based on his earnings. I will defer SS on my account until I have to start withdrawls.

There are many variables to consider. Have you scheduled a discussion with SS?

 

[BillM]

Dave,

Like you say it is a complicated decision that you have to make based on you and your wife’s financial needs.

My decision was to wait til 70 and retire for good. Hah! Fat Chance! I will be helping my clients through 2020 and probably 2021 as well. At least it will be at a reduced rate of work and I can pretend to be semi-retired

 

[JeeperDon]

Don't make the money side of the decision like another job. Retiring is a mental thing, not a banking thing. To me it wasn't "The money is all working out, so time to retire and have fun." It was (per Danny Golver in 'Lethal Weapon') "I'm getting too old for this sh*t!", time to quit and just make the money side work.

 

[dburanich]

We both worked 30+ years at good paying jobs....and saved most of our money. My husband is 7 years older than me. He started his payments when he was eligible. I am getting a SS based on his earnings. I will defer SS on my account until I have to start withdrawls.

There are many variables to consider. Have you scheduled a discussion with SS?

I have not scheduled that appointment yet.
I wanted to get my Medicare out of the way first but that is my next step.
When you do decide to draw from your account check out their maximum family benefit.
I'm not sure if that applies to one or two SS accounts.
It didn't affect us so I didn't research it much.

 

[alexf]

Like many, I calculated it would take too many years if I waited for it to grow. I'd rather get the money early and reduce my yearly withdrawals from IRA (taxable), so I took it at 62, three years ago.

 

[Mike Buckley]

I first became eligible at age 62 because my calculations showed that I would have to live 18 years beyond my full benefit age to collect the additional amount I would between first eligibility and full benefit age. That would put me 83 years old, which was a long way from 62!

Those numbers were also the same for me but I opted to wait until I'm 70 to collect the benefits. That happens this year. I plan on throwing a party when I'm 83 to celebrate that I lived at least as long as the crossover age, which is when more is paid to me over the long term because I decided to wait. All of you are welcome to join in the party!

 

[MNglass]

The classic answer to all these SS and retirement questions is "Tell me how long you are going to live and I'll tell you how you can maximize your income."

Waiting until FRA makes the most sense in any case, both for your wife's added benefits and to maximize your own.

If, at FRA, you REALLY don't need the money that SS provides, you have two choices - defer SS and take the 8%/yr bump OR take SS, accept the tax penalty and burn the cash on whatever you enjoy.

We have possibly the worst SS office in the US. The advisor there kept insisting to me that deferring benefits past FRA did NOT result in any increased monthly benefits (it does - that the 8% everyone refers to). He also kept telling my friend that she didn't need to sign up for Medicare Part A since she was still working (she did). Seriously, if you have a competent HR department, they may be able to answer these questions as well.

But I'm with JeeperDon on this. My spouse is a medical professional and I can't tell you how many times she's worked with someone who has "retired" a year or two before and suddenly faces circumstances that severely limit (or end altogether) their ability to do the things they planned.

 

[Pa]

In my case I've been able to plough the unneeded SS benefits into stock and bond investments which have paid off handsomely as you might suspect.

 

[trenchmonkey]

Retired at 59 1/2 jumped on SS at 62. Younger wife joined in at 64.
I'm goin' on 10 yrs of collecting SS $$. I'd say DO IT NOW before
the "orange buffoon" and his cronies eliminate that as well.
With no mortgages/car payments it's nice gas & beer $$ and
truly disposable income for us both.

 

[Mike Buckley]

I've been able to plough the unneeded SS benefits into stock and bond investments which have paid off handsomely as you might suspect.

Indeed, if I had known the market was going to do as well as it has done in the last ten years, I would have made the same decision. Unfortunately, you didn't offer the sale of your crystal ball.

 

[Randy]

the very minute they'll give it to you is the best time to start

 

[tjkoko]

Retired at 59 1/2 jumped on SS at 62. Younger wife joined in at 64.
I'm goin' on 10 yrs of collecting SS $$. I'd say DO IT NOW before
the "orange buffoon" and his cronies eliminate that as well.
With no mortgages/car payments it's nice gas & beer $$ and
truly disposable income for us both.

Worth thinking about.

 

[SteveK]

I took mine 5 months before I turned 65, which made the signup for Medicare automatic. I had to choose a part D plan as well. I bought supplemental insurance which started as soon as Medicare started. 2 months later I had a total knee replacement, and never paid a bill for the surgery, drugs, or therapy. It is so much better than insurance with co-pay!

 

[tjkoko]

I took mine 5 months before I turned 65, which made the signup for Medicare automatic. I had to choose a part D plan as well. I bought supplemental insurance which started as soon as Medicare started. 2 months later I had a total knee replacement, and never paid a bill for the surgery, drugs, or therapy. It is so much better than insurance with co-pay!

Talk to me about part D as I need at least 20 bottles of insulin every 90 days.