Too many people look at breakeven to determine whether to collect or not. I know people who took their benefit early, because it allowed them to retire. They looked at it not in terms of money, but in terms of happiness!
Just because someone tells you it will make them happy, doesn't mean it will make them happy. You really don't know anyone unless you're in their shoes. Do what's best for you and stop worrying about others.
My financial goals as a 23 year old. 😊 1. Max out ROTH IRA. 2. Invest $10k with employer match 😊 3. Save up 6 month emergency fund 😊 4. Do more mountain biking 😊 5. Continue to invest consistently 😊
Great start. One more. Don't let keeping up with the latest trends impact your investments and savings. SS is designed to be 30-40% max of your needs in retirement. The rest needs to come from your investments and other savings.
@@JBoy340a Not completely accurate! SS has nothing to do with your spending habits. When I collect at FRA, three years from now, my benefit will cover over 70% of my expenses.
Good for you! If you haven’t already, pick up a copy of Bill Perkins’ book “Die with Zero”. It has some great insights on spending/saving across your entire lifespan. Including when you are young.
Excellent video Erin. I love how you present the information and let us decide what’s best. I turn 68 in April. I haven’t started drawing my Social Security. Hoping I can hold off until 70. Thank you.
Married with younger spouse. I retire at 62 and forego SS until 70 when she will be 62 and retiring. She'll start SS at 62. Everything I've looked at leads me to this is the best path for us as a couple. You are right on that everyone's situation is going to be different and will dictate their best/optimal claiming date.
@@brucef1299 I am doing the same with my wife unless social security is made tax free then I will take mine and max out both Roth accounts and her 401k.
The 62/70 approach - our approach as well and our situation is the same as OP. By my the time higher income earner is 62 it will be a year by year decision to stick with the 70yo target or move it up
I see Social Security as a decent longevity insurance, and I also expect to (statistically) live past my 80th birthday, so I plan on starting claiming late. I have a decent nest egg, so I can burn through part of that until I reach age 70. I have limited interest in leaving behind any wealth, so I'd rather enjoy and consume my nest egg while I'm alive. However, there's a small chance I live longer than expected, and in this case Social Security can boost my income in my late years and lessen the need to keep a large nest egg around. So, while maximizing the benefits from Social Security may play a role in my decision, it is more important to have that safe income in case I live far into my 80s and 90s.
I'm feel the same way, i'd rather maximize my SS so if I out live my savings i'll have more SS to live off of. Also I plan to use those years from when I quit work to collecting SS to convert any money I can from my 401K and Traditional IRA over to a Roth and stay in a lower tax bracket.
I may as well. Not sure why she assumed to take just a 5% withdrawal rate from the invested SS. I would argue you could deplete that a lot quicker and come out ahead provided you have other investments
I ran my numbers on the Social Security website last month as I'm looking to retire in about 2.5 years. I found out that if I wait until age 67 to claim my SSA benefit, I'll get about $160 a month more than I'll get if I claim it at age 65. I'm claiming it at 65. Bear in mind everyone's circumstances are different. For me personally, it doesn't make sense to wait. Around age 60 or 62, everyone needs to take a hard look at their situation, including the possibilities in claiming ages of Social Security. Their website was unexpectedly helpful. You do need to create a account
I agree with you. I stopped working at 65 and claimed my Social Security then. If I waited till 67, it would take me almost 10 years to break even, and it didn't include the investment opportunity cost. I now use my SS check to build a dividend portfolio. I have about 5 years before I need some of that money to live on. I hope the dividends will supplement my SS and will close the gap between claiming early and claiming later.
If I'm not mistaken, I believe that when the SSA website gives you your future projected numbers, it does so by assuming you're going to work right up until you tell the calculator that you want to start collecting. So, the number you get at 62 will be assuming that you're no longer going to contribute beyond that point. And for each year after 62, those numbers will be based on the assumption that you will continue to earn at least your previous year's earnings every year until you decide to collect. I may be wrong, but I don't believe the SSA website can determine what you'll get if you retire at one age, stop contributing at that time, but still delay collecting. Read the language to the left of the graph to confirm this for yourself.
@@Po1itica11yNcorrect While I believe you are correct, that does not apply to my specific situation. I paid into social security for a bit over 20 years before I had a change in life direction and became a first responder. In my current position, I do not pay into Social Security. Soon I'll retire with 25 years in my current profession and receive a pension from it. Believe me when I write that I was giddy as a child when WEP went away. I dang near did a happy dance. The WEP would have reduced my SSA benefit by about 40%, and since I'm leaving a 100% pension benefit to my wife after I'm gone, the WEP/GPO would have completely eliminated my wife's SSA benefit. Anyway, the SSA benefit calculator has been accurate for me for years. The only change has been the recalculation after the elimination of the WEP, and any increases to SSA benefits from inflation. My personal situation is atypical
@@Po1itica11yNcorrect I believe you're opening comment is correct. But my situation is atypical. I worked in private industry for 20 years, paying into Social Security. I chose a change in life and became a first responder. In this position I stopped paying into Social Security as I was paying into a pension fund in my state. Long, boring story short is that my Social Security benefit has been the same since the SSA calculator started. The only change was last month after the elimination of WEP/GPO. At this point, until I retire, the only change I'll see in my SSA benefit will be from inflation adjustments. Side note: After the elimination of the WEP, my Social Security benefit will increase about 40%. More importantly, if the GPO had not also been eliminated, the survivor pension I'm leaving for my wife would have completely eliminated her Social Security benefit
Awesome video, as usual! One thing to note is that you typically get your 'lost' Social Security benefits (from earning over the earnings limit before FRA) back since it's much like delaying Social Security. You'll get a higher monthly benefit later.
Another reason for delaying SS is that it can allow you to do Roth conversions at lower tax rates since your taxable income will not be including SS benefits.
I’m 52, my wife is 56. We plan to take SS at 62. We’re fortunate to have a nice nest egg to supplement our retirement. Take it now because tomorrow is not guaranteed and we can adjust spending later in life if we are feeling the effects of drawing at the reduced amount.
I think a big question you should ask yourself is what do I plan to do in retirement. I started drawing at 63 because I wanted SS to help subsidize my boating life. I’m 71 now and SS is about a third of my income with dividends and interest making up the rest. Early saving, paying off the mortgage,and good health helps enormously.
I’m 63 and retired with enough to live on from retirement savings. I’m claiming at 70 because my wife is 7 years younger and will likely get my survivor benefits. Btw. She will claim at 62. The math works. Use Bolden to calculate it.
Not necessarily good advice. I know people who took SS at 62 and regretted that decision. One had zero savings, the other had savings but still fell short.
Investing the money if taken at age 62 can also be viewed as what return are you getting from the money that you still have in your 401K or IRA as you are taking social security instead. It doesn't need to be invested separately. One big factor that I don't see mentioned is that COLA for Social Security is a big factor that also needs to be looked at in addition to what return percents you get. So if you get a 7% return on your money with a COLA average of 2%, your breakeven age is about 89. However, if you get the same 7% return with an average COLA of 5%, the breakeven age is now about 82. For myself, I created an exec spreadsheet that allows me to compare any example by entering in monthly amounts, returns, and COLA rates. Output is breakeven for 62 vs 67 and 70. Based on this, I am looking at age 62 to begin withdrawing. Plus I am more likely to have extra money for my children to inherit.
This one is easy. Talk to a psychic first, and ask how long you're going to live. I hear California has the good ones. Then watch this video, Erin is the best!
To me, this is the most accurate response of the bunch. It doesn’t make any difference what the break even point is, if you get run over by a bus at 70. Life is not guaranteed. I’m in the bandwagon of “retire as early as economically possible, and enjoy the time you have left”. You worked hard to save and do the right thing your whole life. Why would you leave 30-50 years worth of planing, saving & and effort up to chance? If you enjoy working and want to work longer, that’s a different story…wait until you retire to draw. But if you work to live, and can afford to step away, do it as soon as you can, and take the SS money as early as possible. You are much more active and able to enjoy life at 65 than at 85, and unless you have health issues, life is probably cheaper by 85. Take the money and enjoy your life while you are still active and in good health. As I said, life is not guaranteed. No one knows how long they will live, and that is the real key to this question.
Actually Eric could do both! Dress up like a Swamie in an onion head hat and tarot cards! Predict the future and talk SS. I’m sensing a two million view video….
As with most retirement questions - you will only know the answer to 'what is best' after you die (at which time you will neither know, nor care). It's all best guesses. For me, I am 4 years older than my wife and family history shows I will likely have a much lower life expectancy. As the higher earner, I will delay until age 70 so she gets the higher amount once I expire. She will start collecting at age 62, since it is likely she will start getting mine within 10 or so years after that. We should all both love and hate the answer to all questions retirement - 'it depends'.
Great video this week and very relevant. We are drawing at 62. We could hypothetically do " better " by waiting but what are we going to spend money on after 70 besides health care? We will spend now of vacation, travel and others.
I'm planning a little bit the same, but opposite. I plan to take SS at 62, and as a result have to pull less from retirement funds. That would leave more invested for longer. By the time I reach the break even point, I'll have to pull more due to RMDs anyway. So I plan to just claim early.
Every time I've run the numbers on this, claiming as early as possible always wins out when looking at my financial picture as a whole. I use the SS benefit to offset what I would need to withdraw from my portfolio (probably the same end result of how you did it in your video, just a slight twist in how I viewed it). Assuming I have a large enough portfolio to retire at 62, claiming at 62 which offsets the amount I need to withdraw from my portfolio made my break-even well into my 90s.
The first problem with the $1,400 per month invested for $134k principal in eight years, you didn't subtract out taxes. Assuming 85% taxable at 22%, that is 25k of the top.
I retired at 57. Turning 62 in one year. Contemplating this topic. I am leaning towards taking the money at 62 because it will not be a significant part of my income. Just icing on the cake as you say. More interested in maximizing income from 62-72. Got a year to think it over some more.
Some say take it early and invest it, if you look at it with a certain head tilt, I'm doing that. I left it in the program and I'm earning 8% a year. Nice fixed return investment.
I plan to wait until age 70 to claim Social Security. I will use a Social Security bridge strategy to cover the gap between retiring and claiming. I will try to liquidate my pretax retirement assets before RMDs hit. Meanwhile, my Roth accounts will continue to grow in the background, untouched.
I claimed Social Security @63 because I calculated that factoring in the early payments it would take until age 81 before I would fall behind of total amount received. Plus, using Social Security I can delay using IRA until 73.
When doing my retirement planning I completely ignored Social Security, SS is outside of my control so I didn't want to be dependent on something that may get reduced in the future. I retired at 55 and planned on claiming at 70, but now with the recent changes to SS I will have my wife claim at 62 for a small benefit on top of her municipal pension, then I will claim at 67 so she can get the maximum spousal benefit. And if it collapses completely we can still survive.
My wife is a little older than I am. She claimed SS at FRA and I semi retired (self employed). When I filed for SS at FRA I took on a part time job (60 hrs per month flexible) for a non profit and I love it. Combined we make more than when we’re both working and haven’t touched our invested retirement income.
Our retirement plan was put together without considering anything from Social Security. We have an investment portfolio that's a little over $2M, own our house, have some farmland that we rent out that produces a (very) modest income stream, and have no debt. I retired last year at 63, my wife is still working part time because she loves what she does. We haven't made a hard decision on when to claim Social Security. I doubt it will be before I turn 67 which is my full retirement age, at current payment rates that would be around $3K a month for me. We don't need the money that badly, so I'd like to let the amount grow a bit and treat it as an "if all else fails" fallback cash stream and keep it isolated from any market fluctuations.
Currently 45. Plan to retire at 65, and claim SS at 70. Will use the time from 65 to 70 to reduce traditional IRA balances and stay in the 12% tax bucket. Avoids problems with too much RMDs in my later years. 20 years is a long time off. Plan to reevaluate as tax law changes over time.
Nicely explained Erin! With the elimination of WEP/GPO I took my benefit at 65-8 after running the numbers. I have a state pension as well so the GPO impact to my wife was substantial. As another post said, the $$$ difference from here to FRA was insignificant so it made sense to take SS. Love your content! Thx!!
Hi Erin. Great discussion and thorough explanation of this topic. I'm certain it will be of value to your listeners. Have a blessed week and I"ll see you on the next one. Larry, Central Valley, Ca.
Good video! I personally think break even point shouldn’t be a consideration. SS is meant to cover monthly expenses so the best time to draw is when you will be in a position to cover those expenses. This is just my opinion though. Also I feel not many people are in the position to take SS and invest it. As you pointed out (and the only person I ever heard pointing it out) you have to live on something so it might be pointless to live off investments just to invest SS. Why not live on SS and leave investments in tact. Anyway, good video!
I retired at age 61, about five months before my 62nd birthday. I began taking Social Security at age 62. A couple of factors in my decision: 1. It allowed me to forego using my investments. My investments continued to grow, which will increase the legacy I leave to my heirs. 2. My wife was a school teacher that did not pay into SS. As a result, she would not have survivor benefits to my SS. So, if I delayed SS and passed away in the interim between 62 and FRA/70, then all the money I paid into SS over the years would be gone. Of course, this was before the Social Security Fairness Act was enacted this year, which eliminates the WEP/GPO penalties in our case. 3. The "Break Even" point also weighed heavily in my decision. Taking SS early allowed us to use those funds during our "GoGo" retirement years, when we are most active in travels, etc. (Referencing the concept of three phases of retirement: Go Go, Slow Go, and No Go)
The Affordable Care Act (a.k.a. Obamacare) made it illegal for health insurance companies to deny coverage or charge more for preexisting conditions. So, as long as that law holds, you are fully insurable.
It's not what you make it is what you keep. Taxes are a huge consideration that needs to be looked at before taking SS. A lot of people are shocked at their tax bracket when they hit RMD age if they have a good size nest egg in pre-tax dollars. People have to factor in RMDs and Tax trap when one spouse passes if they are married and also IRMMA.
@@James4cycling I am too befroe taking SS. I am reitred so paying a much lower tax on conversion than I would if I was taking SS and when RMD would kick in.
Yes, I'm surprised nobody seems to be talking about that. I haven't really dug into it but, I claimed SS at 66, my FRA and I think I would have been much better off had I waited until 70 and done a lot more Roth conversions in those years. You don't have to have a spouse pass to hit the Tax trap. I bet more commonly, somebody got a gray divorce they didn't see coming and they kept pre-tax 401k and IRAs in the divorce settlement. That's my story.
How about this? Claim SS at 62, continue working while contributing the maximum limit to a traditional 401k ($34,750 for 2025). The traditional 401k contribution is not reflected as W2 wages and so is not tallied towards the $22,320 SS earned income limit. You can therefore be paid $57,069 without SS penalty. Now, take your SS revenue and buy a traditional IRA ($8,000 limit for 2025). You'll be paying very little income tax for the year, so adjust your W4 appropriately to avoid needless withholding. Invest these retirement funds wisely for sensible growth vs risk to help make up for what you've foregone by retiring prior to full retirement age.
@@joekuul8769 the only time traditional 401(k) money is considered "income" is when you take a distribution. If you are paid $40,000, but you direct $30,000 to a traditional 401(k), then your W2 wages is $10,000. The 401(k) contribution is not a deduction; it is just not income, period. This fact can help you qualify for Obamacare or even medicaid, the qualification for which is based on Modified Adjusted Gross Income (MAGI). By directing more pay into the 401(k), you can lower your income below the threshold needed to qualify. The county may look at your gross pay and say your income is too high to qualify, but you will prevail when you point out that by statute the qualification is based on MAGI. I know, because I prevailed.
Potentially claiming early. B/E point is 79. Health decline can be precipitous from 62 to 67(FRA) and hope to take advantage of those 5 early years. Additionally, no one in my family has yet to live beyond 79. Morbid, I know but certainly part of the math.
There are a few other issues you've skipped. SS is taxed differently than regular income. If you're doing aggressive roth conversions, SS would allow for a larger conversion. SS may be insolvent before you claim so you may not get anything if you wait. I don't know why, but when I figure the break even points, and consider investing SS in a municipal bond fund, my break even point is much later than you've calculated. That might be because I've calculated based on monthly SS checks where you might be calculating using just the annual income amount.
The most important factor to consider is family history and your health/lifestyle. If your family has a history of living into their 90s and you live a healthy lifestyle wait on Social Security. With life expectancy in the U.S. dropping and landing at around 75-ish, you would be a fool to wait too long. It takes about 12 years of benefits taken at 62 to be overtaken by starting benefits at FRA of 67. I went to public school but, 62 plus 12 lands at almost 75.
Don’t forget to pay taxes on that monthly benefit at 62. Then the rest can be invested and the ending balance won’t be tax advantaged like your higher SS benefit.
You have to be careful with life expectancies. From birth, it is around 75 on average, but once you have already reached 65, the expected remaining life is over 80 (another 17 to 20 years depending on gender). Having reached 65 you have already avoided all the opportunities to die before then. If you live until 80, you can expect another 8 to 9 years. Nice actuarial table on the SS website. www.ssa.gov/oact/STATS/table4c6.html
I did the math. So from ages 62 to 80 you get a total of a little over $500k. From ages 70 to 80 you also get a little over $500k. They just spread it out but you get the same amount!
Erin: Regarding married couples, most scenarios are for couples the same or similar age. What about couples that have 5 to 10 years difference in age? Could you please make a video on this subject. Thanks
Erin as always you do a great job of explaining. My perspective is simple what's your time, your health and freedom worth? Everyone's answer will be different ....just know you can make more money but you'll never get more days while you're healthy . Cheers to everyone!
Social Security is one of the better diversifications against stock market downturns. Taking it early and investing it into riskier assets is similar to gambling. However, it might be a good idea to take it early during a prolonged downturn to reduce the amount of stocks/funds getting sold at a low price. People also tend to live longer than their parents. Otherwise, the government would have increased the minimum SS age to 65 considering the deficits. Larger payouts at 65+ would also increase IRMAA (Medicare) premiums and possibly income tax due to a higher MAGI for a lot of people. But paying lower social security payments is still benefiting the funds if the person lives until 78-81 y/o.
Thanks Erin. As a single person that really doesn’t need my benefits for daily living ( my house and cars are paid off, so, monthly bills are low …. Though, I do like to play 😬). Haven’t thought about getting benefits until Trump said he will make them tax free. That makes me want to reconsider. Am I wrong?
My wife is 5 yrs older, she waited until FRA (next month) so that she maximizes considering she is lower earner and didn't want to impact spousal benefit total. I'm thinking of claiming @ 65 which will start additional $300 for her. Am I generally correct on this strategy? Thanks, I value the videos. MG
In a similar vein, can my wife claim at 62 as her amount is much less than the spousal benefit, then switch to the spousal benefit when I start claiming?
Erin, you must have read our family's path into retirement. My wife took her SS at 62, I took mine at 66 when I reached FRA. I get a pension from my first career (software engineer), so that combined with our SS payments meets our normal budget. So we don't need to pull anything from our IRA, just letting it grow! It's working great so far!
Thanks Erin, but there’s one more option for a break even scenario - what if you claim early while still working and pay the penalty - what’s the break even vs FRA with no penalty? Thanks
My wife and I are both 60. I retired at 58. My wife will claim SS@62 and we will wait to gauge our status and decide to claim at 65 or 67 or maybe later depending on status.
I didn't catch if you mentioned tax considerations which can be huge. So with a 401k well in excess of my lifestyle needs, seems like not claiming until 70 lets me pull out a bunch of 401k and/or do roth conversions and still have low or no tax as well as reduce later RMDs plus having a larger guaranteed lifetime benefit?
When considering taking SS early and investing, SS COLA must be factored in calculations. Also personal financial situation is probably the main reason for claiming.
My mortgage is paid off and I have tetirement savings in roth 401k, dividend stocks, and metals. Im taking my S.S. as soon as I turn 62. I want MY money back NOW. Besides the fact, I could die before ever getting any of my money back by waiting.
Wife started claiming 2 years ago at 62. My plan is to retire EOY at age 67. Not sue when I'll start claiming since I have a nice fund built to this point. Hoping to figure that out soon but don't know who can help me with that crystal ball decision. Was hoping you would but I understand and appreciate the info you provided.
I recommend you get yourself a fee only financial advisor, who specializes in retirement planning. It may cost you a few hundred, but they will make a plan specific to your needs.
Wait! It’s not always cut and dry. I took SSDI , social security disability insurance at 63 and my FRA age was 66 1/2. BUT, SSDI paid me FRA at my age of 63 ! So when I reached FRA , my SSDI became Normal Social Security at FRA amount. So I called Social Security to ask is there a way to get the age 70 amount, by suspending or delaying… answer was NO. Didn’t plan on getting a rare blood cancer and being disabled,but life handed me the most challenging thing and getting healthy is my focus. I wish you the best in your encore aka retirement.
Your videos are geared toward those over 60 which I am. You can work with a variety of ages. Consider doing videos on budgeting for those in their early 20s.
I have been sending my kids her videos so they know how to start early. Look back on her videos you will find a treasure chest of how-to get-going videos.
If only we knew the future, lol. Thank you again for the straightforward explanation Erin. Hoping to get my youngest through college in the next four years and reach a point where I can still work if I want to and have my spouse take SS at 62 so we can enjoy the years (hopefully) that we have left. Thanks for all your info!
I'm seriously looking at just that and I haven't found anything that says it makes a difference. If you are pretty sure you are going to stay in the other country you probably want to stop the Plan B premium from being taken out of your SS. $185 a month isn't much in the US but, it's a lot if you're in most of the world.
The truth is that almost everyone should claim early. The real break even point for 62 vs 67 or 62 vs 70 is well into the 90’s. This is a statistical fact even assuming a modest rate of return on investment of 5 or 6%. What none of the financial advisors calculates is the ROI during the amortization process of the balance.
walter: You don't know how to calculate b/e. Typically, b/e for 62 to 67 is a little over 78 and from 62 to 70 about the same, depending on when your FRA is. So, no, it is not a statistical fact. If you are trying to figure a b/e assuming you take benefits at 62 and invest, the b/e varies greatly depending on variables.
Claim SS the minute you retire. Your retirement accounts will be left to your heirs, SS will not. Spend it first and let your personal accounts grow as you won't need to pull as much from them.
You know I was debating that concern when to take SS or 401k/IRA but you made the most common sense decision....why leave it the the government! thanks
Neighbor, Bill , want to maximize his benefits, so he continuedto work past FRA, and planned to claim at age 70. At 69yr 10 mo died of a massive heart attack, never collected a penny.😢
Yea, drawing early to invest your SS income sounds good but very few are disciplined enough to do it. In general, the longer you can wait to draw the better. Most of us are going to live longer than we think.
But if I retire at 62 and start collecting then, I need to pull more out from my investments to live off of so I'm just robbing Peter to pay Paul. Even if I countiue to work and collect at 62 now I need more of a return on those investment to make up to the taxes I'm paying on SS while working.
Your income has to come from somewhere. If you delay SS then live off your IRA. That’s what it’s for. Retirement! Then when you begin to take SS you can reduce or stop your IRA distributions all together giving them time to recover before RMD’s kick in at 75. If you take SS at 62 then you’re limited on what you can make, about 22k. That’s not enough for most to live on.
I did a compound interest calculator and came up with $188,067.95 for $1400 per month invested at 9% after 8 years. Her number was $187,747 so 9% seems close
I think the comment that you lose the money to the earnings limit if you go over that limit between the ages of 62 and 67 is incorrect. It is only correct in the short term. You do pay excess earnings back to social security. But what you do pay you get back later so it is a deferred way to bank some extra cash for your older years. I would very much like our fearless leader to unpack how that works.
It helps to define what social security represents for each person and that will be different for each person. To me, I want social security to pay my rent plus my medicare payment. So I look at my SS statement and see it would cover that amount at age 64 so 64 is the earliest I would take it. Then I look at a possible default and reduction on SS, so I divide by 80%, and that gives me age 67. So unless we get a SS fix by the time I hit 64, my target will be 67. Others will have different calculations for different needs.
As I understand it earnings = working (yes: w-2s), so passive incomes like pensions/retirement account distributions/brokerage distributions do not count.
I think for me, it is not the age, but more about when will I have my mortgage paid off. My preliminary calculations show that I could not financially survive on straight pension if there is a mortgage still around.
In my situation, I don't see how waiting past 62 gets me more money. My foreign wife will get half of my FRA amount when I start SS. I am 62 and retired at 60 so my FRA amount (as is my highest 35 years of earnings) is fixed. So my wife's spousal benefit is fixed. She misses out on 100% of that fixed amount every month I delay, while my SS increases only slightly every month I delay. If I wait until age 70, she has missed 8 years of payments and never gets an increase except for a yearly COLA.
I would say right now or as soon as humanly possible is the best time to claim social security, seeing as our government and all services are under attack. Nothing is guaranteed, least of all a government payment. Stay strong.
Taxes should be considered too and that includes available ACA tax credits from 62-65. One can check their “optimum” claiming strategy on Open Social Security website. I’ve been retired 10 years and am 6 years older than my wife. She will retire at or before 62. She will claim her lower benefit at 62. My larger benefit will continue to grow and be claimed at 70…if I live that long!
I am 64 and retired, haven't claimed my SS, not sure when I will do it, don't need it at all, so I don't even think about it. Maybe in a few more years. No idea.
ive seen three people close to me in their late 60's die in the last 3 years from heart attack , cancer , and an accident at home ... until i can leave SS to my kids , like our portfolio will be , we will be claiming at 62 ... i wouldnt wait until 70 unless i hadnt saved well for retirement and SS was gonna be important to survival after age 80 ... if you dont even actually need SS , id take it at 62 and enjoy it because you may not make it 18 more years to break even ... best of luck whatever you all choose ! ............ on a side note , if i draw my SS at 62 and invest it every month for 18 years until im 80 and get a 7% annual return on it id have double the amount i would collect from age 70 to age 80 if i had waited to start my SS at 70 ... and if i didnt invest the SS i got at age 62 and just held it in cash it would be $9,000 more at age 80 than if i waited until 70 to take my SS ... the amount you get at 62 , 67 , and 70 are amortized , which means theyre designed to pay out the same total amount until age 80 ... so all of the people who die before 80 make it possible for the ones who live past 80 to keep getting paid ... just like when your spouse dies before you , they give only a portion of your SS to your spouse , and thats only if their SS is lower ... they dont get to keep theirs and yours
Too many people look at breakeven to determine whether to collect or not. I know people who took their benefit early, because it allowed them to retire. They looked at it not in terms of money, but in terms of happiness!
Just because someone tells you it will make them happy, doesn't mean it will make them happy. You really don't know anyone unless you're in their shoes. Do what's best for you and stop worrying about others.
You can retire before FRA and delay SS until FRA if you have the money.
My financial goals as a 23 year old. 😊
1. Max out ROTH IRA.
2. Invest $10k with employer match 😊
3. Save up 6 month emergency fund 😊
4. Do more mountain biking 😊
5. Continue to invest consistently 😊
Great start. One more. Don't let keeping up with the latest trends impact your investments and savings. SS is designed to be 30-40% max of your needs in retirement. The rest needs to come from your investments and other savings.
@@JBoy340a Not completely accurate! SS has nothing to do with your spending habits. When I collect at FRA, three years from now, my benefit will cover over 70% of my expenses.
Good for you! If you haven’t already, pick up a copy of Bill Perkins’ book “Die with Zero”. It has
some great insights on spending/saving across your entire lifespan. Including when you are young.
Great plan 😊
Starting investing early is the key. Stay the course, you will be happy that you did!
Taking it ASAP at 62.
Same, I will never make the money up, and when I am 65 they take around 200 per month for Medicare, take it!
Excellent video Erin. I love how you present the information and let us decide what’s best. I turn 68 in April. I haven’t started drawing my Social Security. Hoping I can hold off until 70. Thank you.
I’m 62, with a pension and personal savings (Roth and IRA). I love your simplified explanations. Your a great help. Thank you.
Married with younger spouse. I retire at 62 and forego SS until 70 when she will be 62 and retiring. She'll start SS at 62. Everything I've looked at leads me to this is the best path for us as a couple. You are right on that everyone's situation is going to be different and will dictate their best/optimal claiming date.
I have almost the same situation and calculate the same results
I’m also named Bruce. Lol
@@brucef1299 I am doing the same with my wife unless social security is made tax free then I will take mine and max out both Roth accounts and her 401k.
We're doing the same.
The 62/70 approach - our approach as well and our situation is the same as OP. By my the time higher income earner is 62 it will be a year by year decision to stick with the 70yo target or move it up
I see Social Security as a decent longevity insurance, and I also expect to (statistically) live past my 80th birthday, so I plan on starting claiming late. I have a decent nest egg, so I can burn through part of that until I reach age 70. I have limited interest in leaving behind any wealth, so I'd rather enjoy and consume my nest egg while I'm alive. However, there's a small chance I live longer than expected, and in this case Social Security can boost my income in my late years and lessen the need to keep a large nest egg around. So, while maximizing the benefits from Social Security may play a role in my decision, it is more important to have that safe income in case I live far into my 80s and 90s.
I'm feel the same way, i'd rather maximize my SS so if I out live my savings i'll have more SS to live off of. Also I plan to use those years from when I quit work to collecting SS to convert any money I can from my 401K and Traditional IRA over to a Roth and stay in a lower tax bracket.
Thanks Erin! Planning to claim at 62 and investing it.
I may as well. Not sure why she assumed to take just a 5% withdrawal rate from the invested SS. I would argue you could deplete that a lot quicker and come out ahead provided you have other investments
I ran my numbers on the Social Security website last month as I'm looking to retire in about 2.5 years. I found out that if I wait until age 67 to claim my SSA benefit, I'll get about $160 a month more than I'll get if I claim it at age 65. I'm claiming it at 65. Bear in mind everyone's circumstances are different. For me personally, it doesn't make sense to wait. Around age 60 or 62, everyone needs to take a hard look at their situation, including the possibilities in claiming ages of Social Security. Their website was unexpectedly helpful. You do need to create a account
I agree with you. I stopped working at 65 and claimed my Social Security then. If I waited till 67, it would take me almost 10 years to break even, and it didn't include the investment opportunity cost. I now use my SS check to build a dividend portfolio. I have about 5 years before I need some of that money to live on. I hope the dividends will supplement my SS and will close the gap between claiming early and claiming later.
If I'm not mistaken, I believe that when the SSA website gives you your future projected numbers, it does so by assuming you're going to work right up until you tell the calculator that you want to start collecting. So, the number you get at 62 will be assuming that you're no longer going to contribute beyond that point. And for each year after 62, those numbers will be based on the assumption that you will continue to earn at least your previous year's earnings every year until you decide to collect. I may be wrong, but I don't believe the SSA website can determine what you'll get if you retire at one age, stop contributing at that time, but still delay collecting. Read the language to the left of the graph to confirm this for yourself.
@@Po1itica11yNcorrect While I believe you are correct, that does not apply to my specific situation. I paid into social security for a bit over 20 years before I had a change in life direction and became a first responder. In my current position, I do not pay into Social Security. Soon I'll retire with 25 years in my current profession and receive a pension from it. Believe me when I write that I was giddy as a child when WEP went away. I dang near did a happy dance. The WEP would have reduced my SSA benefit by about 40%, and since I'm leaving a 100% pension benefit to my wife after I'm gone, the WEP/GPO would have completely eliminated my wife's SSA benefit. Anyway, the SSA benefit calculator has been accurate for me for years. The only change has been the recalculation after the elimination of the WEP, and any increases to SSA benefits from inflation. My personal situation is atypical
@@Po1itica11yNcorrect I believe you're opening comment is correct. But my situation is atypical. I worked in private industry for 20 years, paying into Social Security. I chose a change in life and became a first responder. In this position I stopped paying into Social Security as I was paying into a pension fund in my state. Long, boring story short is that my Social Security benefit has been the same since the SSA calculator started. The only change was last month after the elimination of WEP/GPO. At this point, until I retire, the only change I'll see in my SSA benefit will be from inflation adjustments. Side note: After the elimination of the WEP, my Social Security benefit will increase about 40%. More importantly, if the GPO had not also been eliminated, the survivor pension I'm leaving for my wife would have completely eliminated her Social Security benefit
Awesome video, as usual!
One thing to note is that you typically get your 'lost' Social Security benefits (from earning over the earnings limit before FRA) back since it's much like delaying Social Security. You'll get a higher monthly benefit later.
Another reason for delaying SS is that it can allow you to do Roth conversions at lower tax rates since your taxable income will not be including SS benefits.
I’m 52, my wife is 56. We plan to take SS at 62. We’re fortunate to have a nice nest egg to supplement our retirement. Take it now because tomorrow is not guaranteed and we can adjust spending later in life if we are feeling the effects of drawing at the reduced amount.
I’m 41 years old and contemplating at what age is best to retire. Erin, you have succeeded in your mission.
I think a big question you should ask yourself is what do I plan to do in retirement. I started drawing at 63 because I wanted SS to help subsidize my boating life. I’m 71 now and SS is about a third of my income with dividends and interest making up the rest. Early saving, paying off the mortgage,and good health helps enormously.
@@marshasweet1737you are living the dream, my man. That’s where I want to be
Take the money and run
I’m 63 and retired with enough to live on from retirement savings. I’m claiming at 70 because my wife is 7 years younger and will likely get my survivor benefits. Btw. She will claim at 62. The math works. Use Bolden to calculate it.
Short and sweet answer is “Take it when you need it”.
Yes, but don’t wait past age 70. 😅
Not necessarily good advice. I know people who took SS at 62 and regretted that decision. One had zero savings, the other had savings but still fell short.
Investing the money if taken at age 62 can also be viewed as what return are you getting from the money that you still have in your 401K or IRA as you are taking social security instead. It doesn't need to be invested separately. One big factor that I don't see mentioned is that COLA for Social Security is a big factor that also needs to be looked at in addition to what return percents you get. So if you get a 7% return on your money with a COLA average of 2%, your breakeven age is about 89. However, if you get the same 7% return with an average COLA of 5%, the breakeven age is now about 82. For myself, I created an exec spreadsheet that allows me to compare any example by entering in monthly amounts, returns, and COLA rates. Output is breakeven for 62 vs 67 and 70. Based on this, I am looking at age 62 to begin withdrawing. Plus I am more likely to have extra money for my children to inherit.
This one is easy. Talk to a psychic first, and ask how long you're going to live. I hear California has the good ones. Then watch this video, Erin is the best!
To me, this is the most accurate response of the bunch. It doesn’t make any difference what the break even point is, if you get run over by a bus at 70. Life is not guaranteed. I’m in the bandwagon of “retire as early as economically possible, and enjoy the time you have left”.
You worked hard to save and do the right thing your whole life. Why would you leave 30-50 years worth of planing, saving & and effort up to chance? If you enjoy working and want to work longer, that’s a different story…wait until you retire to draw. But if you work to live, and can afford to step away, do it as soon as you can, and take the SS money as early as possible.
You are much more active and able to enjoy life at 65 than at 85, and unless you have health issues, life is probably cheaper by 85. Take the money and enjoy your life while you are still active and in good health. As I said, life is not guaranteed. No one knows how long they will live, and that is the real key to this question.
Actually Eric could do both! Dress up like a Swamie in an onion head hat and tarot cards! Predict the future and talk SS. I’m sensing a two million view video….
As with most retirement questions - you will only know the answer to 'what is best' after you die (at which time you will neither know, nor care). It's all best guesses. For me, I am 4 years older than my wife and family history shows I will likely have a much lower life expectancy. As the higher earner, I will delay until age 70 so she gets the higher amount once I expire. She will start collecting at age 62, since it is likely she will start getting mine within 10 or so years after that. We should all both love and hate the answer to all questions retirement - 'it depends'.
Great video this week and very relevant. We are drawing at 62. We could hypothetically do " better " by waiting but what are we going to spend money on after 70 besides health care? We will spend now of vacation, travel and others.
I'm planning a little bit the same, but opposite. I plan to take SS at 62, and as a result have to pull less from retirement funds. That would leave more invested for longer. By the time I reach the break even point, I'll have to pull more due to RMDs anyway. So I plan to just claim early.
Hi Erin. Love the videos! Another benefit if the higher earner delaying in a married couple is protecting/maximizing that death benefit.
Every time I've run the numbers on this, claiming as early as possible always wins out when looking at my financial picture as a whole. I use the SS benefit to offset what I would need to withdraw from my portfolio (probably the same end result of how you did it in your video, just a slight twist in how I viewed it). Assuming I have a large enough portfolio to retire at 62, claiming at 62 which offsets the amount I need to withdraw from my portfolio made my break-even well into my 90s.
The first problem with the $1,400 per month invested for $134k principal in eight years, you didn't subtract out taxes.
Assuming 85% taxable at 22%, that is 25k of the top.
Thanks for the information. My father died at 60 so never got to claim SS. I plan on retiring at 60 but claiming SS at 65-67
Thanks for touching on risk in this one. Factoring in risk, really changed the way I look at what age I want to claim.
I retired at 57. Turning 62 in one year. Contemplating this topic. I am leaning towards taking the money at 62 because it will not be a significant part of my income. Just icing on the cake as you say. More interested in maximizing income from 62-72. Got a year to think it over some more.
Some say take it early and invest it, if you look at it with a certain head tilt, I'm doing that. I left it in the program and I'm earning 8% a year. Nice fixed return investment.
I plan to wait until age 70 to claim Social Security. I will use a Social Security bridge strategy to cover the gap between retiring and claiming. I will try to liquidate my pretax retirement assets before RMDs hit. Meanwhile, my Roth accounts will continue to grow in the background, untouched.
I claimed Social Security @63 because I calculated that factoring in the early payments it would take until age 81 before I would fall behind of total amount received. Plus, using Social Security I can delay using IRA until 73.
When doing my retirement planning I completely ignored Social Security, SS is outside of my control so I didn't want to be dependent on something that may get reduced in the future. I retired at 55 and planned on claiming at 70, but now with the recent changes to SS I will have my wife claim at 62 for a small benefit on top of her municipal pension, then I will claim at 67 so she can get the maximum spousal benefit. And if it collapses completely we can still survive.
My wife is a little older than I am. She claimed SS at FRA and I semi retired (self employed). When I filed for SS at FRA I took on a part time job (60 hrs per month flexible) for a non profit and I love it. Combined we make more than when we’re both working and haven’t touched our invested retirement income.
Always appreciate the perspective, not to mention the outtakes are GOLD! Thank you!
Our retirement plan was put together without considering anything from Social Security. We have an investment portfolio that's a little over $2M, own our house, have some farmland that we rent out that produces a (very) modest income stream, and have no debt. I retired last year at 63, my wife is still working part time because she loves what she does. We haven't made a hard decision on when to claim Social Security. I doubt it will be before I turn 67 which is my full retirement age, at current payment rates that would be around $3K a month for me. We don't need the money that badly, so I'd like to let the amount grow a bit and treat it as an "if all else fails" fallback cash stream and keep it isolated from any market fluctuations.
The funny outtakes at the end had me cracking up 😂. Charming. So I subscribed. 😁
Welcome to the channel! 😊
@ thanks! I’ll check out some more content too. 😁
Currently 45. Plan to retire at 65, and claim SS at 70. Will use the time from 65 to 70 to reduce traditional IRA balances and stay in the 12% tax bucket.
Avoids problems with too much RMDs in my later years.
20 years is a long time off. Plan to reevaluate as tax law changes over time.
Nicely explained Erin! With the elimination of WEP/GPO I took my benefit at 65-8 after running the numbers. I have a state pension as well so the GPO impact to my wife was substantial. As another post said, the $$$ difference from here to FRA was insignificant so it made sense to take SS. Love your content! Thx!!
Hi Erin. Great discussion and thorough explanation of this topic. I'm certain it will be of value to your listeners. Have a blessed week and I"ll see you on the next one. Larry, Central Valley, Ca.
Good video! I personally think break even point shouldn’t be a consideration. SS is meant to cover monthly expenses so the best time to draw is when you will be in a position to cover those expenses. This is just my opinion though. Also I feel not many people are in the position to take SS and invest it. As you pointed out (and the only person I ever heard pointing it out) you have to live on something so it might be pointless to live off investments just to invest SS. Why not live on SS and leave investments in tact. Anyway, good video!
I retired at age 61, about five months before my 62nd birthday. I began taking Social Security at age 62. A couple of factors in my decision:
1. It allowed me to forego using my investments. My investments continued to grow, which will increase the legacy I leave to my heirs.
2. My wife was a school teacher that did not pay into SS. As a result, she would not have survivor benefits to my SS. So, if I delayed SS and passed away in the interim between 62 and FRA/70, then all the money I paid into SS over the years would be gone. Of course, this was before the Social Security Fairness Act was enacted this year, which eliminates the WEP/GPO penalties in our case.
3. The "Break Even" point also weighed heavily in my decision. Taking SS early allowed us to use those funds during our "GoGo" retirement years, when we are most active in travels, etc. (Referencing the concept of three phases of retirement: Go Go, Slow Go, and No Go)
For me the biggest factor for when to retire is health care and being able to buy into my employer's insurance. Having preexisting conditions sucks 😢
The Affordable Care Act (a.k.a. Obamacare) made it illegal for health insurance companies to deny coverage or charge more for preexisting conditions. So, as long as that law holds, you are fully insurable.
It's not what you make it is what you keep. Taxes are a huge consideration that needs to be looked at before taking SS. A lot of people are shocked at their tax bracket when they hit RMD age if they have a good size nest egg in pre-tax dollars. People have to factor in RMDs and Tax trap when one spouse passes if they are married and also IRMMA.
Well said, good points.
That’s why I’m doing Roth conversions.
@@James4cycling I am too befroe taking SS. I am reitred so paying a much lower tax on conversion than I would if I was taking SS and when RMD would kick in.
Yes, I'm surprised nobody seems to be talking about that. I haven't really dug into it but, I claimed SS at 66, my FRA and I think I would have been much better off had I waited until 70 and done a lot more Roth conversions in those years. You don't have to have a spouse pass to hit the Tax trap. I bet more commonly, somebody got a gray divorce they didn't see coming and they kept pre-tax 401k and IRAs in the divorce settlement. That's my story.
@@jerrym3261 So true if you go from MFJ to filing single for what ever reason you will be hit with it.
How about this? Claim SS at 62, continue working while contributing the maximum limit to a traditional 401k ($34,750 for 2025). The traditional 401k contribution is not reflected as W2 wages and so is not tallied towards the $22,320 SS earned income limit. You can therefore be paid $57,069 without SS penalty. Now, take your SS revenue and buy a traditional IRA ($8,000 limit for 2025). You'll be paying very little income tax for the year, so adjust your W4 appropriately to avoid needless withholding. Invest these retirement funds wisely for sensible growth vs risk to help make up for what you've foregone by retiring prior to full retirement age.
This is an interesting idea. Do you have a source you can link to showing 401(k) contributions don't count towards the yearly earnings limit?
@@joekuul8769 the only time traditional 401(k) money is considered "income" is when you take a distribution. If you are paid $40,000, but you direct $30,000 to a traditional 401(k), then your W2 wages is $10,000. The 401(k) contribution is not a deduction; it is just not income, period. This fact can help you qualify for Obamacare or even medicaid, the qualification for which is based on Modified Adjusted Gross Income (MAGI). By directing more pay into the 401(k), you can lower your income below the threshold needed to qualify. The county may look at your gross pay and say your income is too high to qualify, but you will prevail when you point out that by statute the qualification is based on MAGI. I know, because I prevailed.
Great on content - u r a mind reader with possible questions and calculations. Thank you.
Probably one of the best neutral videos on this topic out there. I wish Erin talked about Roth Conversions being a consideration too.
Yes, I was listening for that too.
Potentially claiming early. B/E point is 79. Health decline can be precipitous from 62 to 67(FRA) and hope to take advantage of those 5 early years. Additionally, no one in my family has yet to live beyond 79. Morbid, I know but certainly part of the math.
You provide useful and necessary information…keep up the great work
There are a few other issues you've skipped. SS is taxed differently than regular income. If you're doing aggressive roth conversions, SS would allow for a larger conversion. SS may be insolvent before you claim so you may not get anything if you wait. I don't know why, but when I figure the break even points, and consider investing SS in a municipal bond fund, my break even point is much later than you've calculated. That might be because I've calculated based on monthly SS checks where you might be calculating using just the annual income amount.
Wife files at 62, I'm waiting to 70 because of survivors benefits.
If circumstances allow it, the couple will have the most expected earnings. That is what we are planning to do.
We are doing the same for the same reasons.
LOVING THE BLOOPERS....GO ERIN GO.nice to see that someone so intelligent can also make mistakes 😁
One additional point to consider is life expectancy.
The problem I have with waiting until 70 personally, why not enjoy the money before I am older and less able to travel or enjoy myself.
nc: Why not just use your savings to enjoy life before 70?
There is the point about Survivor Benefit as well as if your partner is younger and was lower income earner
The most important factor to consider is family history and your health/lifestyle. If your family has a history of living into their 90s and you live a healthy lifestyle wait on Social Security. With life expectancy in the U.S. dropping and landing at around 75-ish, you would be a fool to wait too long. It takes about 12 years of benefits taken at 62 to be overtaken by starting benefits at FRA of 67. I went to public school but, 62 plus 12 lands at almost 75.
The live expectancy of a 65 year old: male 82 & female 85.
@@James4cyclingand also at 65 one of those couple have about a 30% chance of living to 90.
Don’t forget to pay taxes on that monthly benefit at 62. Then the rest can be invested and the ending balance won’t be tax advantaged like your higher SS benefit.
@@James4cycling Per Census.gov, man born in 1960 life expectancy is 74.9.
You have to be careful with life expectancies. From birth, it is around 75 on average, but once you have already reached 65, the expected remaining life is over 80 (another 17 to 20 years depending on gender). Having reached 65 you have already avoided all the opportunities to die before then. If you live until 80, you can expect another 8 to 9 years. Nice actuarial table on the SS website.
www.ssa.gov/oact/STATS/table4c6.html
I did the math. So from ages 62 to 80 you get a total of a little over $500k. From ages 70 to 80 you also get a little over $500k. They just spread it out but you get the same amount!
Erin, another great video providing important info for people to consider. Thanks, FD
I'll get it day 1 of year 62!!!! :)
Another great video, thanks Erin. I'm forwarding this to a family member who is currently trying to decide when to take SS. Thanks again.
Glad it was helpful! Thanks for sharing! 🙏
Erin: Regarding married couples, most scenarios are for couples the same or similar age. What about couples that have 5 to 10 years difference in age? Could you please make a video on this subject. Thanks
Erin as always you do a great job of explaining. My perspective is simple what's your time, your health and freedom worth? Everyone's answer will be different ....just know you can make more money but you'll never get more days while you're healthy . Cheers to everyone!
Social Security is one of the better diversifications against stock market downturns. Taking it early and investing it into riskier assets is similar to gambling. However, it might be a good idea to take it early during a prolonged downturn to reduce the amount of stocks/funds getting sold at a low price.
People also tend to live longer than their parents. Otherwise, the government would have increased the minimum SS age to 65 considering the deficits. Larger payouts at 65+ would also increase IRMAA (Medicare) premiums and possibly income tax due to a higher MAGI for a lot of people. But paying lower social security payments is still benefiting the funds if the person lives until 78-81 y/o.
Great video. I go with the philosophy that tomorrow isn't promised. I'm 56 and shooting for 65, Medicare age, but 67 is what I'm planning on.
tod: How does, "tomorrow isn't promise," change your SS strategy?
Erin has the most beautiful hair and smile on TH-cam 😊😁😍😊😁😁👍
She's a beauty for sure. Good thing I'm old, fat and bald now, LOL.
@@rubicon3416 I am so sorry 😢 you have to go through that 😬😮😢
Okay, she lays out financial help better than anyone I have seen on TH-cam.
@@victorbaird8220 Lol.. I cope. Quit the grind at 53. All good.
Can we run these scenarios in a software like Boldin? I have yet to try it… hopefully soon but it seems like their free tier is limited.
Thanks Erin. As a single person that really doesn’t need my benefits for daily living ( my house and cars are paid off, so, monthly bills are low …. Though, I do like to play 😬). Haven’t thought about getting benefits until Trump said he will make them tax free. That makes me want to reconsider. Am I wrong?
My wife is 5 yrs older, she waited until FRA (next month) so that she maximizes considering she is lower earner and didn't want to impact spousal benefit total. I'm thinking of claiming @ 65 which will start additional $300 for her. Am I generally correct on this strategy? Thanks, I value the videos. MG
In a similar vein, can my wife claim at 62 as her amount is much less than the spousal benefit, then switch to the spousal benefit when I start claiming?
Erin, you must have read our family's path into retirement. My wife took her SS at 62, I took mine at 66 when I reached FRA. I get a pension from my first career (software engineer), so that combined with our SS payments meets our normal budget. So we don't need to pull anything from our IRA, just letting it grow! It's working great so far!
Thanks Erin, but there’s one more option for a break even scenario - what if you claim early while still working and pay the penalty - what’s the break even vs FRA with no penalty? Thanks
My wife and I are both 60. I retired at 58. My wife will claim SS@62 and we will wait to gauge our status and decide to claim at 65 or 67 or maybe later depending on status.
I didn't catch if you mentioned tax considerations which can be huge. So with a 401k well in excess of my lifestyle needs, seems like not claiming until 70 lets me pull out a bunch of 401k and/or do roth conversions and still have low or no tax as well as reduce later RMDs plus having a larger guaranteed lifetime benefit?
Yes, I'm 71, claimed at FRA 66 and 20/20 hindsight wish I had waited until 70 and done bigger Roth conversions in those years.
When considering taking SS early and investing, SS COLA must be factored in calculations. Also personal financial situation is probably the main reason for claiming.
Spouse 62, main earner 65, both of us increased income.
My mortgage is paid off and I have tetirement savings in roth 401k, dividend stocks, and metals. Im taking my S.S. as soon as I turn 62. I want MY money back NOW. Besides the fact, I could die before ever getting any of my money back by waiting.
Wife started claiming 2 years ago at 62. My plan is to retire EOY at age 67. Not sue when I'll start claiming since I have a nice fund built to this point. Hoping to figure that out soon but don't know who can help me with that crystal ball decision. Was hoping you would but I understand and appreciate the info you provided.
I recommend you get yourself a fee only financial advisor, who specializes in retirement planning. It may cost you a few hundred, but they will make a plan specific to your needs.
@MilaN-lt2mq yep, my friend is just that person and I plan on working out a deal with him in a couple months.
Wait! It’s not always cut and dry. I took SSDI , social security disability insurance at 63 and my FRA age was 66 1/2. BUT, SSDI paid me FRA at my age of 63 ! So when I reached FRA , my SSDI became Normal Social Security at FRA amount. So I called Social Security to ask is there a way to get the age 70 amount, by suspending or delaying… answer was NO. Didn’t plan on getting a rare blood cancer and being disabled,but life handed me the most challenging thing and getting healthy is my focus. I wish you the best in your encore aka retirement.
Your videos are geared toward those over 60 which I am. You can work with a variety of ages. Consider doing videos on budgeting for those in their early 20s.
I have been sending my kids her videos so they know how to start early. Look back on her videos you will find a treasure chest of how-to get-going videos.
If only we knew the future, lol. Thank you again for the straightforward explanation Erin. Hoping to get my youngest through college in the next four years and reach a point where I can still work if I want to and have my spouse take SS at 62 so we can enjoy the years (hopefully) that we have left. Thanks for all your info!
Thank you so much for watching!
Great videos, so helpful! Thank you.
Hilarious bloopers!
On another note, does it matter if someone works in the U.S., claims social security, then moves to another country?
I'm seriously looking at just that and I haven't found anything that says it makes a difference. If you are pretty sure you are going to stay in the other country you probably want to stop the Plan B premium from being taken out of your SS. $185 a month isn't much in the US but, it's a lot if you're in most of the world.
Good idea! I'm actually at least 20 years from retirement. I was just curious. :)
Expected longevity must be taken into consideration.
The truth is that almost everyone should claim early. The real break even point for 62 vs 67 or 62 vs 70 is well into the 90’s. This is a statistical fact even assuming a modest rate of return on investment of 5 or 6%. What none of the financial advisors calculates is the ROI during the amortization process of the balance.
walter: You don't know how to calculate b/e. Typically, b/e for 62 to 67 is a little over 78 and from 62 to 70 about the same, depending on when your FRA is. So, no, it is not a statistical fact. If you are trying to figure a b/e assuming you take benefits at 62 and invest, the b/e varies greatly depending on variables.
We waited until FRA since we both work. We did not want to get lower benefits because of income from work. We earn the same amount.
Still working at age 64 so I can tell you that I will not claim until I stopped working whenever that is
Claim SS the minute you retire. Your retirement accounts will be left to your heirs, SS will not. Spend it first and let your personal accounts grow as you won't need to pull as much from them.
Completely agree! Just turned 62 and thats exactly why I claimed it now.
You know I was debating that concern when to take SS or 401k/IRA but you made the most common sense decision....why leave it the the government! thanks
excellent video
Thanks for the video.
Neighbor, Bill , want to maximize his benefits, so he continuedto work past FRA, and planned to claim at age 70. At 69yr 10 mo died of a massive heart attack, never collected a penny.😢
Yea, drawing early to invest your SS income sounds good but very few are disciplined enough to do it. In general, the longer you can wait to draw the better. Most of us are going to live longer than we think.
But if I retire at 62 and start collecting then, I need to pull more out from my investments to live off of so I'm just robbing Peter to pay Paul. Even if I countiue to work and collect at 62 now I need more of a return on those investment to make up to the taxes I'm paying on SS while working.
Your income has to come from somewhere. If you delay SS then live off your IRA. That’s what it’s for. Retirement! Then when you begin to take SS you can reduce or stop your IRA distributions all together giving them time to recover before RMD’s kick in at 75. If you take SS at 62 then you’re limited on what you can make, about 22k. That’s not enough for most to live on.
Also ss is taxed less
Great video!!! My year to retire is 67, but 65 is my #👍🏿
Good stuff!
Hi Erin, in the section of investing your SS, what rate of return did you assume?
I did a compound interest calculator and came up with $188,067.95 for $1400 per month invested at 9% after 8 years. Her number was $187,747 so 9% seems close
I used an 8% rate of return. All calculations I do on this channel are with an 8% rate of return 😊
I think the comment that you lose the money to the earnings limit if you go over that limit between the ages of 62 and 67 is incorrect. It is only correct in the short term. You do pay excess earnings back to social security. But what you do pay you get back later so it is a deferred way to bank some extra cash for your older years. I would very much like our fearless leader to unpack how that works.
It helps to define what social security represents for each person and that will be different for each person. To me, I want social security to pay my rent plus my medicare payment. So I look at my SS statement and see it would cover that amount at age 64 so 64 is the earliest I would take it. Then I look at a possible default and reduction on SS, so I divide by 80%, and that gives me age 67. So unless we get a SS fix by the time I hit 64, my target will be 67. Others will have different calculations for different needs.
My current plan is to claim at 62, pause at FRA, and restart at 70.
Does the earning limit only include W-2 income from a job or part time job, or does it include monies received from a pension?
As I understand it earnings = working (yes: w-2s), so passive incomes like pensions/retirement account distributions/brokerage distributions do not count.
@@VoyagerVTX Thank you. This is helpful.
I think for me, it is not the age, but more about when will I have my mortgage paid off. My preliminary calculations show that I could not financially survive on straight pension if there is a mortgage still around.
In my situation, I don't see how waiting past 62 gets me more money. My foreign wife will get half of my FRA amount when I start SS. I am 62 and retired at 60 so my FRA amount (as is my highest 35 years of earnings) is fixed. So my wife's spousal benefit is fixed. She misses out on 100% of that fixed amount every month I delay, while my SS increases only slightly every month I delay. If I wait until age 70, she has missed 8 years of payments and never gets an increase except for a yearly COLA.
I would say right now or as soon as humanly possible is the best time to claim social security, seeing as our government and all services are under attack. Nothing is guaranteed, least of all a government payment. Stay strong.
Taxes should be considered too and that includes available ACA tax credits from 62-65. One can check their “optimum” claiming strategy on Open Social Security website. I’ve been retired 10 years and am 6 years older than my wife. She will retire at or before 62. She will claim her lower benefit at 62. My larger benefit will continue to grow and be claimed at 70…if I live that long!
I am 64 and retired, haven't claimed my SS, not sure when I will do it, don't need it at all, so I don't even think about it. Maybe in a few more years. No idea.
ive seen three people close to me in their late 60's die in the last 3 years from heart attack , cancer , and an accident at home ... until i can leave SS to my kids , like our portfolio will be , we will be claiming at 62 ... i wouldnt wait until 70 unless i hadnt saved well for retirement and SS was gonna be important to survival after age 80 ... if you dont even actually need SS , id take it at 62 and enjoy it because you may not make it 18 more years to break even ... best of luck whatever you all choose ! ............ on a side note , if i draw my SS at 62 and invest it every month for 18 years until im 80 and get a 7% annual return on it id have double the amount i would collect from age 70 to age 80 if i had waited to start my SS at 70 ... and if i didnt invest the SS i got at age 62 and just held it in cash it would be $9,000 more at age 80 than if i waited until 70 to take my SS ... the amount you get at 62 , 67 , and 70 are amortized , which means theyre designed to pay out the same total amount until age 80 ... so all of the people who die before 80 make it possible for the ones who live past 80 to keep getting paid ... just like when your spouse dies before you , they give only a portion of your SS to your spouse , and thats only if their SS is lower ... they dont get to keep theirs and yours