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When to take Social security

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  • When to take Social security

    trying to help parents.
    Mother is 68. I'd guess her life expectancy is 20-25 years. It say if you take benefits at 68 you get 530 a month. if you delay until 70 you get 650 a month
    Father is 68. I'd guess his life expectancy is 10-15 years. It says if you take at 68 you get 2300 a month. If you wait until 70 you get 2750 per month.
    how can i determine ideal time for them to take benefits?
    thanks

  • #2
    I assume you already used Mike Pipers free calculator at https://opensocialsecurity.com/

    there are several free ones on the internet. However outside assets also play a role

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    • #3
      Based on life expectancy only, dad should defer to 70.

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      • #4
        My understanding of social security is that on average, if you wait until you are 70 to start collecting benefits, you will come out ahead. If you are not average though (ie in poor health, lower life expectancy, or are able to invest the entire amount aggressively and have it grow to larger then the benefit would have been if you delayed), you could potentially claim it early and come out ahead. The thing is set up so that the average person comes out ahead statistically if they wait until they are 70 based upon the average life expediencies of a 70 yr old and a 62 yr old. I think that there is a whole industry built around it though. I would imagine that the biggest variable, your actual life expectancy when you turn 70, is probably too hard to predict on an individual basis to make a real educated decision on an individual level. And then there is the macro economics question of the programs solvency. I would probably favor deferring until age 70 under the assumption that on average, unless I am already in poor health, I will come out ahead.

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        • #5
          With a married couple, if we expect the spouse with a substantially higher benefit to pass away significantly earlier than the other spouse, it makes sense to delay the higher benefit as long as possible, as this is the amount that will be payable to the survivor for the remainder of his/her life. Based purely on the facts provided, dad should delay to 70.

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          • #6
            70.

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            • #7
              For your father, the break-even point is a math problem. His over/under is 2300*24/(2750 - 2300) or 123 months beyond 70. Basically 80 y/o right in the range you're anticipating. Mother who you expect to live significantly longer will benefit by father waiting until 70 since she can switch from spousal to survivor benefits. So, mother should file for her own at 68. When your father files at 70, mother switches to spousal and then to survivor assuming he pre-deceases her.

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              • #8
                Do they need the money now?

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                • #9
                  Originally posted by runfast00 View Post
                  I assume you already used Mike Pipers free calculator at https://opensocialsecurity.com/

                  there are several free ones on the internet. However outside assets also play a role
                  How do outside assets enter into the decision?

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                  • #10
                    "Social security break even points" That's what you are asking. Excellent responses already here. Just adding an article I've read before that wasn't terribly written.

                    https://figuide.com/break-even-point...ling-ages.html
                    "Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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                    • #11
                      That Mike Piper calculator says my wife should take SS at 62 and I should do so at 70. We both qualify for the maximum benefit. That doesn’t sound right.
                      My Youtube channel: https://www.youtube.com/channel/UCFF...MwBiAAKd5N8qPg

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                      • #12
                        Originally posted by Antares View Post
                        That Mike Piper calculator says my wife should take SS at 62 and I should do so at 70. We both qualify for the maximum benefit. That doesn’t sound right.
                        I posted this “phenomenon” before. Broke it down into a spread sheet. What it comes down to is the early tears of payments for the wife alone + the higher payments she gets when she gets the survivor basically even out for her. Play in your higher payments at 70 and it comes down to your benefits.
                        If you beat the life expectancy, well you get short changed! Your spouse is in good shape either way. The only way you “both win” is if you both beat the life expectancies. Money in the bank in the late stages.
                        Still trying to wrap my head around it. Best I can do is thinking of it as starting periodic savings at a lower amount starting early beats a higher amount starting later. Counter intuitive to the increases delaying the spouse.

                        The final confusion is forget the percentages, look at the dollars! SS % increases are going to change your life (or shouldn’t be a huge piece). The main benefit might be not dipping into the savings so much in your 60’s. Not going to model that.
                        Thinking of just picking FRA and calling it good.
                        My take (probably in error) is the bend points focus on working to increase the base and the claiming strategy focus on when you stop the delay benefits.
                        I wish Mike Piper’s had some graphs or some graphs showing break even, rather than just an answer.
                        jfoxcpacfp Maybe Johanna can chime in since she has some “expensive software “. Antares
                        I agree it’s difficult to accept claiming early. Any of the CPA/CFA’s might shed light. It would be helpful.

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                        • #13
                          We use software to calculate the BE point and then let the clients decide. We are able to calculate the marginal impact throughout remaining estimated lifespans. Outside assets do have an impact - if you are FI and only trying to get the best mathematical result, might make more sense to delay in hope of improving your outcome. Of course, always need to consider that, should the higher recipient spouse die first (usually the older spouse, usually the male, if applicable), then the SS steps into those shoes and becomes recipient of the higher payout.

                          Haven’t looked at Piper’s s/w; it prob does something similar. If so, I guess the benefit of paying for a subscription is that we are able to retain the history of multiple clients and adjust as their situation (earnings history and estimated premium, for example) does.
                          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                          • #14
                            Actually, just read Tim’s response. Yes, the software provides very helpful graphs and an array of reports, many of which we don’t use, but the graphs are a very useful visual.
                            Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                            • #15
                              If you don’t need the money and can invest the after tax payments, this pushes out the break even point for waiting till 72 much older. In addition, I have a very strong opinion that benefits will become 100% taxable and possibly reduced for those of means.

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