Your Social Security Benefits Plan?

[TripleB]

Obviously my plan may change when I get closer to SS collection age (if it even exists), but here is my current plan:

Take SS as soon as I am eligible. Regardless of how many more benefits I may get if I hold off a year or two or five. Take what I can right now.

Plan for retirement such that I don't need any SS to live on because it probably won't be there. Then anything I get is free money. Even if I could get more "free money" by delaying benefits for a few years, I'll take what free money I can get immediately, rather than risk dying and getting no free money, or risk SS age getting delayed or risk payments getting reduced.

What's your SS plan? I'm more curious to hear thoughts of US citizens aged 20 to 50 since SS is more uncertain for us.

[Alanw]

Obviously my plan may change when I get closer to SS collection age (if it even exists), but here is my current plan:

Take SS as soon as I am eligible. Regardless of how many more benefits I may get if I hold off a year or two or five. Take what I can right now.

Plan for retirement such that I don't need any SS to live on because it probably won't be there. Then anything I get is free money. Even if I could get more "free money" by delaying benefits for a few years, I'll take what free money I can get immediately, rather than risk dying and getting no free money, or risk SS age getting delayed or risk payments getting reduced.

What's your SS plan? I'm more curious to hear thoughts of US citizens aged 20 to 50 since SS is more uncertain for us.

As a social security recipient, I opted to take social security at the earliest time possible.  For someone who does not need SS for living expenses, you will be better off financially taking SS earlier rather than later IMO.  If you continue to work past 62 you would be better to delay receiving SS.  This is all supposing SS will be available far into the future.

I based my decision on the following financial analysis. Your SS statement shows the dollar amount you would receive at (in my case) age 62, 66 and 70 with 66 and 70 being larger than 62.  I figured investing my age 62 amount at a 5% return (think PP) and how long it would take the 66 and 70 amounts to total the same amount I received and invested at 62.  The total dollar amount received at age 62 and invested at 5% would exceed the amounts received at age 66 and 70 and invested at 5% until you reached your late 80's.  If I am lucky enough to live to my late 80's this may not have been the correct strategy.  However, the likelihood of being able to do the physical things in your 80's that you are able to do in your 60's and 70's is rather remote.  In my case, I would rather trade money for things I enjoying doing now rather than save it for things I probably will not be able to do in the future.  Health care in your late 80's and 90's is a another rather murky matter for another discussion.

Everyones situation is different, so analyze and select carefully.

[TBV]

TripleB: Your post suggests a certain pessimism about SS that is not entirely out of line, but may be counter-productive.  We should acknowledge that every penny that has ever been paid in FICA tax has already been spent, mostly on unrelated programs. All future benefits, including the portion financed via the Treasury's special non-marketable securities, will actually come from future tax receipts or borrowed money.  On a practical level, it's irrelevant whether those taxes are FICA taxes or general income taxes, since payment of FICA tax is not connected in any way with entitlement to a specified benefit.  Because SSA is not insurance, a fact the government and the courts agreed on back in the 1930's.  It is a social welfare program whose payments are subject to the ever-changing whims of the federal government.  It has changed dramatically in the past and we can expect it to change again in the future. Changes could include: greater taxation of benefits, increasing the age for full benefits, means-testing, inflation-debased benefits, across-the board reduction in benefits, a wholesale program shift to 401k or Roth accounts, or outright default.

Unless you are soon to become entitled to benefits, you will likely be affected by those changes, no matter the age at which you start to collect.  So, the issue becomes one of which strategy will yield you more dollars (be they debased, heavily taxed, or income-delimited.) That depends on many factors, such as whether one has an SSA- eligible spouse, good or bad health, an ongoing independent source of income, etc.  All things being equal, the longer you expect to live, the better it is to wait as long as possible to start receiving monthly benefits, since you will avoid the 30% benefit reduction at age 62 for post-boomers, receive delayed retirement credits (for every month you wait beyond your nominal full retirement age), and get a potential increase in (what used to be called) your "paid insurance amount" [the full amount due based on your earnings] (for each year of additional earnings.)  Average age expectancy is quite high for those who've already reached age 65. (82.2 for men, 84.9 for women per 2007 OECD data.)  If you live that long, or longer, you'll get more lifetime dollars by starting at age 70 than at 62.

[jackely]

I turn 63 next month and could have started collecting last year but I plan on delaying as long as possible to get the maximum benefit. I have two reasons for this: 1.) I have a family history of longevity. My parents are both still alive in their 90's and both sets of grandparents lived well into their 90's so I could have a long retirement. 2.) My wife is 17 years younger than I am and has only been an American paying into social security for 7 years. Whether she collects as a surviving spouse or opts to choose 1/2 of my benefit in lieu of her own if we are both still alive  it is most likely her benefit will be based on mine and not hers. Therefore it seems best to max mine out as much as possible.

As others have noted everybody's situation is different. I'm in contact with a lot of my high school graduating class members on facebook and I think most of them are already collecting. For some it's because they are out of work though some have retired.

As for the viability of social security over the long term I have my doubts like everyone else and agree it is certainly prudent to have alternative plans. Mine is to live overseas, probably in the Philippines where my wife is from, and try to keep my lifestyle to the point where I could live only with the SS payments (and that wouldn't be at all hard in the Philippines). That way I can defer touching my own money as long as possible in case social security fails to deliver.

(And seeing what my parents are going through in regards to long term care expenses draining their savings right now, retiring in a foreign country like the Philippines where they don't even have long term care facilities makes it sound like an even better idea.)

[hoost]

Obviously my plan may change when I get closer to SS collection age (if it even exists), but here is my current plan:

Take SS as soon as I am eligible. Regardless of how many more benefits I may get if I hold off a year or two or five. Take what I can right now.

Plan for retirement such that I don't need any SS to live on because it probably won't be there. Then anything I get is free money. Even if I could get more "free money" by delaying benefits for a few years, I'll take what free money I can get immediately, rather than risk dying and getting no free money, or risk SS age getting delayed or risk payments getting reduced.

What's your SS plan? I'm more curious to hear thoughts of US citizens aged 20 to 50 since SS is more uncertain for us.

I'm on the low end of the age spectrum and I pretty much disregard SS from my financial planning.  If the govt sends me checks some day...I'm not sure what I'll do, but I'm not counting on it.

[WildAboutHarry]

I assume that for the over-50 crowd social security will remain pretty much as is.  There may be minor changes in store, but one cannot reasonably plan for all the possible scenarios of change.

It is a relatively simple spreadsheet exercise to compare the dollar value of starting to collect social security at various ages.

For me, starting at 62 versus 66 (my full retirement age) versus 70 showed:

1) The amount collected by starting at 62 "beat" starting at 66 until age 75
2) The amount collected by starting at 66 "beat" starting at 70 until age 80
3) The amount collected by starting at 62 "beat" starting at 70 until age 78

This assumed no inflation, since Social Security is inflation-adjusted.  The results in nominal dollars would be different (i.e. older), as would the results if you assumed saving and investing the SS payments.

I am still a couple of years away from 62, and I really have not planned on how to use SS.  Thought about it, but have made no decisions. 

[moda0306]

If I'm healthy going into my early 60's I will probably elect to wait on Social Security because it's essentially a longevity-risk-aversion tool.... definitely as much insurance for me.  As such, I want to situate it so it will pay out its maximum benfits if I live a long time.  I'd rather do that than convert some of my then-PP into an annuity to protect against that risk.

[lazyboy]

Obviously my plan may change when I get closer to SS collection age (if it even exists), but here is my current plan:

Take SS as soon as I am eligible. Regardless of how many more benefits I may get if I hold off a year or two or five. Take what I can right now.

Plan for retirement such that I don't need any SS to live on because it probably won't be there. Then anything I get is free money. Even if I could get more "free money" by delaying benefits for a few years, I'll take what free money I can get immediately, rather than risk dying and getting no free money, or risk SS age getting delayed or risk payments getting reduced.

What's your SS plan? I'm more curious to hear thoughts of US citizens aged 20 to 50 since SS is more uncertain for us.

As a social security recipient, I opted to take social security at the earliest time possible.  For someone who does not need SS for living expenses, you will be better off financially taking SS earlier rather than later IMO.  If you continue to work past 62 you would be better to delay receiving SS.  This is all supposing SS will be available far into the future.

I based my decision on the following financial analysis. Your SS statement shows the dollar amount you would receive at (in my case) age 62, 66 and 70 with 66 and 70 being larger than 62.  I figured investing my age 62 amount at a 5% return (think PP) and how long it would take the 66 and 70 amounts to total the same amount I received and invested at 62.  The total dollar amount received at age 62 and invested at 5% would exceed the amounts received at age 66 and 70 and invested at 5% until you reached your late 80's.  If I am lucky enough to live to my late 80's this may not have been the correct strategy.  However, the likelihood of being able to do the physical things in your 80's that you are able to do in your 60's and 70's is rather remote.  In my case, I would rather trade money for things I enjoying doing now rather than save it for things I probably will not be able to do in the future.  Health care in your late 80's and 90's is a another rather murky matter for another discussion.

Everyones situation is different, so analyze and select carefully.

I started, as Alanw did at, collecting SS at age 62. I'm 67 now. My reasoning was similar in terms of the time value of money and, also, for me, the uncertainty of my longevity past the break even ages of 75-78. Also, there was the uncertainty I felt about the survival of the SS system itself. I decided I wanted to retire at 62. The money had to be coming in from several sources to make it work for me. If I waited to take SS at 66  I'd be drawing more from my IRA, than I wanted to. So it's a matter of balancing and planning.
Each person's situation is different and becomes much clearer as you get closer to it.

[Alanw]

I just hope that SS is available in some form when our younger generations are ready to retire.  When LBJ moved SS from its own trust fund to the general fund and it became an IOU item, I was suspicious as to the outcome.http://wiki.answers.com/Q/When_was_Soci ... _fund  Now when I see the 15 trillion debt of the Federal Government in addition to the unfunded SS and Medicare liabilities I am no longer suspicious.  The Government simply tells us to trust them and that our best interest is being looked after.   The shell game continues and will continue until................

At election time, whenever I receive a phone solicitation from one of the parties, I always ask if their candidate has ever held a national public office before.  If they say yes, I tell them that I will not vote for any incumbent.  They then will tell me that I don't know what I will be getting with the other candidate, to which I reply "You've got to be kidding me".