Full Retirement Age
My birthday is this month, and I will be 66. My full retirement age for Social Security is 66 and two months. I had been planning to start receiving my monthly payments as soon as I reached full retirement age and was excited about the prospect of a paycheck, but now I’m having second thoughts.
Some financial experts suggest it’s smarter to start withdrawing from your IRA and hold off on Social Security until you reach age 70. According to this NY Times article, living on retirement savings in the early years and holding off on collecting benefits is likely to increase monthly income over a lifetime.
There’s also a discussion about marginal tax rates and provisional income if math is your jam, but I’m a journalism major. No can do.
If I wait until I’m 70, my monthly checks would go up by about $800. It sounds nice, but I’m not sure it’s worth waiting for. With my husband’s military pension and our savings, we are not dependent on Social Security, so I’m inclined to skip all the analysis and just go with what feels right.
I suppose I’ll chat with our financial planner before making my final decision. What variables have you considered as you make this choice?
Sugarfest 2021
In other news, I’ve decided to bake my own birthday cake. I’m going to make the three-layer coconut cake from Sally’s Baking Addiction. Everything about it is totally decadent. Even the buttercream roses on the top are insanely me. The more frosting the better.
However, I watched the video for how to make the roses, and I don’t think I can pull it off. I have some Russian piping tips my sister gave me, and those look easier. I will be watching lots of YouTube videos to build my confidence. Here’s a sample.
While we’re on the subject of baking, I spent a lot of time indoors last week due to the air quality, so I decided to make cookies decorated with royal icing. I have quite the collection of cookie cutters and other paraphernalia.
I haven’t made them in a couple of years, mostly because my wrists were sore the last time I made them, and I wondered if I would even try again. However, my wrists have improved, so I went for it. My lack of practice shows. The icing on the chili pepper is too thick and lumped up in places, and the icing was a little sloppy at the bottom of the ladybug.
Imperfect but cute and delicious. Not a bad thing to be. By the way, I made chocolate dough and added a teaspoon of espresso powder. Next time I’d use a little more. You can’t taste the coffee, but somehow it makes the chocolate taste better. We keep them in the freezer, which helps with portion control!
Golf Giveth and Golf Taketh Away
Yesterday I played golf in what is called an alternate shot tournament. I had a partner, and we took turns teeing off. One of us on odd-numbered holes, and the other on even-numbered holes. Then we took alternate shots until the ball was holed.
On number six, my partner teed off. The shot was plenty long enough but in the left rough. We were still 140 yards out, and it was my turn.
I hit a 7-wood, and we watched it fly toward the green. She thought it got stuck in some thick grass in front of the green, and I thought it hit the green and rolled past the hole. When we got up there, she went one way, and I went the other, and we didn’t see it. I jokingly said, maybe it’s in the hole.
And it was!! So, we had an eagle 2 on a par 4. We would go on to completely fall apart on the back nine, but I will remember that shot for a long time.
Wishful Thinking
I’m feeling hopeful that maybe we are turning the corner on COVID. I mean, not everywhere, but maybe some places? I read today 80 percent of eligible Californians are at least partially vaccinated. In my zip code, about 80 percent are fully vaccinated and another 10 percent have one shot.
That said, our numbers are still terrible. Cases per 10,000 people approaching 40 percent in our county. Yet, there are some case rates in the hundreds, so I guess it’s all comparative. I am shocked by how many people go out and about as though the virus doesn’t exist.
I do wonder if the virus will run out of people to infect. Or maybe Delta will run its course and the virus will subside, transitioning to something more like the seasonal flu. I have no basis for these comments. Perhaps nothing more than wishful thinking.
But you know what? There’s something to be said for wishful thinking. I have been on both sides of the attitude spectrum, and nothing good ever happened when I thought the glass was half-empty.
My wife just received first SS payment last week at 66 and 2 months. I am of the belief that you take it at full retirement age. Some say take it at 62 and put it in an index fund. That would have been the right call four years ago. But we aren’t looking backwards. The point in which it makes sense to wait until 70 is something like age 78 or 79. That isn’t a risk that I would take.
We are fortunate to not need the extra income, but this coincided with my youngest leaving my health plan, thus the added income and loss of expense gives a big boost to travel budget or funding 529 plans for grandchildren. I’ve heard the saying that casinos are full of retirees spending social security income. We don’t gamble.
I have long been a proponent of a means test for social security, if you know history, it came about to keep seniors out of poverty. It was never intended to be a retirement plan or fund travel, golf, or gambling activities.
As a public employee and now a PERS recipient, I didn’t pay FICA taxes for a few decades and my social security income will be small, but I do some consulting in retirement and pay taxes which will slightly boost my SS when the time comes
It sounds like you have a solid plan. As always, I appreciate your perspective! And I’m glad to hear your wife got her first check. Who knew we’d be this excited to get old?
Donna,
From reading your blog for a while now, I think you are reasonably smart and have good common sense, which is better than many. What you’ve done so far seems to be working well for you. I have faith that whatever you decide will be okay.
In our house, my husband is the numbers person (has advanced degrees in both math and computer science) so I usually defer to his judgement when it comes to most things financial. However, when it came to taking SS, I decided to start taking mine at 64, about 6 months after I retired. He opted to wait until he was 70, which will benefit us both, or whoever is left, if one or both of us do live to a really ripe old age. (His father just passed away last month at age 96!)
Without having a crystal ball, no one really knows what will be the best choice in advance. I figured that by one of us waiting (he was the higher earner over the long haul, partly because I took off time for childraising), we could ‘split the difference’ and both benefit from his increased SS while having some earlier income, from mine. In addition, he was able to draw a SS check equivalent to 1/2 of his or my (?) SS, during the years after he was 66 and until he turned 70 and started drawing his increased full retirement. Unfortunately, that was a perk that SS took away a couple of years ago, for those who were a little bit younger.
Take your time, talk to your advisor, and then do what feels right to you.
Then don’t worry about it or second guess yourself, because you’ve been careful and lived frugally up to this point, so that whichever choice you make, you’ll be fine and can continue enjoying it your retirement. Now, if the rest of the world would be reasonable and people could just be kind and get along.
Wow, you two really thought it through. My husband was beyond full retirement age when he started collecting, but he didn’t wait until 70. He just waited until he thought the number sounded good! I will talk with our advisor, but I’ll probably stick with my plan to start collecting in November.
I love being described as reasonably smart with good common sense. Yes to getting the rest of the world on board!
I look upon it as a crapshoot. My DH took it at 68, right between full retirement and 70. I was already on SS disability so it switched over when I was 62, I think. I don’t really remember.
Sally’s is a great site. I look forward to hearing how your cake turns out and seeing a photo. Happy birthday month! Now that it’s getting a bit cooler, I plan on going back to baking from the Great British Baking Show. First up will be baked Alaska.
My (red) state may be going to crisis care because of the full hospitals. The only thing I can do is wear my mask, stay 6 feet apart, and hope that I don’t have any kind of medical emergency. My DH is having a knee replacement next month, but at a hospital that doesn’t have Covid patients, thankfully. The other hospitals are pausing elective surgeries, some of which don’t sound all that elective to me.
It really is a crapshoot. My husband did what yours did, and he has never regretted it.
I have the Great British Baking Show in my queue, but I think I’ve only watched it once. I need to get cracking. I will definitely share pictures of the cake.
California hospitals are full as well. All we can do is what you said — stick with the things that are within our control.
I took early retirement at 60 and starting drawing my Canada Pension Plan (CPP) at 60 too. I know our situations/countries are different but here was my thought process:
1. I want to retire early so why not start collecting at 60? (Earliest age I could start drawing the CPP).
2. I don’t come from a long-lived family. Cancer(s) on one side, heart disease on the other. I am healthy for now, although I have had 2 mini-strokes already.
3. My survivor benefit (receiving since JD died) plus CPP-at-60 benefit equals what my full CPP would be if I waited to 65. If I waited, then my survivor benefit would be completely clawed back as I would be exceeding the benefit maximum. So I’d be right where I am already.
4. I want the money while I still have the health and energy to enjoy it. I know from older relatives and friends that my financial wants will go way down if I’m lucky enough to make it to an advanced age.
Hope this helps!
Deb
This is quite helpful! My personal and family medical history is not exactly great, either, so that’s an important point to consider. I like what you said about having the money while you can enjoy it.
Wishing you a wonderful birthday and a very delicious birthday cake!
I agree with you…half-full glasses bear much more promise than half-empty ones!
Thank you. I have to work at being a glass half-full person, but it’s worth the effort.
Happy Birthday! My birthday is this month too! I will be 69. I also debated the SS decision at age 66 and decided to wait until 70 to take mine. My husband took his at 62. Luckily I fell into a relatively unknown loophole (called the restricted application) that allowed people who were born before 1954 to claim 1/2 of their spouses SS at age 66 defer their own SS until age 70, so that helped solidify my decision to wait.
I just missed that loophole! One more year, and you can start collecting. Nice!
Thanks for the birthday wishes.
You can try this calculator: https://opensocialsecurity.com/. Also, I recently read SS can only pay a reduced rate from 2034 onwards if Congress does nothing. So that’s a consideration. Happy birthday and I’m sure whatever you do, you will be fine.
Very interesting. Thank you for sharing. I tried it out, and it said to wait until 70. However, I probably won’t. Still, it’s a good tool. And thanks so much for the birthday wishes.
I’ll keep it short. My finance guy says if someone is offering you money, take it.
That sounds like a pretty great philosophy.
I agree with The Widow Badass — love that name, BTW! — about figuring if you are likely to live beyond the breakeven point for taking it earlier or later. That date where your money is equal in both scenarios.
It’s also great to enjoy more when you are young enough — but don’t assume your financial needs will remain lower. Apparently we spend disproportionately more in our 60s and 70s, less in our 80s, and much more in our final few years of life — when our medical system grabs as much of our money as they can get their hands on.
Please consider that men typically die before women do. (Apologies to your husband for raising this as I hope he’ll beat the odds!)
You need to consider how much you might want that $800/month more if your savings get eaten up from health costs and if your husband dies before you. Will you still get much from his pension?
Sorry to bring up unpleasant thoughts, but I worry about these things. What if you live to be 90+? That’s a lot of money you won’t be getting!!
Thanks for sharing your perspective with me and other readers who are trying to make the same decision. It’s not easy! We are in good shape with medical costs, since my husband is retired military, and Tricare for Life is our secondary. It’s a fabulous benefit. I do get some of his pension if he should pass away, but you raise a good point. I don’t know how much.
My state pension (I used to be young enough to refer to it as old age pension – oh how things have changed 😉 ) has been subject to the moving of boundaries here in the UK. It used to be women at 60 and men at 65. My cohort were moved from 60 to 66 – in order to equalise (insert rolling eyes emoji here). We don’t get a choice about what we do with state pension, we either take it or we don’t. It doesn’t get re-invested or allowed to build up, so that’s one less decision for me to make when the time comes. I am already in receipt of a couple of small pensions as my salary has drastically reduced in recent years. I expect to work until I’m no longer able to – fortunately I enjoy what I do. Himself is younger than me, so we’ve yet to face that decision over his prospects. I also concur with The Widow BadAss about taking it while you can make the most of it. Enjoy it Donna!
I looked up the state pension you describe. Interesting. I guess it’s different for men and women based on actuarial tables. I converted it to dollars, and it didn’t seem like a lot, but then I remembered you have universal health care, so it looks pretty good. I’m pretty sure I’m going to follow the advice of our friend, The Widow Badass.
By the way, how lucky to enjoy what you do!!! Congratulations.
Hi Donna, I am waiting until 70 to start taking social security as I retired at 63 and have a company pension that I am able to live on quite comfortably. Besides that I also have 401k and Roth IRA savings. I turn 70 in February and can hardly wait to start collecting that social security:) I think you have a good plan in place where you’ll start collecting at full retirement age. That coconut cake looks so delicious. I hope you post a picture on how yours turns out. Happy Birthday!
We’re pretty much in the same boat with regard to income, but I probably won’t wait. I know I’d be looking forward to it as much as you are by the time I’m 70!
Cake will be made this weekend. I’ve already made the buttercream roses, and they are quite odd looking but delicious. I promise to share pictures, even if I mess it up. It will make a good story.
Skip the analysis and go with what feels right is my whole philosophy these days. I am deep into “wu wei.”
We thought my husband’s current job was going to end when his green card ran out, and we had this huge move underway, so I started collecting mine as a backup if we needed it. When I had cancer in my 50s, my whole thing regarding SS was to live long enough to get to pick when I would start. Every year over 62 has been gravy from that point of view. So doing it at 67 instead of later was easy. Now, the husband’s company has figured out how to legally pay him for as long as he’s in Japan, so we’re rich, rich, rich. Joking.
I have two last things to say: Happy Birthday and LOVED the calico cat cookie. (We lost the sweetest calico who ever lived last year, may she Rest In Peace.)
Your comment about doing what feels right is particularly relevant. I tend to over-analyze.
I had the same thought about the cancer perspective. Who knew I’d even be there to celebrate my 66th?
Thanks for the warm wishes. It’s always great to hear from you!