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The "still working" part is key. I would assume that all those people applying at 62 are no longer working full time, because for those who have not yet reached full retirment age, there is a substantial reduction in Social Security benefits if you earn more than $14,640 per year. Once you reach 66 (or 67 for the younger folks), then this earnings limitation no longer applies.
Details on how that works are in SSA Publication Number 05-10069 ("How Work Affects Your Benefits"). You can go to www.socialsecurity.gov and click on "publications".
As for the question about break-even ages, there used to be a break-even calculator on the Social Security website, but it was removed a few years ago. About six or seven years ago I used that calculator, and my break-even age for applying at age 62 versus age 66 was 77 (point something). Now people in this thread are talking about age 80. I have no idea which age is correct.
You have to include the investment income that you would get from the extra 4 years of money up front, I think that accounts for the extra couple of years.
But both the trustees report and even Obama made it clear there is no guarantee of certain benfit. SS in fact is much worse off than many pensions. Like many pension in trouble its a stand alone fund and sinks and swims on its own. Basically a pay-go system with little payer support comnpoared to the past and many more people with benfits. If any other trust would be illegal if run like it and people going to jail.Anyone who has listened to trustees report to congress and warning to the last three presidents can't conclude it's guaranteed as to interest or safe investment;IMO.In fact I recommend reaing the last trustess report and even the conclusions on it raised by deficit commission.
It's people like you that scares other uninformed people. Let's get something understood once and for all. There will never be a change made to SS for people that have already qualified for it (age 62). And in all likelihood there will never be a change made to SS for people that are within 7 years of being qualified to receive it, or beyond the age of 55. For Washington to make such a change would be stupid and immediate death to any politician that suggested, endorsed or voted for it. Do you really think that Washington would pull-back on benefits that retirees are already getting...when those people have no chance of making up for the shortfall? Get real!
I don't know if you are serious or not, but just to be sure that you are not believing what you have posted, are you aware that there would be quite a sizable sum to invest at age 70 from the eight years of benefits one retiring at age 62 has already received which, unlike the contingent SS benefit is indefeasible (if you die you still keep it). So, in you example, how much ahead is the hypothetical person who waits until age 70 to receive benefits and dies at age 71 (not a ridiculous possibility)?
Who is talking about waiting until age 70 and dying at age 71? Not me. Do you expect to die before 78-80? Not me!
just about 8% increases with a cola adjustment are hard to beat on your own . you couldnt even buy an annuity paying anywhere near that for the amount you give up between 62 and 70 and i doubt most can do it on their own. especially in the markets we have had the last 12 years.
of course the real payoff is if your married . you have 2 horses in the same race for one bet. perhaps you might not make it to the break even point but odds are one of you will go well past it.
if not then its a moot point isnt it,dead is dead.
the big advantage to waiting to 70 if you have a few extra bucks to lay out is you can take far more of a withdrawal each year from 62 to 70.
you can enjoy larger withdrawls while your younger and healthier because you have the security that you can refill your nest egg later on with a 70% larger payment and cola adjustments and spend down more early on..
like i said if you wanted to buy an annuity that kicked in at age 70 for that difference with cola adjustments you cant find not 1 for that amount of money it cost you.
to me its not about breaking even or not,its about having the best darn life you can while your still healthy enough to go places and do things early in the game . that larger withdrawl each year can do that for you and thats the biggest benefit to me.
The "still working" part is key. I would assume that all those people applying at 62 are no longer working full time, because for those who have not yet reached full retirment age, there is a substantial reduction in Social Security benefits if you earn more than $14,640 per year. Once you reach 66 (or 67 for the younger folks), then this earnings limitation no longer applies.
Details on how that works are in SSA Publication Number 05-10069 ("How Work Affects Your Benefits"). You can go to www.socialsecurity.gov and click on "publications".
As for the question about break-even ages, there used to be a break-even calculator on the Social Security website, but it was removed a few years ago. About six or seven years ago I used that calculator, and my break-even age for applying at age 62 versus age 66 was 77 (point something). Now people in this thread are talking about age 80. I have no idea which age is correct.
The question I have is - where is the retirement savings that people should have set aside? Did they not save anything?
The question I have is - where is the retirement savings that people should have set aside? Did they not save anything?
Excellent question. Where I work, my employer is very pro-active in its encouragement to employees to save for retirement, whether the savings be an IRA, 401k, other investments. When I've spoken to fellow workers relatively few are putting money in a 401k, other than the company's annual profit sharing contribution. Nada. These are people in their late-50s and early-60s. When I ask "Why" they tell me "Something good will happen to me." Or, "My parents are going to die one day and I'll split the inheritance with my siblings." Or, "I'll have Social Security." These are actual answers. They're almost totally unprepared for the next stage of their lives.
For various reasons, none of them good, I blew whatever investments/savings I had. I re-started saving for my retirement when I was 49. I'm agressive in my 401k contributions. But I have no other investments which will produce income. The value of my home, which I expected to produce about $250,000 in equity after I retire and if I would sell it ... has been halved by the economic downturn and there went a component I had expected to be able to draw upon if and when I needed it. And then I have my Social Security.
Nobody will have to sponsor a "Tag Day" to raise funds so I can maintain my lifestyle, and I'll have to reduce some expenses and budget wisely ... but I think I'll get along fine. It would have been much better had I acted more responsibly earlier in life. But that didn't happen.
The "still working" part is key. I would assume that all those people applying at 62 are no longer working full time, because for those who have not yet reached full retirment age, there is a substantial reduction in Social Security benefits if you earn more than $14,640 per year. Once you reach 66 (or 67 for the younger folks), then this earnings limitation no longer applies.
Details on how that works are in SSA Publication Number 05-10069 ("How Work Affects Your Benefits"). You can go to www.socialsecurity.gov and click on "publications".
As for the question about break-even ages, there used to be a break-even calculator on the Social Security website, but it was removed a few years ago. About six or seven years ago I used that calculator, and my break-even age for applying at age 62 versus age 66 was 77 (point something). Now people in this thread are talking about age 80. I have no idea which age is correct.
This chart shows the approximate age when cumulative benefits started at a later age will equal or "break even" with cumulative benefits begun at an earlier age. If you delay receiving benefits until age 70, it takes 11 years, or until age 80, to break even with benefits begun at age 62, but it takes 13 years, or until age 82, to break even with benefits begun at age 66. Benefits begun at age 66, take 12 years, or until age 77 to break even with benefits begun at age 62.
The question I have is - where is the retirement savings that people should have set aside? Did they not save anything?
Some of us weren't really able to save much. I have always had low paying jobs because I had to have, what I call, "portable" jobs that I could get anywhere for any length of time. I have never worked for a company that had 401k plan or I would have done that. I was married and thought I always WOULD be married but it didn't work out that way so was divorced at age 54, not by my own choice. When I hit 62 I lost my job, panicked and applied for SS but kept working full time because I had to. I am a HUGE saver now but being single it's much easier to do. Back when I was 62-65 I could only earn around $12,500 and I'd hit that about eight or nine months in so didn't work the last few months of each year. I did save all year so I could make it through those lean months and always did okay.
I'm still working part time...32 hours a week...and making plenty enough to pay all my bills and still chunk a good amount into savings every month. I expect I'll be working till I croak, as long as my health holds up, but I accepted that idea a long long time ago. I'm 69 now and figure I've got some good years left in me. I'd LOVE to be able to fully retire but that's never gonna happen so, in spite of never being able to save for retirement, I'll be okay.
Excellent question. Where I work, my employer is very pro-active in its encouragement to employees to save for retirement, whether the savings be an IRA, 401k, other investments. When I've spoken to fellow workers relatively few are putting money in a 401k, other than the company's annual profit sharing contribution. Nada. These are people in their late-50s and early-60s. When I ask "Why" they tell me "Something good will happen to me." Or, "My parents are going to die one day and I'll split the inheritance with my siblings." Or, "I'll have Social Security." These are actual answers. They're almost totally unprepared for the next stage of their lives.
For various reasons, none of them good, I blew whatever investments/savings I had. I re-started saving for my retirement when I was 49. I'm agressive in my 401k contributions. But I have no other investments which will produce income. The value of my home, which I expected to produce about $250,000 in equity after I retire and if I would sell it ... has been halved by the economic downturn and there went a component I had expected to be able to draw upon if and when I needed it. And then I have my Social Security.
Nobody will have to sponsor a "Tag Day" to raise funds so I can maintain my lifestyle, and I'll have to reduce some expenses and budget wisely ... but I think I'll get along fine. It would have been much better had I acted more responsibly earlier in life. But that didn't happen.
I expect to retire at 66. Three years from now.
It truly is absolutely amazing to me how most people can go through their lives and not save any significant amount of money for their retirement. 99.999% have some excuse (99.998% are lame excuses) why they don't have any savings. I expect to live off dividends and interest alone from dedicated retirement savings for over 15 years (from my retirement age at mid 50s until age 70 when I expect to start taking SS benefits) and never touch the principal amount. Did I plan for the future and retirement? You bet your ass I did! Will my SS benefit ever be needed? No, but I will start taking it...at age 70.
As far as "retirement saving from a job", as already stated by one poster, not everyone made the kind of salary that allowed that.......I didn't! Heck, before meeting my wife, only transportation I had was an old '87 motorcycle I rode rain or shine, rented a furnished room and just made ends meet with my salary. I didn't have a college degree and that hurt me, but didn't have the money to get one either. Not only that, not everyone has the luck of staying on a job for years upon years. There are layoffs, companies that go out-of-business, people who have to quit a job due to "weather affected" surgeries (myself/wife) and so on. Not everyone wants to or can stay at one job for numerous years! Actually, back in them single (divorced) years, before meeting my wife, I thought about one thing quite a bit.......survive the present!
On the other hand, my wife, because of her Bachelor's Degree, made a good salary and done the Retirement Savings thing, but we've jumped into those savings to purchase a couple of things we wanted........one being a nice power boat. We've also had to move a couple of times and that in itself is costly!
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