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The maximum Social Security benefit at full retirement age (66) is now $2663 per month. However, if you choose to file and defer, that monthly benefit grows by 8% per year to a maximum of $3515 at age 70.
If you have not put in the maximum, the ratios are still the same.
The difference is $10,224 per year. Consider that a US 10 year treasury bond now pays just 2.112%, to get that much more per year you would have to save $484,090.
So one way to think about this is that if you can use savings to fund your retirement to age 70, you will have saved the equivalent of $484K.
That seems like a very cheap annuity. Also, it's an annuity that rises with inflation and it becomes the survivor's benefit for a married couple. What a Deal.
However, less than 2% of Social Security recipients wait until age 70 to take benefits.
here is 62. 66 vs 70 . up to age 80 62 was the best . if you made it to 90 70 was slightly ahead. but if you died before 84 you lost the bet . 84 to 90 barely ahead .
age 90 there is less than a 7% difference in balance . that isn't a year in return , that is in total . .
Last edited by mathjak107; 03-14-2015 at 05:27 PM..
Thanks, mathjack once again you're educating me. (I 'd meet you at a Meet Up anywhere)
You had me convinced through previous posts and threads to wait until 70 for Soc. Sec. I thought you're posited that that was 'best' in most cases. Now I see you're thinking of taking your SS at what age? 66?
I want to retire BY 65.....my FRA is 67 (darn it, NOT 66)...I was thinking of waiting until 70 for Soc Sec. I don't have near as much in assets as you do, and my NON 401K money is in a Roth IRA so I don't have any mandatory RMDs (right?)...so maybe the RMD's causing a tax issue...won't be an issue.
At retirement would you roll a 401K into a regular IRA or Roth IRA?
As for annuities, I know a lot of people have them. A friend's financial planner is suggesting one for her and her husband. But for some reason the fine print scares me and I just can't seem to get a handle on the costs and risks. That being so, I'm from the Buffet/Bogle school of thought and don't invest in ANYthing I don't understand. So while I keeping hearing about annuities.....I'm SUPER wary.
The maximum Social Security benefit at full retirement age (66) is now $2663 per month. However, if you choose to file and defer, that monthly benefit grows by 8% per year to a maximum of $3515 at age 70.
If you have not put in the maximum, the ratios are still the same.
The difference is $10,224 per year. Consider that a US 10 year treasury bond now pays just 2.112%, to get that much more per year you would have to save $484,090.
So one way to think about this is that if you can use savings to fund your retirement to age 70, you will have saved the equivalent of $484K.
That seems like a very cheap annuity. Also, it's an annuity that rises with inflation and it becomes the survivor's benefit for a married couple. What a Deal.
However, less than 2% of Social Security recipients wait until age 70 to take benefits.
I agree with you. I look at it as how much monthly income will I get. I do not assume I would invest the money or worry about taxes. I am looking for a reliable stream of income. However in the example being discussed in the posts following yours the delay until 70 results in $88,000 more cash.
I agree that if you want a safe flow of income you compare the delayed SS to the purchase of an annuity. I think the delayed SS will always be the better deal.
Don't forget while you increase 8% a year it isn't an 8% return . You are giving up checks that offset that by a lot.
This is what so many people fail to realize, judging by posts in this Retirement Forum over the years I have been here. They say things like "How can you beat an 8% guaranteed annual return from age 66 to age 70?" and the statement betrays the lack of understanding.
I did not intend the foregoing as an argument against waiting until age 70. I am just advocating starting from a position of correct understanding when analyzing one's own situation.
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