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From the PM I sent you from your last thread, but this is tied directly to your thread OP, and may be relevant for others thinking through the retirement process and SS draw timing:
You may want to go down to the SS office and have them print a comparison of monthly payments at 62 vs. 65 vs. FRA vs. 70, I think you will be surprised that drawing at 62 in most cases yields the best return unless you are working right up to retirement, and then living on SS, or SS and an extremely small retirement fund/savings - if that's the case, delaying as long as possible is probably the best bang for the buck.
People throw around a % increase in SS payments per year between 62 and FRA, and a slightly higher % increase per year from FRA until 70, but that assumes you are still working and paying FICA into the system/getting work quarter credits at your peak earnings. It is a LOT less if you are retired but just not drawing SS payment. It is also the language of accruing not spending.
Some else already pointed out that in many cases the high ROI actually translates to relatively small dollars on a month to month basis. If you are living on the margin, an extra $50-$100 might be the difference between making it, or not, but if you are ok financially, then it might not be very relevant to your decisions about when to retire and when to file/claim.
In my case, because I plan to stop working at 57, it was like $1856, $2295, $2406, and $2788, actual benefits (per SS administration) since I will have no FICA witholdings from 57-62, but if you use the calculator on the SS web site, it shows something like $1900, $2400, $2600, and $3400, because it assumes I am working and accruing quarters at the top of my earning history, and replacing quarters from my younger years in the 35 year total qualification.
I have a pension we already live on for budget purposes - all my current work income is allocated into paying off/down the retirement house mortgage (lowering monthly expenses) and setting aside money for 3-4 major yearly vacations after I retire.
In my case, I intend on drawing the same month as I turn 62, allowing me to completely pay off the mortgage a year before FRA with SS income, and then investing the balance of the checks until I turn 70. The wife will then have a mortgage free property, and a lump sum if something happens to me, and that will more than offset the lower monthly SS payment - also, she will get lifetime payments off my pension if I pass first, but my pension is reduced somewhat.
budget numbers for drawing at 62 vs. 70 look something like this: $1200 cost avoidance for 16 years (until 82) plus $1856, or $3056 net, vs. a mortgage of $1200 for 12 years (until 82), and a SS payment of $2788 or $1588 net. After 82 the numbers become $1856 vs. $2788, because the mortgage factor is no longer in play, but we won't even come close to making up the positive difference generated by drawing SS at 62 vs. 70 by our mid nineties - and other than medical issues, I expect our financial needs and expenses to decrease over time as we age.
FYI, we both come from families where mid 90's is the expected lifespan, but even with that lifespan as an assumption, drawing at 62 still makes the most financial sense in my case, and likely many others considering when to draw SS.
It's worth you taking a good hard look at your options and their implications/effects with some one at the SS Administration for your personal situation. You might be surprised by what is the "best" option for you WRT when to start taking SS payments - I was!
Yes, indeed go to your social security office for information. Tuck's Dad has some serious errors in his analysis and recommendations. For one thing anyone who has accrued 40 quarters of credit (10 years) can stop working before their FRA and their benefits will continue to grow.
Yes, indeed go to your social security office for information. Tuck's Dad has some serious errors in his analysis and recommendations. For one thing anyone who has accrued 40 quarters of credit (10 years) can stop working before their FRA and their benefits will continue to grow.
Yes they do, but at very different dollar amounts (maybe not rates) as a benefit.
I assumed I could stop working, and still have my benefits grow at prescribed rates. When I went in to my SS office and explained what my plan was (expected to wait until 70, and draw big dollars), and was shown what they actually would be on the print out because I stopped working, other options appear to make much more sense for me, personally.
I would be interested in what you think was flawed in my analysis, because I know what I am planning to do, but have not yet pulled the trigger on any specific option. If I missed something or am in error, I would prefer to factor that in so I can "nail it" wrt when to draw SS, so this is not a swipe, but an honest request.
There is a difference between your benefit growing when you stop working and continuing to accrue value based on COLA and the annual growth by waiting. How any of us are impacted is a function of our working and earning history
2 days ago a SS expert on TV said that the easiest way to decide when to take SS is to ask yourself a question, if you need SS for your retirement then wait as long as you can, if you don't need SS then take it as soon as you can. The more I have thought about it the more I think, it is about the best way to decide.
In a few months I will be 62 and I have no hesitation that this is the best decision.
There is a lot to be said for this point of view. Don't be brainwashed by all those who say to wait.
2 days ago a SS expert on TV said that the easiest way to decide when to take SS is to ask yourself a question, if you need SS for your retirement then wait as long as you can, if you don't need SS then take it as soon as you can. The more I have thought about it the more I think, it is about the best way to decide.
In a few months I will be 62 and I have no hesitation that this is the best decision.
The level of SS needed today for retirement can very easily be changed over the years by inflation and bad market performance
Yes they do, but at very different dollar amounts (maybe not rates) as a benefit.
I assumed I could stop working, and still have my benefits grow at prescribed rates. When I went in to my SS office and explained what my plan was (expected to wait until 70, and draw big dollars), and was shown what they actually would be on the print out because I stopped working, other options appear to make much more sense for me, personally.
I would be interested in what you think was flawed in my analysis, because I know what I am planning to do, but have not yet pulled the trigger on any specific option. If I missed something or am in error, I would prefer to factor that in so I can "nail it" wrt when to draw SS, so this is not a swipe, but an honest request.
you have it right Tuck. Stopping working and paying into SS or continuing until drawing SS is the whole difference.
Would be nice if SSA.gov put a clause with a comma to clarify that little difference.
you have it right Tuck. Stopping working and paying into SS or continuing until drawing SS is the whole difference.
Would be nice if SSA.gov put a clause with a comma to clarify that little difference.
Quite true. However, once one has reached one's 35 years of Social Security earnings, continuing to work may not result in very much gain, depending on whether one is now earning at a substantially higher rate (as adjusted for inflation) compared to the early working years. Even if that is the case, as it frequently is, the biggest gains from continuing to work are realized when one is replacing zeros in the averaging, as is the case with less than 35 years of earnings history.
So a lot can still depend on individual factors.
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