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I've done the math many different ways. Even not counting the larger surviving spouse benefit, if you get the max and start collecting at 62, at 5% earnings, you end up with just about $240k at 70, (And For me, the SS will be taxed & the earnings would be taxed, so actually less than that) assuming 100% of your SS goes to savings. Which can be rough to do. Takes around 12 years or so to break even. I won't really know how old or unlikely 83 is until I'm in my 70s, I figure. But since I know I want to reduce my RMDs ANYWAY, and want to provide at least my FRA amount as a benefit should I die first, its not really an option to collect at 62. I dont need it to live, as I have a pension and appreciable savings. Assuming I live past 82, I will be very glad I did. By 82, the difference in the 62 vs 70 collecting is about $30k a year, and its only taxed at 85%, and not at all by most states. Not chump change. I'm thinking I will want the income not the savings. I'm not concerned with leaving anything to anyone. I'm already sick and tired of saving, saving, saving! I want to spend and live, while I'm young enough to enjoy it, not save even more till I'm 70! But when I'm living it in my late 60s I might sing a different tune. A lot depends on the health of the market and of us!
Last edited by Perryinva; 07-15-2015 at 06:56 PM..
You can take SS early and keep working right? (you don't have to wait until full retirement age to do that do you?)
What's the math for "coming out ahead" in that scenario.
Suppose a person with a FRA of 67.....starts taking it at 62 (they don't need it, they invest it)....they continue at their 90K a year job (putting more money back into their pot from current earnings, AND the 2 for 1 that's being held back for later.)
Then when they really DO retire at 65, their benefit will be recalculated up at that point. So could THIS be a win-win.
The early SS benefit will of course be taxed at the max (and the 2 for 1 will be taken out)....so from a $1,600 age 62 benefit, God only knows what you'd actually GET in your pocket to invest.
So is that person better off just waiting until FRA to claim benefits? Or take the early taxed AND REDUCED benefit and keep working?
At my salary, I'd get zero. My wife started collecting at 62 this year, and all we do is invest hers. She would not be talked out of it, no matter how many charts and graphs I showed her. She WANTED IT NOW! Interestingly, between her and her employer she has only contributed about 100k in her lifetime. Even figuring interest on those dollars, she starts coming out ahead at 72. I will have contributed close to $400k when I retire. At FRA, it will be my late 70s before I get it all back.
You need to do the numbers of need; when most usefulness and years it takes to recover to break even point by gain. Seems break even point and risk of change with bird in hand is making more take it earlier.
The 'break even point' should be irrelevant!
For heaven's sake, the object is not to beat the SS system, like by taking SS early and dying younger (is that a plan?), but to live well for as LONG as you can.
If you need the money sooner, then take it.
If not, then don't.
If you're not sure, split the difference.
Perryinva, yeah talking with a friend of mine today she pointed that out...I was like duh, that's right. If a $1,600 a month payment is docked 2 for for for every dollar over 25K, a person making 90 wouldn't get any benefit...it would all be docked.
In my exuberance at the thought of extra money....I forgot about that little detail. (no wonder no one does that at 62 and keeps working...duh. I knew it. I just forgot)
^^^What tjarado said! I wasn't pointing out "payback age" to illustrate anything except that basically the more you made steadily over your lifetime, the longer you have to live to get to that point. It's been pointed out repeatedly that actuarially, whether you claim early or late, your payback is the same at asumed time of death. The objective should always be to live long, healthy, and happy! Statistically I should live until late 80s/early 90s, as thats where grandparents with no vices lived until, same for my wife. Dad shows no signs of sloowing down at 80. Mom was a chain smoker and died at 68. Its not about dying with the most money (or it shouldn't be, but for many, who knows) but doing whatever will give you the best quality of life, without risking running out of funds later in life. If you need it, then you have no choice and the die is cast. Your late in life financial future is fragile. If you have myriad health issues and don't expect a long life...well that's self explanatory. Everyone else's choice is based on personal desire (like my wife), how long in to your 60s you expect to work, or what you want out of SS for spousal benefits, COLA income later in life etc.
Btw, my break even numbers assume 2% inflation. Though I will have a healthy pension, it is not COLA, so high inflation would quickly erode its value, so depending on how the health of the economy looks at FRA, My health, wifes health, etc etc will determine whether I delay or not. That's 9 years away..anything can happen by then.
If all else fails, you contact your Congressperson or Senator and then only accept a reply that actually answers your questions. I am helping someone on this site who went to their Senator, wrote me a copy of the reply from the Supervisor at the local office- it was totally unacceptable, so she is back at the Senator's office who will advocate for her again.
I am the person that ilovemycat helped and I can't thank her enough as well as a the office of a State Senator who advocated for me with SSA to obtain the survivor benefit info that SSA was reluctant to provide me so I can better plan my retirement. In addition to receiving a phone call from an SSA supervisor, just yesterday I received in the mail a very detailed Benefit Matrix printout containing all the info I requested. So, if you are hitting a brick wall in an attempt to obtain info from SSA that you are entitled to have do not hesitate contacting a State Senator.
The 'break even point' should be irrelevant!
For heaven's sake, the object is not to beat the SS system, like by taking SS early and dying younger (is that a plan?), but to live well for as LONG as you can.
If you need the money sooner, then take it.
If not, then don't.
If you're not sure, split the difference.
yep , dead is dead so the biggest question should be what if i live ?
if you are retiring early and will have to spend invested assets while delaying break even can be 22-24 years once lost checks , lost compounding and spousal adders are figured in.
that makes it a pretty close call either way. unless you live to 90 you likely will do better taking it earlier .
22-24 years just reach the zero point is a long long time of uncertainty as far as longevity .
I am the person that ilovemycat helped and I can't thank her enough as well as a the office of a State Senator who advocated for me with SSA to obtain the survivor benefit info that SSA was reluctant to provide me so I can better plan my retirement. In addition to receiving a phone call from an SSA supervisor, just yesterday I received in the mail a very detailed Benefit Matrix printout containing all the info I requested. So, if you are hitting a brick wall in an attempt to obtain info from SSA that you are entitled to have do not hesitate contacting a State Senator.
So glad it worked out for you! Just one clarification- a person who is contacting a Congressperson or Senator, it is a U.S. Senator, not a State Senator. Since Social Security is a federal program, our federal elected officials are the one's who deal with SSA. State Senators deal with issues in your State.
So glad it worked out for you! Just one clarification- a person who is contacting a Congressperson or Senator, it is a U.S. Senator, not a State Senator. Since Social Security is a federal program, our federal elected officials are the one's who deal with SSA. State Senators deal with issues in your State.
I contacted a US Senator. BTW, thanks again for all your help
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