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not sure what your numbers are but my ss increases 146 a month or 1760 a year from 62 to 66 and 1320 a year from 66 to 70 . the difference between my 62 and 70 is 69% plus cola's .sounds like you are figuring something wrong .
So anyway this subject has been discussed at length and I came away believing I am better off living off of my 401 and delaying my SS. But here are the numbers.
I looked at my benefit at 65 (my FRA is 66/6) and learned that they increase approximately $13 for every month I wait from that point on or $156 a year increase. However I will need to supplement that lost income of approximately $2,000 a month so now I am withdrawing $24,000 additional from my 401. At $156/year it would take me 100 years to recover the $20,000.
OK I'm at the beach and may not have all my cylinders firing but what am I missing here?
You're getting the additional $156 every month going forward. Your $2k per month SS increases to $2156 monthly. You calculated it as a single annual increase. Each $13 increase is added to the adjusted amount.
it can be better but it all depends on individual situations . dollar wise ,especially for a couple it will provide a higher draw rate and bigger balance for heirs most of the time .
DIMA, your math is way off. It's not rocket science, nor is it worth a lot of discussion. Hundreds of thousands of people have already done the math for you. Why reinvent the wheel? IF you are still working and living the way you want, delaying will guarantee a larger income when you no longer work. The key word is guarantee, not "if investing the difference and it earns at least 3% above inflation". Or if you have adequate funds to live exactly how you want from the time you COULD collect, until you decide to collect, then you WILL come out ahead...where ahead means more income taxed at a lower rate for the rest of your life. Adequate does not mean "just enough". It means living off your savings and when you start to collect, you will STILL have plenty of savings for future circumstances. If you die before you collect, but are living exactly how you would have IF you were collecting, THEN WHO CARES? You only care if you live, not if you die.
Is it POSSIBLE to make more by investing your SS income? Of course! Anything is possible! It is also more likely you will lose more, or possibly all of it because of poor market timing or a bad investment, or fraud, or theft, etc, etc. if you are willing to gamble with that for those years, go for it! SSA and I thank you for letting them err on the side of old actuarial tables, and leaving more money for others.
The vast majority of people have no real choice but to collect early. For whatever reason, they can not live adequately unless they do. They no longer want to or can't or are forced out from working for more income. If you belong to the group where you want to retire as soon as possible as long as you have "just enough", then likely you can't afford to delay. For a small percentage, SS is chump change,nso delaying or not is inconsequential. But for a fair percentage of people, it is the difference of 10 to 20 thousand dollars a year after tax income to start, and only grows from there. Plus the survivors benefits for the lower incomed remaining spouse, that is the hard fact and smarter reason to delay.
Last edited by Perryinva; 08-30-2016 at 02:56 AM..
investing which has sequence risk requires a whole lot more money to be kept in reserve for poor sequencing . 90% of the time drawing 4% inflation adjusted from a 60/40 mix has left more than you started with on the table unspent 30 years later .
it has to be that way since poor sequencing can make as much as a 15 year difference in how long the same average return will last .
you have to take raises along the way to avoid that happening but you still have to be very careful about not keeping enough powder dry for those future sequences .
so ss has no sequence risk , it can be spent 100% . that allows greater incomes to be drawn even early on while delaying .
delaying is only for those who have the resources to delay . you need to be able to have that choice
Last edited by mathjak107; 08-30-2016 at 04:19 AM..
it can be better but it all depends on individual situations . dollar wise ,especially for a couple it will provide a higher draw rate and bigger balance for heirs most of the time .
Just a point on this though. Only one half of the couple need wait. That one would be the higher wage earner. The other half can pick early. Still it depends on situations. Some circumstances might require both to pull SS early.
Exactly. In our case, my wifes SS is fairly small. I wanted her to wait until her FRA so that should I die first she would get my full amount, which is the max SS can pay. She was adamant that she wanted it at 62. Emotionally she wanted to contribute more, and stil have "her money" to spend. Most all of her SS goes to her deductable IRA, so the impact is small. But now, if I die first, she will only get 76% of my max. She felt that since she is 5 years, 2 months older than I, with a congenital heart issue, that her outliving me is slim. But in actual dollars, by the time she is 80, we are only talking about $4500 a year less in after tax of her SS if she went to FRA, so it's a fairly small amount in the big picture, vs my waiting until 70 to collect so when I am 75, my SS will be about $30k/yr larger net vs taking it at 62. We will live and spend exactly the same and do everything we want from when I retire until I collect SS. The reductions to my forced RMDs, the much larger SS being taxed on only 85% federally, and on none of it state, and the ability to stay in a lower tax bracket during those years and convert from tIRA to Roth, all combine with the much larger amount to a far larger net income stream that continues to grow thanks to the COLA of a much larger SS amount, vs a smaller SS amount and supplement from a fully taxed tIRA. The tax bracket you will be in, i fluences the decision significantly. Saving 15% off a large SS in the 25 or 28% tax bracket is simply worth a lot more than 15% off a small SS in the 10% bracket. If you will live entirely off SS, and a small income from tIRA (or any amount from a Roth) that keeps you in the zero % tax bracket, and tou have plenty saved, well then it does indeed makes little sense to delay filing SS. But many can neither live on that amount, or have forced fixed income (pension, dividends, etc) that automatically have them paying in at least the 25% bracket.
You're getting the additional $156 every month going forward. Your $2k per month SS increases to $2156 monthly. You calculated it as a single annual increase. Each $13 increase is added to the adjusted amount.
As I said I'm at the beach so I need to go back and look at my notes. But I did do a calculation based on filing at 65 and it was let's say $2,013. I did another based on filing at 66 and it came out to approx. $2,026 or +$13 more per month. I'm pretty sure of those numbers but I may need to check because I don't understand how $13/month suddenly translate into $156.
This has been one of my favorite threads for as long as it has been running.
I will probably start collecting at 65, which is a couple of year increase from what I had thought(62) awhile ago. Mostly to make if simpler on us to have my Medicare and SS filed at the same time.
Also, Jim has a small inherited IRA that we are beginning to draw from that will be at $0 drawing a monthly figure roughly equal to my SS as if I had started to collect at 62.
While we are married, Jim cannot collect based on my SS earning as he has an original style CSRS pension from 35 years with the Post Office.
Who knows though what we will actually do at that time. Our game plan allows for a pretty good degree of flexibility.
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