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Nope. That’s not how the defer to 70 math works in a high inflation environment between your age 62 year and your age 70 year.
once you adjust for cpi inflation in the colas it will always stay constant in todays dollars . it may not track your personal cost of living but dollars stay constant .
the 70 amount includes colas on the difference but bottom line dollars are inflation adjusted and comparable to age 62 dollars .
once you adjust for cpi inflation in the colas it will always stay constant in todays dollars . it may not track your personal cost of living but dollars stay constant .
the 70 amount includes colas on the difference but bottom line dollars are inflation adjusted and comparable to age 62 dollars .
Yeah, but the break even calculation is different when there is inflation. With 0% inflation, collecting at 62 vs 70, the crossover is around age 82. With 5% inflation, it’s age 79. Deferring to age 70 is a great defense against 1970s stagflation.
yes break even changes but the comparison in dollars does not change .
that is why ss is compared in dollars that are not inflation adjusted . both the 62 and 70 dollars see the same cpi increase to reflect inflation . 5% is 5% to both values .
what changes is the dollars involved and the years to break even .
I would agree that the higher the inflation the more beneficial it is to have delayed, because the market risk increases with it. Percentage wise it may work out the same, but naturally the actual dollar difference between SS taken at 62 vs 70 at age 82 is much greater with higher inflation than with low. Playing with a SS calculator that can vary inflation and discount costs like SSAnalyze is a real eye opener when you see how high the SS amounts climb. I’m sure in the 60s & 70s, the fear of inflation was far higher than it is now and the idea that someone could collect $25k/yr at 62 or $42k/yr at 70 seemed fantastic.
from what i see on these forums most people lack the knowledge involved to be able to make a well informed decision so it is always based on half a head of knowledge as far as "from what they see" . it usually is all based on what if i die as opposed to what if i live .
most also do not have a choice in delaying since they lack the assets to lay out to safely delay . so while they have an opinion about taking it early they do not have a choice to delay . .
And right there is your cash scramble among a lot of people.
My mom is 60 and has some health issues, but there's nothing at the moment that would prevent her from working five more years. Financially, they're going to need the largest SS check they can get - they don't have sufficient savings to retire any time soon, as far as I know. She doesn't make great money, but it's still much more than her SS check would be as a career $40k or less earner.
If she were to take SS at 62 and stop working, that funding gap is going to have be made up somewhere. Significant lifestyle cuts. Moving to a house that's cheaper to maintain out of necessity. Dad working for longer. There's probably not enough there to cut - they'd need additional income.
People are not fully analyzing the impact of investment/savings return when they calculate the break-even date for Social Security.
First: If you are working between ages 62-66 and earning more than about $18,000 a year, don't collect Social Security.
Second: If you don't have enough assets in savings and retirement accounts to supplement your Social Security payments starting at age 62, which give you enough income to survive, don't quit your job if you can help it.
But if you wait to retire before your full Social Security age (66-67 depending on your date of birth), don't be confused with the simplistic thinking that it always a good idea to wait to collect because your SS checks will be larger.
Yes, your SS checks will be larger, once you finally get your checks at age 67-70, but you will get fewer SS checks in your lifetime. If you can collect SS at age 62, your monthly checks will be smaller than waiting but, if you invest the money in the bank or mutual funds and can get a conservative 4% per year return with 2% inflation, it will take nearly 25 years for you to make more money waiting to collect at age 67-70.
i showed the math in post 65 . it shows a straight up comparison in dollars at the various ages . once break even is hit the difference in dollars favors delaying.
what it just does not figure in is the results of spending down invested assets to delay as well as spousal not taken because of delaying .
how ever , michael kitces did that work for us and if we compare ss to a balanced portfolio and filing early the results show about the same balance if one in a couple lives to 90 . only the ss had no volatility and no risk to get to that point .
but it really should never be about what if i die . your plan needs to mesh with all the pieces of your plan and should be geared for the best balance if you live .
People are not fully analyzing the impact of investment/savings return when they calculate the break-even date for Social Security.
First: If you are working between ages 62-66 and earning more than about $18,000 a year, don't collect Social Security.
Second: If you don't have enough assets in savings and retirement accounts to supplement your Social Security payments starting at age 62, which give you enough income to survive, don't quit your job if you can help it.
But if you wait to retire before your full Social Security age (66-67 depending on your date of birth), don't be confused with the simplistic thinking that it always a good idea to wait to collect because your SS checks will be larger.
Yes, your SS checks will be larger, once you finally get your checks at age 67-70, but you will get fewer SS checks in your lifetime. If you can collect SS at age 62, your monthly checks will be smaller than waiting but, if you invest the money in the bank or mutual funds and can get a conservative 4% per year return with 2% inflation, it will take nearly 25 years for you to make more money waiting to collect at age 67-70.
Disagree? Do the math and show me I am wrong.
I believe that the bolded and underlined sentence is wrong. If you are working and collecting you will lose 1 dollar for every 2 dollars over $16,222 that means just about 50k is when you will no longer get a check. If I am wrong someone will put the answer out but I think I am pretty close to the number that you are looking for, not 18k.
The power of compound interest and investment return over a longer period of time when someone collects SS at age 62 cannot be ignored. If you retire early (62) but dont collect SS until 67-70 and you pull an equal amount of money as your missing SS check out of your savings and investments from age 62 to 67-70 to subsidize the money you are not getting in Social Security, you are losing money. And with even a small amount of investment return, your break-even date is well into your mid to late 80s.
The estmates of a break even date of 78 years old I see in many articles about the topic does not consider investment return from SS checks from age 62.
you are correct. at 17,700 or so you would start to give back 50 cents on the dollar after that amount. it sure could still pay to collect
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