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Crazy, never knew the increases were that steep for delaying.
Are those increases based upon the person working all those years from 62-70?
What’s the rate increase if one stops at 62(assume they have 30 solid years in) but doesn’t file till 65 or 70?
No. Those ARE the numbers for someone with 35 years (not 30 for SS) of max SS and retiring at 62 with no SS income after that. That means that their last highest SS credited income would be $132,900 for 2019, replacing their lowest adjusted income calculated earlier (which would be in the $115k range from the mid ‘80s).
If someone were to work until 2027/28 when they were 70, with THOSE last eight years being the last eight of 35 years maximum taxable income, then the SS amount at age 70 would be approximately $52,000, assuming the increases to the income limit continue to rise every year similar to the last 3 years (about 4-5%/yr). That would mean that by 2027/8, FICA income up to about $173k would be taxed. At that point, ones FICA & Medicare deductions would be about $13,000 a year, increasing your SS by about $900/yr.
Percentage and dollar wise, every year increase to the monthly adjusted average over the last 5 years has GREATLY outpaced the adjusted income levels of the previous 30. On average, from 1980 through 2010, each years adjusted yearly income is roughly in the $112-$120k range. 2017 was over $127k, 2018 was $128,400, and 2019 will be $132,900.
The way SS is calculated, each of the previous 35 years, from the calendar year you turn 61, are all adjusted for a factor based on the average earning amount in the US for the current year you turn 61, compared to the credited year. After you turn 61, those adjusted numbers are fixed, & every years income from then on is simply multiplied by 1, and replace the previous years fixed values.
So in years past, (again, for maximum earners) the increase to ones SS was essentially zero, if you continue ld to work to age 70, as the adjusted older years values roughly equaled the newer years. But the increases to the earned maximum NOW are rising far faster than inflation and wages have increased, so that is no longer true. Every year from now on that one earns the maximum SS income, until they are 61, increases their FRA monthly amount by about $80/mo over the previous year.
Last edited by Perryinva; 12-11-2018 at 10:46 PM..
Yes, if you're still alive and in relatively good health at 70. Many people who are 62 don't make it to 70 or in those 8 years, go from being relatively healthy, to unhealthy and not able to do very much. So it's a chance you take. There are no guarantees. It's not about wanting instant gratification. It's about being realistic and knowing you may be a very different person physically at 70 than you are at 62. Take some money now and know you will have it, or wait another 8 years and take a chance you may not ever see it and never have the freedom of being retired.
Again, those numbers are assuming you retire at 62 in 2019/20 and do not work past that age. It assumes that each year you delay filing you are essentially “purchasing” the increases to your SS monthly for the amount that you would have gotten by filing at 62.
Of course it is a gamble. ALL annuities are gambles that you will live long enough to collect more than you paid in for the annuity. In the case of SS, since the government is not for profit, the “premiums” are FAR less than any insurance company can offer for the same amounts at that age. And no insurance company offers an annuity that you pay in to monthly, allowing you to decide when to start your annuity and choosing that level of annuity.
So just like anyone with a poor health or longevity liklihood, your purchase of the annuity is a personal decision. For someone with a healthy younger female spouse, who continues to collect that annuity after your death, the “premiums” are exactly the same as they are for a single poor health male, where they stop on his demise. So for some it is a slam dunk bargain of the century and for others, not so great.
For anyone that can TRULY afford to delay filing, it is not at all about the last two sentences in your post above. It makes no difference what you will be like at 62 or 70, or collecting something now instead of not getting it later. It is only about how much income you want from an annuity vs from ones own investments. Plain and simple. Anyone that looks at delaying SS based on a “break even” comparison is playing a fools game. They can’t really afford the cost of delaying, because if the small difference in income between the two means that much to them, then their finances are too tight to purchase the annuity. No one purchases an annuity based on a ROI in case they die. They purchase it because of the income it provides, in case they live.
Last edited by Perryinva; 12-11-2018 at 11:16 PM..
Yes, if you're still alive and in relatively good health at 70. Many people who are 62 don't make it to 70 or in those 8 years, go from being relatively healthy, to unhealthy and not able to do very much. So it's a chance you take. There are no guarantees. It's not about wanting instant gratification. It's about being realistic and knowing you may be a very different person physically at 70 than you are at 62. Take some money now and know you will have it, or wait another 8 years and take a chance you may not ever see it and never have the freedom of being retired.
last i heard dead is dead . you don't need money ... the bigger issue is always what if i live
then it really won't matter anyway because I'm dead.....but barring a tragedy ( possible but statistically not probable) I will live to my mid to late 80s so wouldn't it make sense to plan for that time frame?
mentally it gets harder and harder to not take the money earlier from ss , while watching more and more get pulled out of your investments .
aside from the fact most people have no choice to delay because most americans don't have the dough to lay out for 8 years . so it really boils down for most , to retire and file early or work until 70 and file later or somewhere in between .
i thought i would wait until 70 too . but a side from not getting 4500 in spousal additional for my wife , it was just to much money to lay out for what amounted to no good reason in our case . so 65 was a good balance .
if i had to worry about a few bucks either way in difference , i think i would seriously have to look at my retirement plan .
for those who do have the assets to have choices , in theory early ss and keeping more invested vs spending down assets up front delaying can be very very close in income and balance . one is just more dependent on markets and rates , the other has more weight betting on longevity .
so go with the one you think gives you the edge , in either case nothing is guaranteed to be better .
I'm a long way from collecting as I'm only 52, but my "plan" is to wait until 70 as that much bigger check ( assuming I live to 85-90) will be a nice income , but i know a lot can change in the next 10-18 years. From what I've read though, if you're in decent health and can afford to live on your investments then waiting till 70 is clearly the best option. Is that what you people have found?
oh and the fact that "most people are taking it at 62 or 65" tells me its probably the wrong thing to do lol
Don't do what "most people" do; do what's right for you. If I take it at 62, and have 4.5 million in the bank, I would fall into the "most people" category. That doesn't mean taking SS at 62 works for everybody financially.
but it is important to realize that is not a return , so many confuse this with a return .
you are not making 6-8% a year . your cash flow is only increasing at that rate at the expense of giving up checks , no spousal benefits , no capped medicare premiums , spending invested assets or assets that could have been invested , etc .
so no , it is not to be confused with roi which is very different .
it is like annuity or pension . if you put 100k in an spia you get a cash flow of 6.80% . but you are only getting back your own money for about 15 years . so you don't see a "return" until 15 years later when you go on their dime .. ss can take 22 years or longer to see your first penny in return.
that is the difference between ss increasing vs a return .
but it is important to realize that is not a return , so many confuse this with a return .
you are not making 6-8% a year . your cash flow is only increasing at that rate at the expense of giving up checks , no spousal benefits , no capped medicare premiums , spending invested assets or assets that could have been invested , etc .
so no , it is not to be confused with roi which is very different .
it is like annuity or pension . if you put 100k in an spia you get a cash flow of 6.80% . but you are only getting back your own money for about 15 years . so you don't see a "return" until 15 years later when you go on their dime .. ss can take 22 years or longer to see your first penny in return.
that is the difference between ss increasing vs a return .
I don't know much about annuities, what happens if you put 100K in an annuity and die 2 years later. Where does the money go and if it is to heirs, how much of a hit do they take on the original 100K?
mentally it gets harder and harder to not take the money earlier from ss , while watching more and more get pulled out of your investments .
aside from the fact most people have no choice to delay because most americans don't have the dough to lay out for 8 years . so it really boils down for most , to retire and file early or work until 70 and file later or somewhere in between .
i thought i would wait until 70 too . but a side from not getting 4500 in spousal additional for my wife , it was just to much money to lay out for what amounted to no good reason in our case . so 65 was a good balance .
if i had to worry about a few bucks either way in difference , i think i would seriously have to look at my retirement plan .
for those who do have the assets to have choices , in theory early ss and keeping more invested vs spending down assets up front delaying can be very very close in income and balance . one is just more dependent on markets and rates , the other has more weight betting on longevity .
so go with the one you think gives you the edge , in either case nothing is guaranteed to be better .
Not to mention the fact that once your SS is reasonable- not max over the 35years but reasonable, and if there is also spousal income involved, the physical amount of $$ that are being left behind makes the decision even harder to ignore. In our case, by waiting from 67 to 70 our SS would have increased 24%, OK, but at the cost of a lot of discretionary income. It turned out that amount drawn now allows us to not touch investments until RMDs, easily meet financial obligations- plus have a life. That was our original age 70 goal, only implemented earlier. Now we finally have a nest egg (...we hope ).
I don't know much about annuities, what happens if you put 100K in an annuity and die 2 years later. Where does the money go and if it is to heirs, how much of a hit do they take on the original 100K?
it depends on the annuity . the highest paying spia's pay what they do because those who die pay for those who live .
you can buy a joint one that passes to a spouse but when the parties die the money goes into the pool regardless of when . those are mortality credits and they are why you could never pull from yourself what these pay out.
basically you need about 15 years today to get your money back , then you go on the insurers dime .
delaying ss is a better deal
Last edited by mathjak107; 12-12-2018 at 05:05 AM..
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