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I was talking to a friend the other day about Social Security and when to take it. A family member is waiting until 70 to get the maximum benefit but my friend thinks that may not be best. He noted that you are losing 7 1/2 years of income by waiting and it would take a number of years to recoup that money.
His reasoning is this. At 62 1/2 he would get $1,900 a month from SS. At 70 the benefit would be $3,600. If he starts taking it at 62, he would earn a total of $171,000 in those years between retirement and 70 ($1,900 x 12 x 7.5 = $171,000). If he waits to 70, it will take over 8 years to break even and get that $171,000 back ($3,600 - $1,900 = $1,700; $171,000/$1,700 = 100.59 months or 8 years, 4 months).
He feels he should take that money and, assuming he does not need it, invest it to get a better return. Does this make sense? Is he missing something? Jay
There’s a crossover point when you’ve earned the same amount total no matter which route you took. After that the 70 yr start earns you more. So if you live beyond that point you have done better to have waited. And that’s when things are getting more expensive so nice to have more resources. I think that age is 78 and a half.
I took it at 62. I want to live on my cashflow (I also have a pension) rather than draw down my savings. Since I had years out of the workforce as an at-home mom, the difference in the amount of the social security I get at 62 vs. 66 isn't enough to lose sleep over.
I was talking to a friend the other day about Social Security and when to take it. A family member is waiting until 70 to get the maximum benefit but my friend thinks that may not be best. He noted that you are losing 7 1/2 years of income by waiting and it would take a number of years to recoup that money.
His reasoning is this. At 62 1/2 he would get $1,900 a month from SS. At 70 the benefit would be $3,600. If he starts taking it at 62, he would earn a total of $171,000 in those years between retirement and 70 ($1,900 x 12 x 7.5 = $171,000). If he waits to 70, it will take over 8 years to break even and get that $171,000 back ($3,600 - $1,900 = $1,700; $171,000/$1,700 = 100.59 months or 8 years, 4 months).
He feels he should take that money and, assuming he does not need it, invest it to get a better return. Does this make sense? Is he missing something? Jay
I wonder what percentage of people waited until 70 just to die at 69 or sooner.
There are plenty of break even calculators out there. I think my break even is about 80. I don't see much reason to wait past 62. Living to 80 is not a given. My parents both died at 85. The last few years they had, I don't think any extra money would have made any difference. I also don't want to work past 62. I am tired of the whole thing and I have paid into SS since I was 15. At 62 it will be time to collect something.
I was talking to a friend the other day about Social Security and when to take it. A family member is waiting until 70 to get the maximum benefit but my friend thinks that may not be best. He noted that you are losing 7 1/2 years of income by waiting and it would take a number of years to recoup that money.
His reasoning is this. At 62 1/2 he would get $1,900 a month from SS. At 70 the benefit would be $3,600. If he starts taking it at 62, he would earn a total of $171,000 in those years between retirement and 70 ($1,900 x 12 x 7.5 = $171,000). If he waits to 70, it will take over 8 years to break even and get that $171,000 back ($3,600 - $1,900 = $1,700; $171,000/$1,700 = 100.59 months or 8 years, 4 months).
He feels he should take that money and, assuming he does not need it, invest it to get a better return. Does this make sense? Is he missing something? Jay
Why does everyone doing this math think they are the first and only person to have ever thought like this?
Maybe it's a bad idea for guys with heart trouble, but as a healthy woman I think my odds of living to 80+ are pretty high and I'd rather take the higher benefit (along with associated COLAs). Who knows what the market will do....
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