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....did I do it right. Took the age of 80 as an ending point, went to the SS website and got the estimated benefits for ages 62, 67 (FRA) and 70. Forget 70...not gonna happen. From 62 to 80= 216 months....from 67 to 80= 156 months, using those timelines, I multiplied the benefit starting at each age, times the number of months (216 & 156), and then divided the difference between the two totals by 12 months, and came up with the monthly difference in benefit if I retired at 62.....it ended up being a small amount less to cut loose at 62, and even though Medical Insurance may be the road block (will need to work the numbers at that time), if we can fund the Insurance, I see no reason to work beyond 62.....Wife disagrees. I know it's just estimates, but being 57 and 62 is around the corner, I want to be sure I'm figuring this correctly....on the upside, I also have a Pension, and love my job.
It's nice to be the visionary you apparently are, but at your youthful age, I suggest you revisit your desire and math when you're a little closer to the cliff. Lots can change between now and then in these departments but until then, enjoy the picture you've painted of your life thereafter your big R day.
There are some SocSec Tax implications that are not insignificant.....I'm sure Mathjak will be along shortly to spell those out for you.
Also, the Medical Insurance is a big unknown. How will you be sure that Paul Ryan isn't funding his new bill by over-charging YOU for Health Care in the years before your get to Medicare ??
at this stage i would not get to wrapped up in all these finer details of the payment . rather i would look at my total tax situation and is there anything i can do so my ss will not get taxed if it is on track to be taxed ..
how about rmd's when they occur ?
will you be selling assets within 2 years of medicare ?
can you use the zero percent capital gains bracket to do some conversions ?
there is a whole lot more to concentrate on then projecting payments years in advance .
I don't get your method of calculation. Why not just compare the numbers SS gives you? What has an end point of 80 got to do with it?
For instance if SS says you will get $30k/year at age 62 and $34k/year at age 67, the difference is 1/12 of $4k or $333/month.
At any rate, if you are at the point of looking at this sort of differences to make it work, I would not retire at 62.
Based on the OP's calculations, I see no reason why he/she should not retire at 62.
I retired at 61 (debt free) and took SS at 62 (we also had a pension). My similar calculation simply compared the SS benefit at 62, with my FRA SS at 66/7 ...concluding that the break-even point was about 13-years (age 75). From that point forward, I would have netted a few hundred dollars more per month -- but, considered the value of a 5-year earlier retirement, to be worth it! (If we were living 'closer to the edge', the added benefit of delayed SS might have been a bigger factor.)
I covered interim insurance (to 65/Medicare) with an extended Cobra at about $500 per month, (plus received an added 'bailout' - which included one-year in salary and insurance from my last employer beyond retirement).
I also enjoyed my work, but my wife had a sizable pension. We were motivated to retire early for other reasons ... and have never regretted the decision!. Retirement when one is younger and healthier has a lot of advantages over continuing to work. But, everyone must make that decision based on their own situation, health and objectives.
I agree with jghorton. Everyone's life and finances are different and all of the calculations to determine the exact time you should take SS assume that everything else is equal. It's not. Some people are in better health, or enjoy their job, others won't make it much past 70, or will be in such poor condition if they do, that a few hundred bucks a month won't make their lives much better. The main thing to do is to start early, save as much as you can, pay off debt, and stay as debt-free as you can, and when you are approaching the lower end of SS eligibility, examine YOUR circumstances. You and your spouse's health, your income, your savings and investments, your planned cash flow, your budget needs, your plans, and your mindset are all part of the equation and no SS calculator or equation can determine that.
.... even though Medical Insurance may be the road block
I retired a bit early 2 years ago (age 60) due to my position being eliminated and being forced to take a pension. What I would warn you about is the cost of health insurance. Mine has gone up substantially since my COBRA termed out, and if the new health care bill becomes law, it's projected it will increase dramatically due to my age and retirement income bracket. Under the ACA older person's premiums can't exceed 3 times younger people's; in the new bill, that increases to 5 times. If you retire with over $75K a year in income, you'll get a nice tax credit. Anything up to that, you'll owe up to $3,000 a year more, depending on the county you live in (there are maps you can find online with a breakdown by the CBO).
Do not underestimate this expense. I have the cheapest plan I can find, and between the premiums and deductible, I have to shell out over $13,000 a year before my plan pays for anything other than one annual exam (which includes no blood tests) and one mammogram. I needed 8 additional mammogram pictures last fall (everything was fine) and paid for those out of pocket. I have no prescription drug coverage, but don't need any. If I did, that would be an additional expense.
So plan carefully. I could be pumping a lot of money into consumer discretionary spending if my health insurance wasn't so expensive.
I retired early and I’m 76 now, and would not want an 80 end point, hope for 85 and beyond. We both took our SS at 62 without regret.
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