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I'm a couple of months from FRA and have no near term plans to sign up for SS benefits. At FRA, my SS benefits would be slightly above $3K per month. Delaying SS start till age 68, benefits would be around $3.5K per month. Delaying SS start until age 70, benefits would be about $4.1K per month. I'm in good health and have plenty of income to live off at present and don't draw down the principle amounts of my IRA or after tax accounts. No need for additional immediate income. Like others have said, the SS benefits will be a big extra margin of inflation indexed income when I decide to start.
As it turns out, my OP values are ALL WRONG. And as my time limit is over to correct the OP, all I can do is post the corrections here.
As it turns out, the break even ages are all within a few years, from age 78 to age 82.
Taking SS at 62, breakeven age for FRA is 78.
Taking SS at 70, breakeven age for FAR is 82.
This actually makes a lot more sense than the big spread I show in my OP, since the various social security benefit payments are kind of sort of an attempt at actuarial tables so that you've withdrawn about the same amount at expected age of death.
Yeah, we all die at different ages, but they are trying to average it out so that the people who live extra long get offset by the people who die extra young. So this makes a lot more sense to me.
My goal in doing this thread was simply to get an idea of breakeven dates for SS as a part of my decision making.
There is way more that goes into it, than breakeven.
For some, it is about maximizing the spouse's benefit. Say their spouse is 15 years younger. They could stand to collect that larger amount for a long, long time. Delaying makes sense if there is no immediate need for the money. I am not married.
Broke people need the money ASAP and are likely to take it at 62. I'm not broke.
For me, taking early SS would be all about being able to spend all that money on travel while I am still healthy enought to do it. A larger amount collected after my health is so bad I can't travel or do things anymore, really doesn't do me much good.
Then again, I could spend down my 401k on travel, and then replace that expenditure with a greater SS check by waiting until 70 to collect.
For some people, waiting to 70 is just insurance against outliving their savings. For them, if they die young it is "no harm no foul", but they don't want to wind up being 95 and broke, with their savings devoured by inflation.
Inflation itself is a reason for some people to wait unti 70 to collect SS. If we go through a period of 10% inflation or more, all fixed income gets hurt by that. COLA does not keep up with inflation, but at least the people who waited until 70 and took bigger overall checks, are going to get more money from the same COLA rate than the people taking it at 62. 5% more on $1000 is $50. 5% more on $2000 is $100. So a 5% COLA just gives you a lot more dollars on a bigger base check than on a smaller one. No duh. For some people, that insurance is worth waiting to collect at age 70 if they don't need the money or have other sources to live off prior to age 70.
Once again, it is mostly about when you die, but it is also about inflation, need, and circumstance.
It really is different for everybody.
A broke person who takes SS at 62, but then lives to 95 years old in an era of high inflation is going to come out far worse in the long run than if he waited to 70. He will be comfortable at first with the extra money, but not long into the future he will fall behind and then fall dramatically behind as he ages toward 95.
The bottom line is, if you need Social Security to live, then you have it tough indeed. If you don't, then you are just nibbling at the financial margins, just like any other investment decision you did well or screwed up throughout your lifetime. I mean, if you bought the Google IPO, or bought Microsoft from the start, you wouldn't need SS anyway.
the math will vary for all of us though as that math does not consider assets being spent down to live that can stay , or be invested if you had early ss .
it does not consider taxes ...
spending down an ira while delaying ss , taking out the money tax free by using the standard deduction and reducing rmd's later , possibly filing single again at some point is a biggie .
delayed ss is also taxed on only up to 85% of the amount . your portfolio in an ira is taxed on 100% .
it does not include any spousal benefits that can not be paid while delaying .
on the other hand delaying ss leaves your medicare premiums un protected .. the sky is the limit as far as increases . when you collect you can never pay more than the cola .
so rarely are these calculations going to be an accurate picture of individual situations .
Question about the unprotected medicare premiums....is this for the Part B, or does it have an effect of the Medigap premiums I pay separately each month?
Last edited by impalatom; 09-14-2020 at 02:17 PM..
Question about the unprotected medicare premiums....is this for the Part B, or does it have an effect of the Medigap premiums I pay separately each month?
Only your part b is protected ...medigap has no such protection
It’s my understanding that the Medicare premium is only protected if you pay the base amount. If you are paying a higher premium due to income level your premium is not protected.
It’s my understanding that the Medicare premium is only protected if you pay the base amount. If you are paying a higher premium due to income level your premium is not protected.
you can't be protected because your premium becomes income driven once subject to irmaa
So many people here ask if they should take Social Security at 62, or at FRA, or even at 70 years old.
I calculated various Social Security benefits at various ages, and then sum-totalled my cumulative benefits through age 99, in order to determine what my break even ages are for beginning taking social security benefits at various ages, from 62 to 70.
Break even means the age at which I would have collected more total money from Social Security by waiting until full retirement age, than by collecting beginning benefits at some age earlier than full retirement age.
I was born in 1958.
My Social Security full retirement age (FRA) is 66 years and 8 months.
At FRA I will be collecting $2,700 per month, or $32,400 per year.
Here are my conclusions.
Starting at age 62, at age 79 I would have been better off waiting to FRA. By age 80, I would be ahead of the game waiting for FRA vs. collecting early.
Starting age 63, at age 80 I would have been better off waiting to FRA.
Starting age 64, at age 81 I should have waited.
Starting age 65, at age 83, I should have waited. So at age 82, I was still better off collecting early.
Starting age 66, at age 88 I would have been better off waiting to collect at my full retirement age of 66 years and 8 months.
We can't know when we are going to die, but I use 85 years old for planning purposes. If I start collecting benefits at 65 1/2 years old, then I would collect the same total money from Social Security either way, if I die around 85 years old. In fact, I am better off starting earlier, since I would collect more money up front and less on the back end.
If I wind up dying at 80, then I will wish I had begun collecting at 62 years old.
If wind up living unitl 90, then I will wish I had waited until full retirement age to begin collecting.
Thanks for doing the work. I was also born in 1958.
I did briefly consider taking it this year when I hit 62. I'd be able to kill my mortgage a lot sooner, for example. But I don't really need it, and so I am going to wait. I just refi'd to a 15 year that I plan to kill in 7 years.
Did laugh at you dying at 80 and wishing you had collected earlier.
Thanks for doing the work. I was also born in 1958.
I did briefly consider taking it this year when I hit 62. I'd be able to kill my mortgage a lot sooner, for example. But I don't really need it, and so I am going to wait. I just refi'd to a 15 year that I plan to kill in 7 years.
Did laugh at you dying at 80 and wishing you had collected earlier.
To me the people who take it at 62 are the people who 100% need it and the people who 100% don't need it.
Some of us continue to work. I waited till I was 67.5 to take mine. I just got married to a 60yo and it will be much better for her if she out lives me.
I had always figured my Break Even was around 82 but me working was a bigger factor.
To me the people who take it at 62 are the people who 100% need it and the people who 100% don't need it.
Some of us continue to work. I waited till I was 67.5 to take mine. I just got married to a 60yo and it will be much better for her if she out lives me.
I had always figured my Break Even was around 82 but me working was a bigger factor.
Yes, same here. I was still working part-time, but what I did can't be done due to COVID. I attended industry events in NYC on behalf of the firm for which I worked, but everything was cancelled in March. I've done some minor editing/document work for them since, maybe a total of ten hours, but large networking events are not happening for the foreseeable future, at least in Manhattan.
I did just hear from them about an hour ago, and I'm attending a virtual event in October.
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