Social Security question/ help please if you know

[path1]

I’ve been reading articles when I see them about drawing social security early and 99.9% say drawing early is not recommended and a bad decision.

The people that write these articles I bet have more education than me. But when I run my numbers I can’t figure out why they come to that conclusion.

I've spent the last couple days doing the math problem over and over and leads to believe I must be doing something wrong. My cross over point of waiting for full age or drawing early comes to almost 80!!!

So I’m thinking I must be making a math error, but can't find out where. Keep getting same answer of around 80 years old.

According to my “Your Social Security Statement” Social security basically says they will pay me 25% less than full retirement age and till I die if I take it at 62 versus 66. Looking further into their web site and just not the statement, it is not 66 but actually 66 ½ for my “full retirement age”. Then they go on to say by year 2033 the thing is screwed anyways unless some changes are made.

I tried to write out the math problem here as if I’m putting it into a calculator but it doesn’t make any sense, probably I'm not doing something right.

There are 54 months (or payments to me) between age 62 and 66 ½. So I took that 25% more I would get if I waited till 66 ½ and divided by the 54 months (or payments) to see where I would break even point. That number comes out to be almost 80 years old! I’m thinking no way 80 can be correct. I must be doing something wrong. Almost 80 years old and no male has made it to 80 in my family that I know of and who’s saying I’ll even make it to 66 ½ in the first place.

What am I missing? Is my math wrong?

I should draw early or wait.

I’m thinking if the 80 number is right, I don’t need the added security of the added money of "full retirement age" of 66 ½. And take the "bird in hand" right now.

I couldn’t find any other forum dealing with social security questions, but I know many on this forum are old enough and smart enough to have worked the numbers.

Is my math correct at 80?

Do you have an example of the math formula so I can put into calculator?

Thanks for any and all help.

(edit: deleted personal info because it didn't make any difference)

[quoyfab]

I've not seen discussion pertaining to Income taxes after drawing Social Security. We started REGULAR IRA contributions when in 1979, we are now 62, due to earnings structure and lack of need for deductions started ROTH IRA's in 2005. We additionally started converting funds from our REG to ROTH in 2006. While the conversions WERE taxable, we believe that our 15% Federal tax bracket to be as low as we'd ever see, and understand that withdrawals of ROTH monies are not factored in the income calculations for Federal Income Tax (provided the ROTH withdrawals meet the 5 year rule). For a couple,the income threshold is currently $ 44,000/yr, which is calculated by adding 1/2 of your Social Security to any earned income, REG IRA distributions, pensions, dividends and interest and etc. Interestingly, TAX free bond income is included for this calculation.

We soon turn 63 and will start drawing in April with combined SS income of 32,000, half of which will be used in future income tax calcs. Because we now have 38% of our IRA funds in ROTH's, we can plan IRA distributions to minimize and or avoid Income taxes. Due to State Income tax rate of 7.95% and Federal of 15% thru 2014, our planning will provide us a very livable 70 to 75k in current $ well into our 80's. And might I add, it can be done free of ANY income taxes.

[Padlin]

Unfortunately they don't always know about some of the more uncommon methods like file and suspend. Do your own homework first, at least know what the options are.

[ol_Bombero-JC]

Dannyabear1 wrote:
Best to go to your local SS office and have a 'sit down' with them. They will put in it writing you can understand.

And there you have it..:C

Be sure to make an appointment -vs- being a "walk in".

~

[Irover]

Was going to take it at 62; had a STEMI severe heart attack just 3.5 months before I turned 61; applied and recieved my disability in July 2013 the day before my birthday. This January medicare starts. I chose Cigna HealthSpring as it reduced my Part B to $62.90 a month. I get VA 100% medical care and will use the Medicare for Emergencies if needed.
Did a lot of Rving and work camping since 1998 and traveling until Aug. 2012; finally decided to park it for a spell.

[Padlin]

Each persons situation is different amounting to varying strategies.

These folks do a good job weighing your particulars, but the full report costs a few $ while as a short assessment is free. I did it a few years ago, gives you the best choice, dollar wise, as well as how much you lose or gain by deviating from their optimal.

You can also use I-Orp plugging in your own numbers to see how much you can spend in a given year, then change the SS start years and see how much spending $ you gain or lose per year. Takes a bit of work digging up with the numbers.

You do have to come up with a projected longevity, I went by family history.

[riggsp]

Started taking mine at 62, but I also have a retirement benefit (that I contributed to for 30+ years) as a State employee, and we have no bills except for a small house payment and utilities...It was a no brainer for us, as the break even was around 76 for both of us...we wanted to travel, not spend our last days in rocking chairs...that's just the way we did it...check with SSA to make sure what works for you.

[Gene_Ginny]

I will make this short without too many details.

I took mine a year early and it "cost" me about $90/ month. My wife took hers early and if I filed she could get half of my full age payment which was more than $125 dollars above what hers would be by itself. Didn't have to think too long on that one.

Breaking out the numbers, if I put mine in the bank for a year and then drew on it to make up the difference it would last 15 years. When the guy at SS ran the numbers on my wife's payment it was also 15 years, not counting the extra $125 per month from getting 1/2 of mine.

[doxiemom11]

Too many people run out of "life", not their social security money. Take it at 62 and if you don't really need it, save it, invest it yourself.

[mamasmax]

I'm seeing basically two very different arguments presented here. 1). File early to have a better chance of getting back all MY money or 2). File at your full retirement age - or later - to maximize your monthly income. A few years ago I ran into an old coworker who'd retired early because He'd had to some 20+ years earlier. He said at first he actually brought home a little more than when he worked, but that income changed very little and now he has to be much more careful with his budget. I've heard many analysts predict that due to the high deficits the Feds have run up, high inflation and taxes are inevitable in the probably near future. Will what may be a comfortable income now at 59 be enough when I'm 79? My point is, I don't want to be that guy in his late 70's or older working as a greeter at Walmart because he took all the early retirement opportunities ( and incurred the financial "penalties") so he could have a good time at 62.

[Steve_B_]

I posted once already, but since then my sister's idiot ex-husband dropped dead from a heart attack at 65. It proved my point that starting SS ASAP should be considered. Her now significant other retired last week and will be signing up for SS now. Take it, enjoy it, or if your income allows, invest it. If it lets you take one extra trip a year, it's worth it!

[tinner12002]

I plan on taking mine at 62, nobody knows what life is going to throw at you so I intend on getting some of what I paid into it back before I kick the bucket. If I live longer great but I want to get my money while I'm young enough to enjoy it.

[paulinemay]

Sorry, but now I see my error. You say the 76 % increase is on the reduced amount. (Reading comprehension was not my strong suit in school...)

[paulinemay]

3 dog nights wrote:
Just watched an "Expert" tell me about the pitfalls of drawing early. He said at 62 I get a 25% penalty and that if I wait till 70 I would actually draw 76% more than at 62. I ran some basic numbers to make it easy. Assuming I live to 80, not unreasonable based on my family history. And for the sake of math, using $100 as my benefit at 62.
100 x 12(months) x 18(years)= $21,600
176 x 12(months) x 10(years)= $21,120
Why should I wait?..... He had no answer, just kept running the numbers over and over.

Okay, but shouldn't your starting number for early SS withdrawal be $75 and not $100? (Based on your statement that there will be a 25% reduction for drawing SS early). Maybe I'm not following you, though.

[toedtoes]

I think a lot of the experts assume we'll live to the max life expectancy and base decisions on that. But for many of us, that's not reality. My "money guy" (financial advisor) has been great at helping me plan for MY future rather than a generic "average" or "max" future. There are many things that make my future extremely different from the average future and planning for that average would hurt me more than not planning at all.