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)

[3_dog_nights]

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.

[JimBollman]

I just heard about this option and don't know if it is real but the link below says if you file at full retirement age for you (66 for me) and suspend at any time after that if you need the money you can start and get all back benefits or take the higher draw rate.

Social Security Safety Valve

This doesn't get you the 62 option but protects the later part of your SS if you get sick before you reach 70.

[Ro_n_Joe]

DW and I are going to draw our SS ASAP. Can't wait to retire to go fulltiming !

[toedtoes]

That's how I've looked at it. For me:

I am retiring from work at 55.

My retirement and interest on other money will provide me with my current monthly pay (knock on wood nothing crashes).

I want to "enjoy" my first 10 years of retirement doing things that I don't have time for now. That will use more money than I currently use per month.

Once I start to slow down, I will be able to start taking SS.

I will use the SS to rebuild any excess I've used during the first 10 years so I have it later when I need more care.

It's all a balancing act.

[John_Joey]

I view retirement in three stages:

• First - very active (i.e very expensive)
• Second - Mental or physical problem starts to develop (i.e lifestyle slows way down, not so expensive)
• Third stage - need someone to assist you in your daily life (i.e very expensive.)

When you're thinking about when to draw SS think about the above also. If you wait you'll be in the second or third stage, that may or may not be what you wanted. If you draw early you'll enjoy the money in the first stage, but the last stage could be a problem.

[JAXFL]

skipro3 wrote:
And when can you use the SS money? While you are young enough to enjoy it is when. At 62 I'll still have enough of my physical AND mental function to go out and have fun. At 78, not so much....

But here's an idea for those who think waiting is a better idea; take your SS at 62 and invest it until 65, 66, 70 or when ever you think you would retire and draw SS. Let's just say, for round numbers, your SS will be $1,000 a month. (That way you can just use simple arithmetic to extrapolate to your actual SS payment). Now, investing $1000 for 4 years at 8% interest (that's the amount SS claims your increase in SS would be if you waited) you would have a nest egg of a bit over $56,000. That money is yours and can be handed down to your heirs, unlike a SS monthly benefit which dries up when you die. So now take that $56,000 and keep it invested and draw $400 a month. It will last over 25 years, or age 91. Probably well past your life expectancy. And if you need a cash infusion for something, an emergency for example, well you have $56,000 in your savings.
This is a no-brainer. As long as you are able to have the discipline to save, it's dumb NOT to take SS at the earliest possible date.

This is a great plan ... if you are retired or semi-retired. However, there is always a BUT. If you still work and earn more than $11K a year you have to pay back money to the SS fund, not only that but being you are earning income of more than $11K and SS counts as additional income too, you are taxed at a higher rate. This plan works AFTER you are 66.5 years old (can earn as much as you can handle then) except for the tax part. Now at 66.5 years old you can bank the $1000 a month toward the $56K. Remember also that your forced Medicare payments (of however much they raise it to) comes out of your SS check when you are 65 even if you do not draw SS yet.

[bigwheelsturnin]

my husband just took it at 62...takes 3 months to start...IRA..til then..while he can still get around...drive..enjoy.
of course..close to 66 & half yrs..$500 more..but means almost 5 more years of fulltime work...
if you can swing it...enjoy now.

[Ski_Pro_3]

And when can you use the SS money? While you are young enough to enjoy it is when. At 62 I'll still have enough of my physical AND mental function to go out and have fun. At 78, not so much....

But here's an idea for those who think waiting is a better idea; take your SS at 62 and invest it until 65, 66, 70 or when ever you think you would retire and draw SS. Let's just say, for round numbers, your SS will be $1,000 a month. (That way you can just use simple arithmetic to extrapolate to your actual SS payment). Now, investing $1000 for 4 years at 8% interest (that's the amount SS claims your increase in SS would be if you waited) you would have a nest egg of a bit over $56,000. That money is yours and can be handed down to your heirs, unlike a SS monthly benefit which dries up when you die. So now take that $56,000 and keep it invested and draw $400 a month. It will last over 25 years, or age 91. Probably well past your life expectancy. And if you need a cash infusion for something, an emergency for example, well you have $56,000 in your savings.
This is a no-brainer. As long as you are able to have the discipline to save, it's dumb NOT to take SS at the earliest possible date.

[Bumpyroad]

invmartyc wrote:
I am turning 62 next month and I have already applied. Why? Because I will be over 78 when I reach a break even point.

And all that hype about people living till the over 80 and many into the 90's and beyond is not backed up by the numbers. According to the NIH, based on DEATH CERTFICATES, men average just over 78 and women three years longer.
If you keep an eye on the obits you will see that you see just a few lasted longer than 80.

The government wants you to be greedy or afraid, or both. They want you to delay taking SS until you are 66 or even older. I am amazed that they even try to force you to take it at 70! If so many people are living to 100 then why not wait until you are 80? You would get around double or more than at 62 right?

I say go with what is best for you. Not everyone should wait for 66 or later. My wife died at 54, she did not draw a single dime.

sorta reminds me of a bird in the hand vs two in the bush.
bumpy

[invmartyc]

I am turning 62 next month and I have already applied. Why? Because I will be over 78 when I reach a break even point.

And all that hype about people living till the over 80 and many into the 90's and beyond is not backed up by the numbers. According to the NIH, based on DEATH CERTFICATES, men average just over 78 and women three years longer.
If you keep an eye on the obits you will see that you see just a few lasted longer than 80.

The government wants you to be greedy or afraid, or both. They want you to delay taking SS until you are 66 or even older. I am amazed that they even try to force you to take it at 70! If so many people are living to 100 then why not wait until you are 80? You would get around double or more than at 62 right?

I say go with what is best for you. Not everyone should wait for 66 or later. My wife died at 54, she did not draw a single dime.

[KeithAS]

I did the math manually, not in Excel. For me the break even point was between 79 and 80. I took it at 62, and it goes into a separate savings account, not the one I use for living, along with my .mil pay. Adds up when you don't use it. I figure at 79+, my wants will be less.

[toedtoes]

skipro3 wrote:
If I have a retirement IRA that already covers me, I still plan to draw my SS early. Reason; by spending my SS, I reserve my own account for any inheritance. My SS stops when I die. My IRA is handed down to my family. I think I'd rather spend the SS dollars first before spending my own savings.

That's a good point. If you are planning on providing for your next generation, then spending SS over your own $$ will help in that endeavor.

Another way I look at it is that if I wait to take SS and I die 2 years later, I'm handing over a lot of money to unknown entities. If I take SS early and save my own money, then when I die, I get to choose who gets the money I didn't spend.

[Ski_Pro_3]

I retired at 55 and will draw SS at my earliest time; 62.5. The difference between not paying into SS for those 7.5 years and working until 62.5 is only $100 a month on the SS check. Why you ask? Because those last years, while they would be my highest earning years, are also the shortest years SS has to invest that money. You see, SS ranks the years you have been paying in, with the early years being worth more than the later years. So even though you might have not been earning much back in 1970, those dollars have been invested in SS for 40 years or so. Compounding that interest year after year. SS awards you points for the years with a max # of points and a dollar amount based on your income, but capped. So, for most folks who have worked all their lives, there isn't much gain in SS for the last several years before you pull the plug on work. There is a calculator on SS site that will allow you to 'what if' for retiring and it includes the option of telling it that you earn zero dollars after any age you wish.

Also, I know I could better use the money when I'm 62, while I'm able to have fun, then at 70 when I'll be spoon fed my strained peas. Just sayin' I want to enjoy my retirement.

If I have a retirement IRA that already covers me, I still plan to draw my SS early. Reason; by spending my SS, I reserve my own account for any inheritance. My SS stops when I die. My IRA is handed down to my family. I think I'd rather spend the SS dollars first before spending my own savings.

[JAXFL]

jamarynn1 wrote:
I've never seen a Brink's Armored Car following a hearse, have you?

You don't need the Armored Car... the wife says she will write me a chack and I can cash it after my ride in the hearse....:)

[NYCgrrl]

I wouldn't ask the agency(SSA) with a vested interest in my payouts for advice on when I should collect. All I want is the data for 3 different time frames and thennnnn if need be take it to a financial planner/CPA. JMO.