07-06-2016, 11:26 AM   #21
Recycles dryer sheets

Join Date: Apr 2012
Location: Seattle
Posts: 479
Quote:
 Originally Posted by stepford Supernova, You and I are in similar circumstances as I've noted before. I considered both the accelerated income pension option from our former employer and taking social security before my FRA. I calculated that both of these options were significant money losers (particularly the latter) once I got into my mid-late 70's. Some I'm opting for the fixed single lifetime annuity for the pension and taking SS at 70. Everyone has different retirement needs and expectations, but unless you expect Social Security and/or Big B to become insolvent during your lifetime or have reduced expected lifespan I'd suggest reconsidering. One final point: Our pension is not inflation indexed so the impact of the accelerated income option strongly depends on the inflation we experience over the next few decades. I calculated the breakeven year between the accelerated income and single life annuity options (starting at age 55) for different inflation rates and obtained: 0% 16 yrs (i.e. the Single Life Annuity provides a greater total after age 71) 2% 18 yrs 4% 21 yrs 6% 27 yrs 8% Infinity (i.e. the SLA never catches up) So if you expect inflation to increase significantly then the accelerated income option may actually be superior. Since SS payments are inflation indexed, however, this isn't a factor there and delaying is always better (assuming one lives long enough to receive the payments). Finally, I agree with others here. The AnyPIA calculator you can download from the SSA is the best way to calculate SS payments for different scenarios - particulate when, as early retirees, we have those pesky zeros in our 35 year employment history).
Thanks Stepford and appreciate the feedback (and analysis).

I might have over-simplified my accelerated vs. lifetime calculation it appears.

Here's the back of the envelope math I did:

Lifetime annuity (assume 30 yrs of pension/lifespan)
\$37500 x 30 = \$1,125,000

Accelerated
\$42,912 X 6 = \$257,472 (first 6 yrs---I would be almost 56 when I start drawing)
\$34512 X 24 = \$828,288
Total--------- \$1,085,760

Realizing there is a \$40K variance on the negative but thought it was pretty close. I did not take into account interest rates or inflation. Oops.
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07-06-2016, 12:39 PM   #22
Recycles dryer sheets

Join Date: Apr 2012
Location: Seattle
Posts: 479
Quote:
 Originally Posted by Boss2014 Here is the link to the ss.gov estimator. The estimates are based on your actual records and you can make different scenarios. https://www.ssa.gov/retire/estimator.html
That worked great! I could not get it to work yesterday. Thanks.

I like this math better than my calculation.

\$1688 if "retiring" now at 55.5
\$1819 if working until 62

Like others have mentioned it doesn't add much for working much longer to get to that next bend point.
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 07-06-2016, 07:49 PM #23 Recycles dryer sheets   Join Date: Dec 2012 Posts: 448 that is right. having 35 yrs of income (no zero yrs in the calculation), and to the extent possible if one is fortunate enough, having as few yrs as possible that are significantly below the max, are what is most important. I stopped working shortly after age 55. My age 62 SS will be \$1682. If I had worked until 62, it would have been \$1781. However, if I had stopped working at 52, which would have given me one zero yr and also one yr at close to zero income, I would only get \$1400. Stopping at age 48, only \$1150.
07-06-2016, 10:19 PM   #24
Full time employment: Posting here.

Join Date: Sep 2013
Posts: 541
Quote:
 Originally Posted by mamadogmamacat that is right. having 35 yrs of income (no zero yrs in the calculation), and to the extent possible if one is fortunate enough, having as few yrs as possible that are significantly below the max, are what is most important.
Maxing out all 35 years isn't THAT critical. It does roll off somewhat toward the max. In my case I'll have 27 years of maximum earnings, 2 additional years at 80-90% of max and 3 inconsequential (college summer jobs) years of <10% of the max. Roughly 29 full years and 6 zeroes or 83% of the 35 year max, and I'm still projected to get about 88% of the max benefit. Each additional working year at max income would only increase my benefit by less than 2%. While every little bit helps, this incremental increase was small enough in the last few years that it barely factored into the calculation of when I could retire.

07-07-2016, 05:43 AM   #25
Full time employment: Posting here.

Join Date: Jan 2014
Posts: 715
Quote:
 Originally Posted by stepford Maxing out all 35 years isn't THAT critical. It does roll off somewhat toward the max. In my case I'll have 27 years of maximum earnings, 2 additional years at 80-90% of max and 3 inconsequential (college summer jobs) years of <10% of the max. Roughly 29 full years and 6 zeroes or 83% of the 35 year max, and I'm still projected to get about 88% of the max benefit. Each additional working year at max income would only increase my benefit by less than 2%. While every little bit helps, this incremental increase was small enough in the last few years that it barely factored into the calculation of when I could retire.
+1

8 years of zeros for me. Filling in some of those zeros barely moves the needle on my benefit amount and isn't worth my time and freedom.

07-07-2016, 11:42 AM   #26
Recycles dryer sheets

Join Date: Apr 2012
Location: Seattle
Posts: 479
Quote:
 Originally Posted by mamadogmamacat that is right. having 35 yrs of income (no zero yrs in the calculation), and to the extent possible if one is fortunate enough, having as few yrs as possible that are significantly below the max, are what is most important. I stopped working shortly after age 55. My age 62 SS will be \$1682. If I had worked until 62, it would have been \$1781. However, if I had stopped working at 52, which would have given me one zero yr and also one yr at close to zero income, I would only get \$1400. Stopping at age 48, only \$1150.
That is pretty amazing how little it changes by working another 7 yrs in your case (and maybe my case now). Thanks for the reply.
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