Social Security Question - Left The Corporate Plantation Early

[Can_I_Retire_Now]

I retired recently and I must say I have been busier than ever - but its a good feeling to be busy and not be encumbered by the corporate world. I certainly don't miss w**k - in fact, I should have retired sooner!

Anyway, I'm having some difficulty getting a question answered. Maybe my best bet is to visit the Social Security office next week to get a definitive answer, but I figured I would post my question here to see who is in the know....

I'm 64. My original plan was to wait and take SS at FRA as I figured the monthly payout would be higher than if I took it now. But, from what I've read, and I don't know if this is true or not, but if you leave the workforce early, that your retirement monthly benefit will be no greater by waiting until FRA (another 2 years) since I'm no longer paying into the system. If this is true, there there is no sense in waiting until I arrive at FRA to begin taking SS.

I assumed my benefit would continue to increase until FRA, but that may not be the case. I cannot locate any SS calculator that accounts for this type of scenario. I have money set aside to tide me over until FRA, but now I'm not sure its worth the wait.

Anyone know the real skinny here?

 

[RobbieB]

Yes, your benefit will continue to increase until you reach 70.

 

[Ed_The_Gypsy]

I retired recently and I must say I have been busier than ever - but its a good feeling to be busy and not be encumbered by the corporate world. I certainly don't miss w**k - in fact, I should have retired sooner!

Anyway, I'm having some difficulty getting a question answered. Maybe my best bet is to visit the Social Security office next week to get a definitive answer, but I figured I would post my question here to see who is in the know....

I'm 64. My original plan was to wait and take SS at FRA as I figured the monthly payout would be higher than if I took it now. But, from what I've read, and I don't know if this is true or not, but if you leave the workforce early, that your retirement monthly benefit will be no greater by waiting until FRA (another 2 years) since I'm no longer paying into the system. If this is true, there there is no sense in waiting until I arrive at FRA to begin taking SS.

I assumed my benefit would continue to increase until FRA, but that may not be the case. I cannot locate any SS calculator that accounts for this type of scenario. I have money set aside to tide me over until FRA, but now I'm not sure its worth the wait.

Anyone know the real skinny here?

Yes, it will increase 8% every year until 70, even if you are not working. Worked for us.

 

[Can_I_Retire_Now]

Hey, thank you! That certainly makes me feel better

 

[Perryinva]

Actually it increases about 6% per year for the OPs age 64-65, and 65-66, through FRA. AFTER FRA it increases .667% of your monthly FRA (8% yearly of FRA amount) amount every month you delay through age 70. All this plus whatever COLA increases are during those delayed years. Remember the credits are only applied in the January after they are earned, except when you file at age 70. Also remember that those monthly increases after you start Medicare, are also preventing you from taking advantage of the Hold Harmless clause for Medicare increases. Hold Harmless limits the increased premiums for Medicare to the same amount that your SS went up due to COLA changes. This may be worthless if you have a near max SS amount, as the increases due to the COLA percentage could be large enough to eclipse the Medicare increases anyway. If your SS is low (unlikely for anyone that had a corporate job through age 64) it is a factor.

The “ no increase for early retirement” refers to people that retire early enough that they have end up with less than 35 years of solid earnings paid in to SS, so all subsequent years then become zeros, whereas before work cessation the estimates were based on those zeros being the last years earnings. It takes 2 years of zero earnings before the future estimate reduces to the more realistic value which will always be less than the estimate made fully employed until filing. Sometimes significantly sometimes not much at all. Depends on age and years of premiums paid.

 

[GenXguy]

I retired recently and I must say I
I assumed my benefit would continue to increase until FRA, but that may not be the case. I cannot locate any SS calculator that accounts for this type of scenario.

Anyone know the real skinny here?

This just came up on another thread in recent days.

You can calculate this with the downloadable detailed calculator at ssa.gov, although it's not the most straight forward.

This one might be easier for you to use:
https://ssa.tools/

I personally plan to retire in my 50's with less than 35 years of SS earnings, but that is not relevant. My SS benefit increases significantly by delaying from 62 to 65 to 67 to 70 as calculated by both of the methods I mentioned. Based on MAGI for ACA subsidies and breakeven ages, I'm roughly planning 65 myself.

 

[RobbieB]

And you don't even have to wait whole years either, it goes up every month from 62 to 70.

 

[Can_I_Retire_Now]

And you don't even have to wait whole years either, it goes up every month from 62 to 70.

Hey, this is looking better! Maybe it now will be a nice birthday present to me!

 

[VanWinkle]

Yes, it will increase 8% every year until 70, even if you are not working. Worked for us.

SS benefits increase about 8% after full retirement age(66 for the OP).
Before that, they increase about 5-6% per year until full retirement age.

"If your: full retirement age is 66, the reduction of your benefits at age 62 is 25 percent; at age 63, it is about 20 percent; at age 64, it is about 13.3 percent; and at age 65, it is about 6.7 percent."

 

[joeea]

I'm 64. My original plan was to wait and take SS at FRA as I figured the monthly payout would be higher than if I took it now.

Your monthly payout will be higher if you wait until your FRA. It will be higher still if you wait until you are 70.

But, from what I've read, and I don't know if this is true or not, but if you leave the workforce early, that your retirement monthly benefit will be no greater by waiting until FRA (another 2 years) since I'm no longer paying into the system. If this is true, there there is no sense in waiting until I arrive at FRA to begin taking SS.

Starting your benefits before your FRA will always reduce your benefits (by about 6% per year you start early).

I assumed my benefit would continue to increase until FRA, but that may not be the case. I cannot locate any SS calculator that accounts for this type of scenario. I have money set aside to tide me over until FRA, but now I'm not sure its worth the wait.

This might help:
https://www.ssa.gov/planners/retire/applying2.html

And this will help:
https://opensocialsecurity.com/

Make sure you consider any potential impact on your spouse if you are married.

 

[Can_I_Retire_Now]

Thanks Joe - I ran the open source calculator. Like all the others it recommends I wait until 70. I'm starting to think these calculators are rigged by the government.

They hope you expire before they have to pay you any benefits. Most likely I will not wait until 70.

 

[joeea]

Thanks Joe - I ran the open source calculator. Like all the others it recommends I wait until 70. I'm starting to think these calculators are rigged by the government.

If they were rigged by the government, they would always recommend starting at 62.

They hope you expire before they have to pay you any benefits.

Nope.

Most likely I will not wait until 70.

We all have choices to make. Some are easy, others not so much.

It's always good to fully understand what you are getting and what you are giving up before making important decisions.