Social Security

[almost there]

Yep, an 11 year delay is long enough for me........
You might want to look at it as "how many years being retired without taking SS".
11 years will be my number. Long enough for me...

 

[Perryinva]

When it comes to SS, I truly believe few people make a financial & mathematically actuarially based decision as when to file. If they did, far more would delay until 70. (Only another 4% take it from 67 through 69!) . “Almost There” is more typical, where the allure and temptation of that unclaimed money overides any real decision based on numbers. He delayed gratification as long as he felt he needed. The difference, if any as he sees it, is inconsequential compared to the freedom of getting that income now (or in 3 years). He’s been retired 8, and has a handle on what he needs and wants (assumptions on my part of course). My wife was the same. She absolutely would not discuss delaying hers past 62. In our case, it was a bit more palatable as I am 6 years younger, and a high earner while she was a much lower earner with no chance of ever getting spousal SS from me. Her SS for the last 4+ years all went to investing snd has done nicely. She’s past FRA, which would have been about $300/mo more than she is getting. She was a bit upset when I pointed that out, but she is still way ahead when we look at her IRA. The age 82 “breakeven” sure seems a long way off, and that extra $80k in her IRA has tangible value at this point in our retirement.

 

[RunningBum]

When it comes to SS, I truly believe few people make a financial & mathematically actuarial decision as when to file. “Almost There” is more typical, where the allure and temptation of that unclaimed money overides any real decision based on numbers. He delayed gratification as long as he felt he needed.

Agree. Also note that Almost isn't planning to delay at all, but rather take at 62.

 

[ncbill]

When it comes to SS, I truly believe few people make a financial & mathematically actuarially based decision as when to file. If they did, far more would delay until 70. (Only another 4% take it from 67 through 69!) . “Almost There” is more typical, where the allure and temptation of that unclaimed money overides any real decision based on numbers. He delayed gratification as long as he felt he needed. The difference, if any as he sees it, is inconsequential compared to the freedom of getting that income now (or in 3 years). He’s been retired 8, and has a handle on what he needs and wants (assumptions on my part of course). My wife was the same. She absolutely would not discuss delaying hers past 62. In our case, it was a bit more palatable as I am 6 years younger, and a high earner while she was a much lower earner with no chance of ever getting spousal SS from me. Her SS for the last 4+ years all went to investing snd has done nicely. She’s past FRA, which would have been about $300/mo more than she is getting. She was a bit upset when I pointed that out, but she is still way ahead when we look at her IRA. The age 82 “breakeven” sure seems a long way off, and that extra $80k in her IRA has tangible value at this point in our retirement.

Using maxifi's "maximize" option, delaying from age 63 to age 70 results in ~$80,000 extra over the combined lifetime of the two of us, assuming we both make it to its default age of 100...not enough of a difference to motivate us to wait.

 

[Rianne]

Using maxifi's "maximize" option, delaying from age 63 to age 70 results in ~$80,000 extra over the combined lifetime of the two of us, assuming we both make it to its default age of 100...not enough of a difference to motivate us to wait.

?
Very simple, not including COL. This is based on today's $$ with no increases. Exclude inflation and COL

62 both of us from 62 - 92: $970,920, 30 years at $32,364/year
70 both of us from 70 - 92: $1,279,344, 22 years at $58,152/year
$1,279,344
-$970,920
$308,424
Am I missing something?

 

[almost there]

"Using maxifi's "maximize" option, delaying from age 63 to age 70 results in ~$80,000 extra over the combined lifetime of the two of us, assuming we both make it to its default age of 100...not enough of a difference to motivate us to wait"

"62 both of us from 62 - 92: $970,920, 30 years at $32,364/year
70 both of us from 70 - 92: $1,279,344, 22 years at $58,152/year
$1,279,344
-$970,920
$308,424
Am I missing something?"

Have mentioned it a couple times now, but it has been overlooked. Taking it at 62 and investing it till 70. Even a 3.5% CD would close a good part of the gap. Last time I am mentioning it. lol lol 7 yrs / 3.5% / $32,364 would be over $250k at 70.

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

Not saying I am going to do it, just another option....
That unspent $32,364 in my accounts will be doing the same thing if I spend SS 1st.
Its all in how you prefer to look at it.

 

[pb4uski]

.... Have mentioned it a couple times now, but it has been overlooked. Taking it at 62 and investing it till 70. Even a 3% CD would close a good part of the gap. Last time I am mentioning it. lol lol

At 3.5% the BEP of delaying from 62 to 70 is extended from 80 1/2 to 85. See post #108.

 

[ncbill]

?
Very simple, not including COL. This is based on today's $$ with no increases. Exclude inflation and COL

62 both of us from 62 - 92: $970,920, 30 years at $32,364/year
70 both of us from 70 - 92: $1,279,344, 22 years at $58,152/year
$1,279,344
-$970,920
$308,424
Am I missing something?

Both of us have many zero earnings years...which is the likeliest reason for the lifetime difference being much lower (using maxima & open SS calculator)

 

[Perryinva]

He retired 8 years ago, and has 3 more years to go to file at 62. I see what you mean, but to his point, he’s waited 11 years living without it, so at 62, he wants it. Not that I agree at all, but I was just making the point that logic means little when faced with opportunity for many. I don’t dwell on SS at all, really, since I can’t possibly file until age 63. I agree with others here that it’s value as a COLA annuity is too great to squander filing early when I have zero trouble “pre-spending” the anticipated amount by reducing my taxable IRA while taxes are low for both living, RMD reduction and Roth conversions.

 

[almost there]

Thanks, I am not really trying to come out way ahead with SS. Will be happy just to get my money back. There are some cool tools out there. This one was posted on this thread, and is pretty fun to play with. https://ssa.tools/calculator.html#/nav-spouse-benefit
Also, shows your lifetime taxable earnings. 1st time I had seen it.

 

[pb4uski]

... Also, shows your lifetime taxable earnings. 1st time I had seen it.

You mean like on page 3 of your SSA Statement that you get every year?

 

[almost there]

I don't get them every year? Maybe I am not old enough?
May have gone paperless? No idea.
Have had a couple hard copies through the years, but never noticed the lifetime total. I do go on the online website now and then. Just recently to plug in my date on the site I re-posted. https://ssa.tools/calculator.html#/nav-demodata

One cool thing on that site is the age sliding scale. To see the effect of when
you and your spouse (independently) pull the trigger . (Default Demo from the site screen shot below, not my numbers) Totals didn't fit in the screen shot, but you get the idea.

 

[UnrealizedPotential]

About sending SSA statements every year: I believe the SSA administration doesn't do that anymore. The best thing to do, IMO is to sign up at the SSA website and you can look at your yearly earnings there, look at estimated benefits, get a new SSA card,etc.

Sign up for "my social security account" and you can get what you need by doing that.

ETA- the SSA apparently still mails yearly statements to those who are 60 and over but have not started receiving benefits yet.

 

[Perryinva]

That is correct. Though I have been enrolled in MySS for about 8 years already, and have printed them out for each year to track the increases. I like to see when the new estimate changes based on the latest filed tax return. Since I turned 61 this year, it will be very interesting (to me) to see how they freeze the indexed earnings next year, which then limits the increases significantly, for each year I delay. Hoping for some higher COLA’s!!

 

[Dtail]

That is correct. Though I have been enrolled in MySS for about 8 years already, and have printed them out for each year to track the increases. I like to see when the new estimate changes based on the latest filed tax return. Since I turned 61 this year, it will be very interesting (to me) to see how they freeze the indexed earnings next year, which then limits the increases significantly, for each year I delay. Hoping for some higher COLA’s!!

So when one hits 62 y.o., then if there is a 2% COLA increase for the year, I assume that only the next year estimate increases by the COLA.
Taking it further, I assume that the estimated 5 years out number, the COLA only applies to the first year and any further estimate increases are due to the "natural" 6 to 8% increases.
Correct?

 

[joeea]

Thanks, I am not really trying to come out way ahead with SS. Will be happy just to get my money back.

Sounds like your plan to claim at 62 might give you a decent chance to "get your money back" if that's all it will take to make you happy.

Of course it depends on how much of your money you contributed and how long you live. It would be harder if you contributed the max every working year, but don't live long. It would be pretty easy if you contributed little/nothing and claim a spousal benefit for a long number of years.

Most folks will "get their money back". Some never will.

 

[Dtail]

Will try to last to 70. Minimum is 66 y.o. with ACA management until 65 and lump sum pension at 65.
Going with the odds, as my family on both sides through the first cousins have all lived past 80.
Who knows....

 

[Perryinva]

So when one hits 62 y.o., then if there is a 2% COLA increase for the year, I assume that only the next year estimate increases by the COLA.
Taking it further, I assume that the estimated 5 years out number, the COLA only applies to the first year and any further estimate increases are due to the "natural" 6 to 8% increases.
Correct?

Yes, sort of. All increases (or decreases from estimates) are used to calculate your PIA (primary insurance amount) which is the amount you get at your FRA. So any COLA cascades to all the other age calculations, since everything is based on your PIA. SS assumes no future COLAs when estimating your PIA, but does incorporate all previous COLAs.

Before age 62, as the average national wage increases each year, all previous years credited earnings are increased by an index multiplier tied to the ratio of 2 calendar years earlier and 40 years earlier. This index changes the bend points based on that increase. The effect is an increase in the maximum average indexed monthly wage, and an increase in ones SS PIA benefit. After that, there is a further increase once the COLA is applied (if there is one). After that, if you are still employed and paying in to SS at a rate that replaces one of your earlier indexed years, there is a further increase, because your indexed monthly average wage had to be recalculated. Remember that all increases are used for calculating your FRA amount.

As you said, Filing at 62 is an amount based off your FRA amount, roughly 6%/yr, (0.5%/mo) and all increases post FRA are based on 8% of your FRA amount. All COLAs are applied to your FRA, which is then used to calculate your actual benefit based on when you filed.

Once you have 35 maximum years earning credits, the additional years of earnings have very little effect, with most increases coming from COLA and indexed earnings. Once you hit 62, your bend points are then fixed, so all subsequent increases to PIA are only COLA, per year, compounded, and replacement of lower years with current years. If you already have 35 max, after 62, the PIA really only changes based on COLAs until you file.