Different Take on When to Take Social Security ...

[ScotsmanUS]

I retired a few years ago and am living off savings and small amounts of IRA money in order to maximize my ACA subsidy. I had been planning to take SS at age 70, but ....

I think I just learned that now I turn 62 this year (October) my SS amount at age 67 has been locked in, ie COLA adjustments and Wage Increase adjustments do nothing to change my SS Amount I am due at 67, unless I am actually taking SS in which case I get the COLA increase.

So when I did the math in the past it looked like I had a breakeven point in my early 80's. NOW, if I assume some pretty healthy COLA adjustments for 2023 and 2024 ( say 8% in 2023 and 5%in 2024) then my numbers change dramatically, and taking SS at 62 makes much more sense for me.

So can someone confirm my understanding as follows;

- My SS amount at 67 years old is now fixed as I turn 62 this year and I miss out on the larger than normal COLA or Wage Increases ??
- I would benefit from this years COLA (applied to 2023 SS) IF I am taking SS by the end of this year ie, November or December.

Hopefully this is clear, but to say it another way ...
As we all know I would take approximately a 30% hit in annual SS dollars if I take SS at 62 compared to 67, BUT if I start in 2022 I regain perhaps 8% and 5% of that 30% hit assuming the Cola is 8% and 5% over the next 2 years. So the reduction is really 30%-13% ie 17%. And that is even further reduced by another 3 years of 'normal' COLA increases

Someone please correct me if I am totally wrong on this thinking !!!

 

[single2019]

I retired a few years ago and am living off savings and small amounts of IRA money in order to maximize my ACA subsidy. I had been planning to take SS at age 70, but ....

I think I just learned that now I turn 62 this year (October) my SS amount at age 67 has been locked in, ie COLA adjustments and Wage Increase adjustments do nothing to change my SS Amount I am due at 67, unless I am actually taking SS in which case I get the COLA increase.

So when I did the math in the past it looked like I had a breakeven point in my early 80's. NOW, if I assume some pretty healthy COLA adjustments for 2023 and 2024 ( say 8% in 2023 and 5%in 2024) then my numbers change dramatically, and taking SS at 62 makes much more sense for me.

So can someone confirm my understanding as follows;

- My SS amount at 67 years old is now fixed as I turn 62 this year and I miss out on the larger than normal COLA or Wage Increases ??
- I would benefit from this years COLA (applied to 2023 SS) IF I am taking SS by the end of this year ie, November or December.

Hopefully this is clear, but to say it another way ...
As we all know I would take approximately a 30% hit in annual SS dollars if I take SS at 62 compared to 67, BUT if I start in 2022 I regain perhaps 8% and 5% of that 30% hit assuming the Cola is 8% and 5% over the next 2 years. So the reduction is really 30%-13% ie 17%. And that is even further reduced by another 3 years of 'normal' COLA increases

Someone please correct me if I am totally wrong on this thinking !!!

Fortunately, you are wrong. COLA will continue to increase your future SS payments

 

[RunningBum]

Where did you find this? It doesn't sound right but I haven't looked into those kind of specifics. What does opensocialsecurity say?

 

[MissMolly]

This is not correct. Once you turn 62 COLA will apply regardless of when you choose to start SS.

 

[ivinsfan]

Can you tell us where you got this idea? I'm curious if it secondhand from a person or something you saw online.

 

[Al18]

I checked the last 3 years of SS statements (haven’t claimed SS yet) and confirmed the age 62 amount has increased each year.

 

[Chuckanut]

Your information on delaying SS and the COLA is not correct.
May I suggest you look up a guy named Tom Margenau who writes about SS issues.

https://www.creators.com/features/your-social-security

Find his old articles and read them. Based upon my understanding, your information is not correct and can lead you to a less than optimum decision.

Maybe SS at 62 is right for you. Maybe SS at full retirement age is best. Or maybe SS at 70 is what you need. I don't know. But, you will need good information on SS to make that decision.

This is from his latest article:

https://www.creators.com/read/your-social-security

Instead of just announcing the upcoming COLA, this national newspaper could have done their readers a real service and answered the question everyone is asking me. And that question usually goes something like this: "I was planning to wait until I reach my full retirement age later in 2023 to file for my Social Security. But I want to get the benefits of this projected big COLA. So, do I have to file for reduced early benefits in 2022 in order to get the 10% increase in my benefits in early 2023?"


And the answer is no. If you aren't getting benefits when the COLA comes out (i.e., in January 2023), the same COLA increase is built into the Social Security benefit formula for future Social Security recipients.

IMHO, SS at 70 is the best annuity money can buy, and good stuff like the above is part of that reason.

 

[ScotsmanUS]

Hopefully I am wrong

I just read on the Social Security government site about the Wage Indexing freezing at 62 ( with your index for the 2 years prior to your 62nd year being fixed at a 1.0000 index or multiplier. Then I read an answer to an online question that stated this person needed to be claiming SS in 2022 for the COLA % for 2023 to be applied to his SS amount.
So adding no new wage index updates to no COLA increase unless you are claiming SS and I got to thinking my SS amount is frozen from age 62 to 67.

Does the SS Admin have a site where I can ask questions??

Thanks for all your inputs, consensus seems to be I am mistaken!! Which is good, except I’m back to the indecision as to when to claim !!!!?!

 

[ivinsfan]

I just read on the Social Security government site about the Wage Indexing freezing at 62 ( with your index for the 2 years prior to your 62nd year being fixed at a 1.0000 index or multiplier. Then I read an answer to an online question that stated this person needed to be claiming SS in 2022 for the COLA % for 2023 to be applied to his SS amount.
So adding no new wage index updates to no COLA increase unless you are claiming SS and I got to thinking my SS amount is frozen from age 62 to 67.

Does the SS Admin have a site where I can ask questions??

Thanks for all your inputs, consensus seems to be I am mistaken!! Which is good, except I’m back to the indecision as to when to claim !!!!?!

You are mixing oranges and apples which accounts for the confusion. And there are literally dozens of threads about when to apply for SS.

 

[SevenUp]

I just read on the Social Security government site about the Wage Indexing freezing at 62 ( with your index for the 2 years prior to your 62nd year being fixed at a 1.0000 index or multiplier. Then I read an answer to an online question that stated this person needed to be claiming SS in 2022 for the COLA % for 2023 to be applied to his SS amount.
So adding no new wage index updates to no COLA increase unless you are claiming SS and I got to thinking my SS amount is frozen from age 62 to 67.

Does the SS Admin have a site where I can ask questions??

Thanks for all your inputs, consensus seems to be I am mistaken!! Which is good, except I’m back to the indecision as to when to claim !!!!?!

Yes, wage indexing is based on when you turn 62, regardless of when you file for benefits. Cost Of Living Adjustments are also applied regardless of when you file for benefits.

In addition to tools on the SSA website, any of the following should give you a good estimate of your Primary Insurance Amount (PIA), and benefits based on when you would start receiving it:
The 'SocialSecurity' tab of the case study spreadsheet
The Downloadable Social Security Benefit Estimator
Social Security Calculator

After you get your PIA, the Open Social Security: Free, Open-Source Social Security Calculator can provide suggestions on when to start.

 

[MissMolly]

The wage index applies before age 62 and then COLAs kick in at 62 and are applied every year regardless of when you file for ss.

 

[single2019]

The wage index applies before age 62 and then COLAs kick in at 62 and are applied every year regardless of when you file for ss.

Only a fool will question Miss Molly on social security.

Doesn’t the wage index apply at 60?

PS: this has nothing to do with OP’s question, that has been answered

 

[MarieIG]

Fortunately, you are wrong. COLA will continue to increase your future SS payments

+1

 

[MissMolly]

Only a fool will question Miss Molly on social security.

Doesn’t the wage index apply at 60?

PS: this has nothing to do with OP’s question, that has been answered

Yes. Like I said, it applies before age 62.

 

[MissMolly]

Maybe what you're asking is that wage index only applies up to age 60? Yes, only up to age 60. Then as far as I know, nothing applies when you turn 61. Then the year you turn 62 they start applying COLA. Is that what you asking?

 

[Gumby]

These may help:

https://www.ssa.gov/OACT/COLA/Benefits.html
https://www.ssa.gov/oact/cola/colaapplic.html

 

[bada bing]

Only a fool will question Miss Molly on social security.

Doesn’t the wage index apply at 60?

PS: this has nothing to do with OP’s question, that has been answered

You are correct, the wage indexing factor is locked in going forward, starting the year you turn age 60.
Cola adjustments to PIA start the year you turn 62 whether you claim then or not.

Related to the OP question, everyone gets no inflation adjustment for the year they turn 61. No way around it.

 

[Gumby]

You are correct, the wage indexing factor is locked in at 1.00 going forward, starting the year you turn age 60.
Cola adjustments to PIA start the year you turn 62 whether you claim then or not.

Related to the OP question, everyone gets no inflation adjustment for the year they turn 61. No way around it.

But I believe the bend points will increase the years you turn 60 and 61, so that is a quasi COLA.

 

[SevenUp]

But I believe the bend points will increase the years you turn 60 and 61, so that is a quasi COLA.

Bend point are calculated using a base of $180 for the first and $1085 for the second, multiplied by the ratio of (the Average Wage Index the year one turns 60) divided by (the Average Wage Index in 1977). That last value is $9779.44.

See Primary Insurance Amount for a reference.

 

[Gumby]

The indexing amount for bend points may be two years in arrears (i.e. the 2022 bend points are calculated based on 2020 data), but they do increase every year for everyone. The thing that is unique to an individual recipient is that their earnings in years 61 and 62 are not indexed (but they are counted at par in the AIME calculation)

 

[SevenUp]

The indexing amount for bend points may be two years in arrears (i.e. the 2022 bend points are calculated based on 2020 data), but they do increase every year for everyone. The thing that is unique to an individual recipient is that their earnings in years 61 and 62 are not indexed (but they are counted at par in the AIME calculation)

Maybe it's semantics and we are saying the same thing in different ways?

The bend points for any individual are established once and don't change thereafter. They are determined in the "Year of eligibility; that is, the year in which a worker attains age 62, becomes disabled before age 62, or dies before attaining age 62." See footnote "a" in Benefit Formula Bend Points.