SS break even formula?

[Midpack]

It's pretty straightforward calculating exact breakeven ages, but it's often not that simple.

Quote:

Depending on taxes, inflation, and investment returns, the range of break-even ages [of benefits begun at age 62 to age 66] goes from 81 to 86 1/2. There is a similar range of break-even ages in the comparison of benefits begun at age 66 to age 70—from the age of 84 to nearly 87. Besides future rates of inflation and investment returns, Lemons also looks at claimants' federal income-tax brackets and at the percentage of their Social Security benefits that are subject to federal income taxes. This varies from zero for people in the lowest 10 percent federal tax bracket, to 50 percent for those in the 15 percent bracket, to 85 percent for people in all higher tax brackets. No more than 85 percent of Social Security benefits are taxable, regardless of income levels. While these comparisons are relatively straightforward for one person's benefits, Social Security benefits often involve a spouse and family members, too. Lemons doesn't know, of course, what your family situation is like. But he does emphasize that people need to factor in spousal benefits and survivor benefits to a spouse and non-adult children to do their own comparisons.

What's Your Social Security Break-Even Age? - US News

[rescueme]

Quote:

Originally Posted by MasterBlaster Can you tell us how old you are and when you plan on dying ?

Exactly....

I/wife never computed our SS on our "break even point".

Money is for the living - not the dead ...

We computed the scenerio (if you wish, use: Social Security Benefits Evaluator - T. Rowe Price and just plug in a dummy name, along with your SS projections.)

We found (for us), it makes sense for me to file/suspend at age 66, FRA (yes, I'm age 66 ) and for my wife (who will be FRA -age 66, in May - three months from now) to claim a 50% benfit based upon my SS earnings, and both claim "our own" at age 70. BTW, that's less than four years away, for me.

Our goal is two-fold; maximize our SS while we are living, and maximize DW's SS benefit upon my passing, since the stats show that I will go to the "great beyond" before she.

We do have the advantage of being retired (more than sevaral years) and are able to fund our retirement "adventures" without SS (e.g. if you need SS income, then claim it at early/normal FRA date). However, we're blessed not to look at SS as more than an income that will allow us to accumulate assets to be passed on to our (disabled) son.

Two things about SS; "break even" dates don't mattter (as I stated before - money is for the living). As for "over accumulated assets at death" (for those that wish to spend every last penny before they shove off this "mortal coil"), I just say that I would rather die with money, than live without it.

FWIW...

[HFWR]

A calculator and a chart from the SSA...

Early or Late Retirement

Early or delayed retirement

[brownred]

Quote:

Originally Posted by rothlev I think this type of plan increases your pension during the years you do not collect social security, and then lowers your pension after you start collecting social security, so the net is your income stays level. I would be very leary of taking a reduction in my pension . Your pension does not "take your social security" from you.

Yes, I think you are correct, for some reason I just can't explain that correctly!

[brownred]

I want to thank everyone for your responses. It's helped and given me things to think about that I haven't thought about.
Keep the thoughts coming if you please!

[Genug]

I agree with Rothlev. You need to understand this option better. There is a price to pay for the social security leveling

If they increase your pension by $800 at 55, they will permanently reduce your pension by a larger amount at 65. You need to factor in the reduction amount as compared to the actual social security that you will receive to complete your analysis

But of course as others have said, life expectancy is the biggest wildcard.

[youbet]

Quote:

Originally Posted by Gumby Ignorance of the mortality tables might be one reason that people choose to take SS early, but that's not the only reason. In my case, the young wife will likely survive me. She is a teacher who won't be eligible for SS on her own and won't get benefits based on my record due to the GPO. For us, it makes sense for me to take SS early, so as to preserve our nest egg to support her after I die and the SS checks stop entirely. I know there are others on the board who have made the same calculation.

Yep, there sure are.

Started my SS at 62 to maximize our FIRE portfolio at my demise for DW's benefit since she'll have no SS. The timing has worked out well since we've been in a boom market for the 4.5 yrs since I started collecting. Money we didn't withdraw from the portfolio, due to collecting SS, has grown nicely.

[Dcharles]

Our FA said that if you can afford to hold off until 70, assuming you expect to live longer than 70, then it is best to not take SS Due to the guaranteed rate of return. We will wait, unless our health fails.

[brownred]

Ok, lets turn this around a little. What would you do or how would you take the money if you were in my shoes?

55 yrs. old, Single, no kids
$500,000 in 401K/Roth
$3000 month pension
$800 SS now (level income as described above by rothlev), or $1800 at 62
Tired of working/hate my job and company
Family history is dead by mid 70's
I don't want to die with a lot of excess $ on the table

Also, an interesting little tidbit here. I have been on BP meds for probably 25/30 yrs. I got 2 1/2 weeks off this last Christmas. I forgot to take my BP meds. I would remember every 2nd or 3rd day but said ahh, I will take it tomorrow but kept forgetting. I had a scheduled Drs. appt. 10 days into my 2 1/2 weeks off. My BP was 114/73!

[brownred]

Quote:

Originally Posted by Dcharles Our FA said that if you can afford to hold off until 70, assuming you expect to live longer than 70, then it is best to not take SS Due to the guaranteed rate of return. We will wait, unless our health fails.

I am "receptive" to waiting till 62 but absolutely no later.

[Ready]

Do you have long term care insurance?

[springnr]

Quote:

Originally Posted by youbet Yep, there sure are. Started my SS at 62 to maximize our FIRE portfolio at my demise for DW's benefit since she'll have no SS. The timing has worked out well since we've been in a boom market for the 4.5 yrs since I started collecting. Money we didn't withdraw from the portfolio, due to collecting SS, has grown nicely.

I've been looking at this as 62 is fast approaching....
My premise was that drawing SS at 62 allowed the same amount of funds to remain in my IRA and earn $$$. (Excel says)
At 4% earnings a year 62 vs 70 catch each other at 86.
At 5% earnings, starting at 62 is winning over starting at 70 into my 90s.

Also at 70 are you going to pay more taxes due to higher SS payout + RMD?

[robnplunder]

Quote:

Originally Posted by brownred Ok, lets turn this around a little. What would you do or how would you take the money if you were in my shoes? 55 yrs. old, Single, no kids $500,000 in 401K/Roth $3000 month pension $800 SS now (level income as described above by rothlev), or $1800 at 62 Tired of working/hate my job and company Family history is dead by mid 70's I don't want to die with a lot of excess $ on the table Also, an interesting little tidbit here. I have been on BP meds for probably 25/30 yrs. I got 2 1/2 weeks off this last Christmas. I forgot to take my BP meds. I would remember every 2nd or 3rd day but said ahh, I will take it tomorrow but kept forgetting. I had a scheduled Drs. appt. 10 days into my 2 1/2 weeks off. My BP was 114/73!

If I were in your shoes, I go with 62. Although if your BP stays at current level, you may wait longer. You could be the odd ball in your family who ends up living past 100.

(For me, 70 for reasons already listed here)

[Dave J]

Quote:

Originally Posted by Ready Do you have long term care insurance?

Since he is single, no kids, does he really need it?

[brownred]

Quote:

Originally Posted by Ready Do you have long term care insurance?

I have that through my union but stops when employment ends. I do not have it beyond that.
I have briefly looked at it but I is awfully expensive for me due to me being on BP and Cholesterol meds.

[Dave J]

Quote:

Originally Posted by brownred Ok, lets turn this around a little. What would you do or how would you take the money if you were in my shoes? 55 yrs. old, Single, no kids $500,000 in 401K/Roth $3000 month pension $800 SS now (level income as described above by rothlev), or $1800 at 62 Tired of working/hate my job and company Family history is dead by mid 70's I don't want to die with a lot of excess $ on the table Also, an interesting little tidbit here. I have been on BP meds for probably 25/30 yrs. I got 2 1/2 weeks off this last Christmas. I forgot to take my BP meds. I would remember every 2nd or 3rd day but said ahh, I will take it tomorrow but kept forgetting. I had a scheduled Drs. appt. 10 days into my 2 1/2 weeks off. My BP was 114/73!

Is your home paid for, and what is your annual living costs. If you live like I do, you could retire now.

PS: I mostly retired at 47 and totally at 57. My situation is somewhat different than yours.

[brownred]

Quote:

Originally Posted by robnplunder If I were in your shoes, I go with 62. Although if your BP stays at current level, you may wait longer. You could be the odd ball in your family who ends up living past 100. (For me, 70 for reasons already listed here)

I went back on the BP meds as soon as I went back to work.
My point was that it appears that my BP went to normal when I wasn't going somewhere I didn't want to be....work!

Don't get me wrong, I'm not anti work or lazy. I've Just been with the same company since I was 20, almost 35 years now. I just don't want to go there anymore.

[brownred]

Quote:

Originally Posted by Dave J Is your home paid for, and what is your annual living costs. If you live like I do, you could retire now. PS: I mostly retired at 47 and totally at 57. My situation is somewhat different than yours.

I owe $20,000 on my home, scheduled to be paid off July 2016.
I was working on my living costs but that got out of wack due to a water pipe breaking in my house a month ago and spending money I normally wouldn't.
I am not a big spender.

I'm assuming your situation is different because you have more money? Correct?

[Hermit]

Looks like your situation is more "Can I retire?" Answer these questions: Some Important Questions to Answer Before Asking - Can I Retire?
This thread is a great start to figuring out your SS situation, but there are some more questions to answer before you can decide if you have the resources to retire. Good Luck.

[kaneohe]

Quote:

Originally Posted by springnr At 4% earnings a year 62 vs 70 catch each other at 68. A

Does this make sense? If you are drawing extra funds at 62, isn't 62 ahead until at least 70 when the other guy finally starts drawing SS? Perhaps you meant 78 instead of 68?