SS Calculation

[jodz]

Maybe somebody knows where this one is - I've lost the page and can't find it. I'm looking for the calculator that tells you how long it will take to 'make up' the higher amount of SS dollars you would get at full retirement age.
Example: I get $1.200 a month at 62 and $`1,700 at 66. How long will it take to make up the difference?
I found the calculator yesterday and I think it said it would take until I was 76...but I'm not sure.
thanks for any help,
Jodz

 

[cute fuzzy bunny]

Look in the Frequently Asked Questions section, I think its there.

Your numbers sound about right though. Takes a long time to make it up. I think the general consensus is to take it early unless you would simply have no idea what to do with the money.

 

[John Galt]

I agree with TH. And besides the amount of time it takes to "make it up" (taking a lower check at 62)
you have to stay alive that long. There is no way
of knowing if that will happen.

John Galt

 

[Cut-Throat]

I agree with TH.  And besides the amount of time it takes to "make it up"  (taking a lower check at 62)
you have to stay alive that long.  There is no way
of knowing if that will happen.

John Galt

I'm thinking a bit different on this than I used to. I've actually made a complete 180 degree turn on this after pondering it this year.

If we are in an ultra low rate of return as we are now when I am eligible to start collecting, I would probably wait until age 66.

A financial article made the following case. If you don't have to have the money at age 62 and defer the payment until 66 you will obviously get more money. If you a live a very long life and make up the difference, you will be better off in the long run.

If however, you die early and do not get as much money as taking the payment at age 62, Then, well, you're dead - and who cares - I know I won't

The only way you can really get screwed is if you start taking the payouts at age 62 and then live a very long time and wish that you would have waited until age 66.

So, for me it's almost a no-brainer. The only exception that I could come up with. Is that we are in an Ultra High interest rate period when I am eligible and I could start taking the payments early and Buy bonds and lock in a very High rate of return. This way you might be better off taking the SS early. I'll run the numbers when I'm close to 62, but if I was making the decision today -I'd wait another 4 years.

 

[unclemick]

My case - age 61, doing ok without right now. In my family tree, males croak early (heart ), women live long - late eighties.

1. Take the money early and roll the dice - DRIP dividend stocks.

2. Spent more as needed from what we have now - and hold SS in reserve until 70 - possibly leaving money on the table.

The male biological imperative leans toward 1. above - but will be playing with the numbers right up to the first deadline - july 2005.

3. Darkhorse - DCA my SS into balanced index - and spend as needed.

 

[cc]

Cut-throat's point is worth thinking about, and FIREcalc also tends to support the delayed benefit (higher overall SWR), at least in cases where that benefit constitutes a large fraction of required cash flow.

Another thing to consider is this: if a wife is younger and collects on her husband's record, you can lock in a higher benefit for her in the relatively likely event that she outlives the husband. (If you delay past full retirement age though you have to keep in mind the maximum family benefit...)

 

[Cut-Throat]

Yup, you have to watch the maximum family benefit. My wife is 8 years younger than I am. So right now, it looks like I'd wait until 66 to take mine and she would take hers at 62 years 10 months.

But I'm sure things will change a few times before my wife and I are eligible. We'll recalculate then.

 

[cc]

I'm sure you've done the calculation so I'm probably missing something, but isn't the MFB 1.75*PIA? I assume you get 100% of PIA at 66 so she wouldn't hit the MFB until a later age?

 

[Cut-Throat]

I am not using a calculation as I'm 9 years away from SS.

But was taking the numbers from the SS calculator that I downloaded from the SS website.

It looks to me that if we both waited until full retirement age that we'd go over the MFB. - Don't know for sure though.

I just looked at the MFB. Maybe I'm not understanding this right. If you have 2 workers husband and wife. Do they add the Benefits together to come up with a MFB or can both workers together exceed this amount?

 

[cc]

I'm pretty sure the MFB only pertains to multiple collections on one record. If your wife collects on her own record I don't think you have to worry about it at all. If she survives you I THINK she would still have the option to switch to your benefit if it's higher. Hopefully someone here could confirm or clarify this?

 

[sgeeeee]

I agree with the reasoning posted so far as long as you believe in the solvency of the system without future recurring reductions in benefits (through CPI adjustments, actual benefit rates, or taxation).

I tend to believe in the solvency of some form of social security, but also believe that we are very likely to see a creeping erosion of benefits moving forward. So the earlier you start collecting, the more likely you might be to reap at a higher benefit rate. That would tend to make me favor early withdrawal.

I'm 50 now, so I don't have to decide for awhile. But my thought is to plan my retirement based on early withdrawal (worst case for my expected longevity), then decide what to actually do when I get very close to age 66. If social security appears to be "fixed" by then and I don't see a good value added use of the immediate extra dollars, I can wait. If I feel like the erosion of benefits is immenent or I think I could really enjoy the extra income, I can start withdrawing.

So even if I start with different concerns and tendancies than others, I end up with the same strategy as everyone else who has posted.

 

[cc]

You may be right about that - I assume that any increase in full retirement age would also increase the break-even age? When I have time I'll figure out the change in break-even age between those with a full retirement age of 65 vs. those with FRA of 67. (Of course they COULD also raise the minimum age above 62.)

 

[Zipper]

It's a no brainer. John's right. Who knows what's in the cards, but the saying, "a bird in hand is worth 2 in the bush", is true. If you don't need the cash invest your SS/CPP......but do take it. When I applied for CPP at 60, the gov't official said most people that are eligible do. It's in your own best interest.

 

[Cut-Throat]

I tend to believe in the solvency of some form of social security, but also believe that we are very likely to see a creeping erosion of benefits moving forward.  So the earlier you start collecting, the more likely you might be to reap at a higher benefit rate.  That would tend to make me favor early withdrawal.

SG,

You are thinking logically and forget about politics. The experts predict that SS will remain untouched for those over 50. Reason: - Too big a voting block hence Political Suicide - Hence someone else that won't touch it will be elected.

What they will do is screw the very young (just like today - Tax cuts and Borrow for war in Iraq) and unborn. Also screw bigtime with medicare. Only affects sick people, a minority of the population. If you're 50 + you can take SS to the bank. Probably safer than T-Bills!

 

[sgeeeee]

SG,

You are thinking logically and forget about politics. The experts predict that SS will remain untouched for those over 50. Reason: - Too big a voting block hence Political Suicide - Hence someone else that won't touch it will be elected.

What they will do is screw the very young (just like today - Tax cuts and Borrow for war in Iraq) and unborn. Also screw bigtime with medicare. Only affects sick people, a minority of the population. If you're 50 + you can take SS to the bank. Probably safer than T-Bills!

You may be right. I started to add , "and it would clearly benefit me if you are." But as I thought about it, I'm not so sure. If we (old pharts) maintain our benefit level by taxing the young to the point that industry is less efficient and productive, then we get our social security payments, but our investments go in the dumper.

At any rate, I agree that I will wait and make this call when I get closer to age 66.