Trade off between SS starting age and withdrawal rate

[Dtail]

I think all of the social security provided "estimates" assume you continue working at the same salary until the age you claim. So that 2998 might be if you work til 70?

If you use the Social Security Retirement Estimator, you can plug in zeros for your estimated income earnings until taking the SS and you will have an accurate estimate at each year from 62 to 70 if you wish.

 

[ShokWaveRider]

My only question is do I take at 65 or FRA (66) 70 for me is not even in the cards.

 

[pb4uski]

The difference between 65 and FRA/66 is probably about 6.67% or so.... so if FRA benefit is $1,000 a month then a year earlier is probably $933.... so by giving up a year's worth of payments at $11,196 you'll get $804/year of COLAed benefits for the rest of your life.

 

[ShokWaveRider]

The difference between 65 and FRA/66 is probably about 6.67% or so.... so if FRA benefit is $1,000 a month then a year earlier is probably $933.... so by giving up a year's worth of payments at $11,196 you'll get $804/year of COLAed benefits for the rest of your life.

The Actual Numbers are: FRA = $2,304pm, 65 = $2,150 the difference is $154pm = $1848pa. So my Break even rate is 14 years. So I will be 79 (if I am lucky) by the time I break even.

 

[Rksolid]

I didn't read all the responses, but I punched the numbers and have consider taking at 62 no matter if I need it or not. The difference between taking at 62 and 70 is a extra 14k if I live to 82. SS can not be inherited once you died it's over. So why not take at 62 bank or invest the money which will offset the 14K. The money then can be inherited or given to charity. Why let the government keep what you and your employers have paid? There's no guarantee how long one will live.

 

[Rianne]

I didn't read all the responses, but I punched the numbers and have consider taking at 62 no matter if I need it or not. The difference between taking at 62 and 70 is a extra 14k if I live to 82. SS can not be inherited once you died it's over. So why not take at 62 bank or invest the money which will offset the 14K. The money then can be inherited or given to charity. Why let the government keep what you and your employers have paid? There's no guarantee how long one will live.

I like that scenario. If I wait until 70 and die at 71, what have I gained? An entire work life contributing to SS and so little returned. You can calculate $$ all you want but you cannot calculate the time you have left to spend it. Yes, there are statistical data using past survival rates, but like the stock market, there are no guarantees for the future.

 

[DatumPoint5]

For anyone interested, please review the graph below to visualize the breakeven point for taking SS at 62, 66, and 70..... Also, the two "cross over points" A and B

Whether taking SS at 62 or 66, is considered "actuarially neutral" and you receive the same amount over time up to age 77

Taking it at 67 or 70 is also considered "actuarially neutral" and you will receive the same amount over time until you are 83

 

[RunningBum]

I didn't read all the responses, but I punched the numbers and have consider taking at 62 no matter if I need it or not. The difference between taking at 62 and 70 is a extra 14k if I live to 82. SS can not be inherited once you died it's over. So why not take at 62 bank or invest the money which will offset the 14K. The money then can be inherited or given to charity. Why let the government keep what you and your employers have paid? There's no guarantee how long one will live.

If you live past the breakeven, you can have more to spend and/or leave to your heirs/charity. I figure if I die early I'm going to leave plenty behind anyway. It's the potential of outliving my assets that I'm more worried about. No guarantees, but taking SS early only sets up the scenario to leave more behind if you die before the breakeven point.

 

[RunningBum]

I like that scenario. If I wait until 70 and die at 71, what have I gained?

You're dead, so you won't be around to think about it. This goes back to my "really, what happens if" question a few days ago.

 

[googily]

I'm planning on splitting the difference--my intent is to take my DH survivor benefit at 60 and then mine at 70. Depending on how much longer I work, taking the survivor benefit at 60 is about the same as my benefit at 69, and there will also be two small pensions.

 

[Dtail]

Potentially the most debated topic here. If the tax laws/deeper means testing happens, that could sway the decision for more of us.

 

[pb4uski]

The difference between 65 and FRA/66 is probably about 6.67% or so.... so if FRA benefit is $1,000 a month then a year earlier is probably $933.... so by giving up a year's worth of payments at $11,196 you'll get $804/year of COLAed benefits for the rest of your life.

The Actual Numbers are: FRA = $2,304pm, 65 = $2,150 the difference is $154pm = $1848pa. So my Break even rate is 14 years. So I will be 79 (if I am lucky) by the time I break even.

So I was pretty close... $2,304/$1,000*$933=$2,150... spot on... and $804/pa/$1,000*$2,304=$1,852 vs $1,848.

 

[Rksolid]

I like that scenario. If I wait until 70 and die at 71, what have I gained? An entire work life contributing to SS and so little returned. You can calculate $$ all you want but you cannot calculate the time you have left to spend it. Yes, there are statistical data using past survival rates, but like the stock market, there are no guarantees for the future.

Data for survival rates take in genetics, a fatal accident either your fault or some else can't be calculated.

 

[pb4uski]

If you live past the breakeven, you can have more to spend and/or leave to your heirs/charity. I figure if I die early I'm going to leave plenty behind anyway. It's the potential of outliving my assets that I'm more worried about. No guarantees, but taking SS early only sets up the scenario to leave more behind if you die before the breakeven point.

+1 I'm an averages player. Based on our family history, general health and socio-economic state it is quite likely that we will live beyond the BEP than die before the BEP, in fact, far beyond the BEP. Even if we don't, our heirs will inherit a very nice sum. And then there is the entire joint life aspect. I view it as buying a COLAed annuity on installments.

 

[GravitySucks]

I didn't read all the responses, but I punched the numbers and have consider taking at 62 no matter if I need it or not. The difference between taking at 62 and 70 is a extra 14k if I live to 82. SS can not be inherited once you died it's over. So why not take at 62 bank or invest the money which will offset the 14K. The money then can be inherited or given to charity. Why let the government keep what you and your employers have paid? There's no guarantee how long one will live.

Before I knew I may be eligible for survivor benefits I asked my heirs (DD1 & DD2) if they'd rather probably inherit a bit more or possibly have me needing to move into their basement at 80. They both picked inherit less. So I figured I'd wait till 70.
Survivors at 60 makes it moot unless I have a major health issue pop up.

 

[pb4uski]

If DM asked me that is what my response would too.

 

[CRLLS]

If you take SS @ 70 and die before the breakeven point, you wont know it.

If you take SS @ 70 and live to 95, you'll be thankful. Having a few extra guaranteed $$ to support the higher costs of life is a good thing IMO.

 

[pb4uski]

Good point. Now that we have that settled.....

 

[rayvt]

If you take SS @ 70 and live to 95, you'll be thankful. Having a few extra guaranteed $$ to support the higher costs of life is a good thing IMO.

Well, no. Actually that higher SS at 90-95 just means I can go to Monaco for 8 weeks a year instead of merely 7.

What's a few extra $$ going to buy you at 95? A better grade of gruel in the nursing home?

That's not my plan.
The plan is not to just barely get by. The plan is for the SS benefit to be lost in the roundoff.

 

[Rksolid]

Before I knew I may be eligible for survivor benefits I asked my heirs (DD1 & DD2) if they'd rather probably inherit a bit more or possibly have me needing to move into their basement at 80. They both picked inherit less. So I figured I'd wait till 70.
Survivors at 60 makes it moot unless I have a major health issue pop up.

It's not all about inheritance, the difference between 62 and 70 is less than couple hundred a month. If you don't need the money invested it and the difference of 14k will be almost even. Why leave money on the table if you die before 70 all you hard work will be for nothing. If you don't need it before 70 I highly doubt you'll be short of money. Even at minimum your retirement is 12K a year that's 96k in 8 yrs that can be invested, even at bank rate it will be over a 100k. If you wait and collect 15K a years at 70, that's it. I take it at 62 still get 12k a year but have a bonus 100k in the bank to use. You hold out for 300.00 extra a month, if I take out 300.00 a month from my 96k saved it will take me 26.6 yrs without interest to deplete the 96K.

 

[ShokWaveRider]

It's not all about inheritance, the difference between 62 and 70 is less than couple hundred a month. If you don't need the money invested it and the difference of 14k will be almost even. Why leave money on the table if you die before 70 all you hard work will be for nothing. If you don't need it before 70 I highly doubt you'll be short of money. Even at minimum your retirement is 12K a year that's 96k in 8 yrs that can be invested, even at bank rate it will be over a 100k. If you wait and collect 15K a years at 70, that's it. I take it at 62 still get 12k a year but have a bonus 100k in the bank to use. You hold out for 300.00 extra a month, if I take out 300.00 a month from my 96k saved it will take me 26.6 yrs without interest to deplete the 96K.

This depends. in my case the difference was over $1000pm

 

[Dtail]

This depends. in my case the difference was over $1000pm

Same here.

 

[Rksolid]

Same here.

The math works the same, instead of 96k, you'll have way more. My thing is why leave money on the table. You and your employers paid the government for this benefit. This has been deducted from your checks. For me I will have 44 yrs of investing into SS when I retire @ 60. If you die the government keeps YOUR investment. They key work is that if you don't need it before 70 you've done well and most likely won't run out of money. My difference between $886 from 62-70. If I take at 62 by 70 I will have 187K, at 70 I can draw 2800.00, if I withdraw 886.00 per month it will take 21 years to deplete 187K that puts me at 91yrs old

 

[pb4uski]

It's not all about inheritance, the difference between 62 and 70 is less than couple hundred a month. ....

That is totally wrong. At 62 you get ~75% of your FRA and at 70 you get ~132% of your FRA, so your benefit at 70 is 176% of your age 62 benefit.

Unless your FRA benefit is only $350/month, the difference is much more than a couple hundred a month. If one's FRA was $1,000/month then the difference would be $570/month.

 

[pb4uski]

The math works the same, instead of 96k, you'll have way more. My thing is why leave money on the table. You and your employers paid the government for this benefit. This has been deducted from your checks. For me I will have 44 yrs of investing into SS when I retire @ 60. If you die the government keeps YOUR investment. They key work is that if you don't need it before 70 you've done well and most likely won't run out of money. My difference between $886 from 62-70. If I take at 62 by 70 I will have 187K, at 70 I can draw 2800.00, if I withdraw 886.00 per month it will take 21 years to deplete 187K that puts me at 91yrs old

You messed up your numbers somewhere. The break-even point between 62 and 70 is in your early 80s..... the BEP is long before 91.