Filing early or late for SS in various countries

[RISP]

Inspired by a recent thread, I decided to look up how benefits change if you file early or late for Germany's "gesetzliche Rente" (basically our version of Social Security).

The earliest age to draw Rente is 48 months before FRA (so, at age 63). Benefits are reduced by -0,3% for each month that you file early, and are increased by +0,5% for each month that you file late.

The following table compares benefits at various ages in the German vs. the US system. The benefit at full retirement age is set to 100 (I used 67 years of age because this is both the FRA for Americans born after 1960, and Germans born after 1964).

	Age	Germany	USA	UK
	62		70,0
	63	85,6	75,0
	64	89,2	80,0
	65	92,8	86,7
	66	96,4	93,3
FRA	67	100,0	100,0	100,0
	68	106,0	108,0	105,8
	69	112,0	116,0	111,6
	70	118,0	124,0	117,4

Turns out filing early is relatively much more attractive under the German system, while filing late benefits Americans more. I do remember reading once that the reductions for drawing Rente early are not actuarially correct (the cuts would have to be more severe).

If anyone can provide information for other countries or systems, I would be happy to update the table.

 

[Alan]

In the UK you can't take it early but if you delay then it goes up at 5.8%/year. For me the FRA is 66. For those born after 4/6/70 it increases month by month until by 4/5/78 the FRA reaches age 68.

https://www.gov.uk/deferring-state-pension/what-you-get

If you reach State Pension age on or after 6 April 2016
Your State Pension will increase every week you defer, as long as you defer for at least 9 weeks.

Your State Pension increases by the equivalent of 1% for every 9 weeks you defer. This works out as just under 5.8% for every 52 weeks.

The extra amount is paid with your regular State Pension payment.

 

[RISP]

In the UK you can't take it early but if you delay then it goes up at 5.8%/year.

Thanks Alan - so, slightly worse than the German bonus for waiting, much worse than the US one. Also, '1% for every 9 weeks' is hilarious. Reminds me of when there were 240 pence in one pound sterling. Or, a hundredweight consisting of 112 pounds.

 

[Alan]

Thanks Alan - so, slightly worse than the German bonus for waiting, much worse than the US one. Also, '1% for every 9 weeks' is hilarious. Reminds me of when there were 240 pence in one pound sterling. Or, a hundredweight consisting of 112 pounds.

Until I Googled it for details I had no idea it was 1% every 9 weeks and have no idea why 9 weeks. I certainly don't intend to delay it when I'm eligible next February. I'll also get a free bus pass

 

[ncbill]

But isn't the average monthly benefit of the UK's old age pension much less than the typical USA SS retirement benefit?

How about the USA compared to Germany?

 

[RISP]

But isn't the average monthly benefit of the UK's old age pension much less than the typical USA SS retirement benefit?

Quite possibly so, but how is that relevant to the question at hand, ie. how much filing early or late reduces or increases the benefit?

 

[RISP]

The average benefit in Germany is just about 800€ per month. However, this includes a lot of very small Renten, because some people only contributed for a few years before becoming self-employed etc. You need just 5 years having paid into the system in order to draw something (however small) when reaching retirement age.