I'm having a disagreement with someone that says, they calculated their breakeven as 90 years old. I can find dozens of websites that say 78 to 80 with Motley Fool having it at 82-1/2 years old, (don't know why). But I can't find the breakeven point on the SSA.gov website. Does SSA not publish this?
Does SSA.gov give a breakeven point anywhere on their Website?
- Thread starter Time2
- Start date
SSA.gov removed their break even calculator a number of years ago, as it was not consider a good gauge for people to us.
The average breakeven for 62 vs FRA is around 78 yrs old. Some folks like to think that investing their early benefits pushes the break even age out further. If the break even was 90 then everyone would claim ealry.
SevenUp
Full time employment: Posting here.
- Joined
- Jul 3, 2014
- Messages
- 881
"The" breakeven point depends on the real rate of return you assume for any of the early SS payments you would invest
So if we earned 9% and inflation was 3%?
Also you can't invest your whole SS income taxes must be subtracted.
SevenUp
Full time employment: Posting here.
- Joined
- Jul 3, 2014
- Messages
- 881
Then the real rate of return would be approx. 6%.
When you add taxes to the mix, then other income streams should be considered because those will affect how much of the SS is taxed, making "the" breakeven point that much less exact and more dependent on specific circumstances.
Yes, I understand we need to know what tax bracket we receive the SS that is intended to be invested.
To help make a better estimate is taxing 85% of SS in the 22% bracket correct?
It seems someone would have built a spreadsheet with adjust able variables to get a good handle on this. I'm comfortable with 80 as the breakeven point, but I do wonder how investing or at least not spending down your portfolio as much affects the breakeven point. Most on the group, would just expend less out of their existing portfolio, in my case, I'll drop from a withdrawal rate of ~3% to ~1%.
Unless of course I figure out how to BTD
. Haven't yet.
TheWizard
Thinks s/he gets paid by the post
Only certain people care about computing a break even point for SS...
SevenUp
Full time employment: Posting here.
- Joined
- Jul 3, 2014
- Messages
- 881
Maybe, maybe not. See Taxation of Social Security benefits - Bogleheads for details.
Al18
Full time employment: Posting here.
The average life expectancy in the US is 78, and you can’t collect if you are 6 feet under
It's different for everyone.
My wife has never worked and she's older than I am. So, she'll get SS only when I get SS and she'll get full benefit since she's full retirement age, so our break-even is 90+
Last edited:
It's not hard to understand that if your dead, you don't get SS. I know there are people in poor health that make it a wise decision to collect at 62. I also know their are pessimists that think they might not live long, so collect at 62. And there are, it seems way to many that think the government wants you to wait until 70, so it gets to keep your money, so they do the opposite and collect at 62.
As far as average life expectancy and mean life expectancy, it seems it is used interchangeably on many websites. I don't think that is correct.
But what matters now, is I'm 68, the actuarial tables say, 50 percent of men my age will live more than 15 years. So 50% of the time I'll live to be 83 or older. Not terrible odds. If I don't make it at least my wife will have a bigger SS check and more of our IRAs will have been Roth converted, i.e more to spend on her next husband.
It's different for everyone.
My wife has never worked and she's older than I am. So, she'll get SS only when I get SS and she'll get full benefit since she's full retirement age, so our break-even is 90+
Will she get full benefit or 50% of your benefit?
bada bing
Full time employment: Posting here.
I've seen lots of overly simplified break even calculations that don't account for the inflation proofing built into SS. If you're assuming an investment return on the early checks, you have to use real inflation adjusted return numbers.
Another often overlooked error is matching the overall risk of both scenario portfolios. Returns are tied to risk. The risk in SS is best approximated by treasury bonds, i.e. very low. If you're comparing deferring SS to investing in an equity heavy portfolio, you're making an error because the "take early" scenario is invested much more aggressively. You could balance out the comparison by assuming equivalent equity exposure and reducing fixed income allocation in the deferred portfolio. In simpler terms, by spending from only bonds while deferring and letting equity allocation rise is a roughly equivalent risk comparison. When analyzed this way, the break even is ~82-83.
The most common reason for taking SS early is the money is needed for current expenses, not a break even optimization strategy. Most early filers do not have the funds available to delay even if they wanted to and the early income isn't invested, it's spent..
Another common error comparing break even scenarios is using life expectancy at birth or some other age. The relevant comparison age is life expectancy at the decision age 62-70. A male aged 62 has an average remaining life expectancy of 20.11 years, for females it's 22.94 (age 82 and 85 respectively). Go to age 70 and remaining expectancy is 14.4 and 16.6 years respectively (age 84.4 and 86.6). Of course those are averages and people have individual situations that make estimating their individual chances better than a coin toss.
Another often overlooked error is matching the overall risk of both scenario portfolios. Returns are tied to risk. The risk in SS is best approximated by treasury bonds, i.e. very low. If you're comparing deferring SS to investing in an equity heavy portfolio, you're making an error because the "take early" scenario is invested much more aggressively. You could balance out the comparison by assuming equivalent equity exposure and reducing fixed income allocation in the deferred portfolio. In simpler terms, by spending from only bonds while deferring and letting equity allocation rise is a roughly equivalent risk comparison. When analyzed this way, the break even is ~82-83.
The most common reason for taking SS early is the money is needed for current expenses, not a break even optimization strategy. Most early filers do not have the funds available to delay even if they wanted to and the early income isn't invested, it's spent..
Another common error comparing break even scenarios is using life expectancy at birth or some other age. The relevant comparison age is life expectancy at the decision age 62-70. A male aged 62 has an average remaining life expectancy of 20.11 years, for females it's 22.94 (age 82 and 85 respectively). Go to age 70 and remaining expectancy is 14.4 and 16.6 years respectively (age 84.4 and 86.6). Of course those are averages and people have individual situations that make estimating their individual chances better than a coin toss.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Generally speaking, breakeven is about 80.
If your FRA is 67 and you take at 62 then you get 70% of your PIA. .70*(80-62)=12.6
If your FRA is 67 and you take at 70 you get 124% of your PIA.... 3 years of 8% annual delayed retirement credit. 1.24*(80-70)=12.4
If your FRA is 67 and you take at 67 then you get 100% of your PIA. 1.00*(80-67)=13
That ignores any real return, which might move it out 2-3 years in most cases.
No way it would be 90 unless one is using an unrealistically high real investment return assumption.
If your FRA is 67 and you take at 62 then you get 70% of your PIA. .70*(80-62)=12.6
If your FRA is 67 and you take at 70 you get 124% of your PIA.... 3 years of 8% annual delayed retirement credit. 1.24*(80-70)=12.4
If your FRA is 67 and you take at 67 then you get 100% of your PIA. 1.00*(80-67)=13
That ignores any real return, which might move it out 2-3 years in most cases.
No way it would be 90 unless one is using an unrealistically high real investment return assumption.
Last edited:
Midpack
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Then the ball is in their court. SS breakeven is somewhere around 80 yo, but your assumptions and specific details can swing it a couple years.
AARP said:
Last edited:
ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Breakeven of WHAT exactly? You didn't say, so we don't know what breakeven your 'someone' is using.
B-E between taking at 62 v2 70? FRA vs 62? FRA vs 70? Or B-E on the money you contributed while working?
Also need to know spousal situation, investment assumptions.
The first step in a 'solution' is understanding the problem. You didn't give enough info.
In addition to the error that has been pointed out for life expectancy, a spouse often can collect, so that's not always relevant either.
-ERD50
For anyone that cares to read Quora thread, here is a link to the many different ideas why people think they should take SS at 62, some of them silly. Other have good reason to wait until 70. There will be some winners and losers on both sides.
It doesn't seem anyone gets persuaded to change their mind.
https://www.quora.com/Why-do-some-p...e&__sncid__=42909993367&__snid3__=57382265116
It doesn't seem anyone gets persuaded to change their mind.
https://www.quora.com/Why-do-some-p...e&__sncid__=42909993367&__snid3__=57382265116
Similar threads
