Sounds good
I just put together a spreadsheet based on what the SSA says my benefits would be if I collected at 62(early retirement), 67 (full retirement) and 70 (max retirement age). I'm 50 now and my numbers were based on the assumption of not working any more, but that should be irrelevant since the amount of benefit is a set percentage of one's "full retirement age" benefit.
If I stop working today my benefit is projected to be $1710 if I start collecting at 62, $2509 if I start collecting at 67, and $3163 if I hold off until 70. Using net future value calculations and assuming I could invest the money at 4% if I start collecting at 62 I'll have just over $217,000 at age 70. If I start collecting at 67 I'll have almost $93,000 by age 70.
I haven't worked up the net future value calculations of the $217,000 or $93,000 but even assuming that I didn't earn any interest at all I could live 12.5 years from age 70 and would come out the same whether I started taking benefits at age 62 or age 70. Using the same assumptions if I start collecting at 70 instead of 67 it would take 11.8 years before I would come out behind if I start collecting at 67 but save the money. Basically social security's actuaries assume that you likely live into your early 80s. Someone who dies earlier comes out ahead with early collection. Someone who lives super old probably loses out overall if they took the early benefit.
Assuming I would continue to earn interest will push the point of "should have held off from taking benefits" even further out. The other unknown is what rate of return I could actually expect during the years I was collecting early but just investing the money. Getting closer to 5% would make taking early benefit a no brainer. Getting closer to 3% would make holding off a better deal. One can only guess what the real return will end up being, so that kind of makes it a gamble. But at the end of the day it probably doesn't really matter since the difference seems pretty small.
It is hard for me to ever imagine retiring at 62 when my benefit would only be $1245 per month.
I am more in the longevity insurance camp than the breakeven camp on this.
My wife is younger than me, and has a less robust earnings record. In our case, it makes a lot of sense for me to wait and her to take it early. I view delaying SS as a relatively cheap inflation adjusted annuity with a mild tax benefit.
I'm definitely waiting, although I was tempted to take it and use it to pay off the rest of my debt and then sock it all away. DH is getting his now, which helps. In terms of longevity, he has more bad habits and more medical conditions than I do, so unless I have a surprise cerebral hemorrhage like my mother, uncle and grandmother did at early ages, I'll probably outlive him. I was hoping that I could sell my house in NJ, pay off this house in VT, and live off of SS. If I can't live off of SS I can't retire. To me, a portfolio is merely a place to display all the receipts for my stupid purchases over the years.
Last edited by catherine; 6-12-18 at 8:58am.
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