retiring

[Chris616]

There is a standard way to compare two series of payments, like receiving a smaller monthly SS amount from age 62 onwards vs a larger amount age 67+, in order to make an "apples to apples" comparison. The series of payments is converted to one single equivalent number that is called the "present value" or "future value" depending on which direction the conversion is going.

I used a spreadsheet for the attached screenshot (and I've pasted in the formulas in that red box for anyone who wants to recreate it), but you can find PV and FV calculators online, like this one (I pasted in the same calculation to show that it gives the same answer):
Present Value Calculator

In the spreadsheet, line 10 gives the "present value" in the year 2024 of the $2500 payments made from age 67 onwards.
Line 14 is the sum of the preceding two lines and is the number to compare to line 10.
Line 12 gives the "present value" in the year 2024 of the $1750 payments made from age 67 onwards.
Line 13 gives the "future value" in the year 2024 of the $1750 payments made from age 62-67 (2019-2024).

The "Interest rate 67+" isn't significant, since it has the same impact on lines 10 and 12. What does make a difference is the interest rate applied to the monthly payments received from age 62-67. In this example I've adjusted that interest rate (cell B6) until I got the same total for the two options (this is what David was trying to do).

If you bring the "Interest rate 62-67" down to 2% to match the other interest rate, you can then adjust the "Expiry age" downwards to see at what age the two options are equivalent. That's age 81 for this example.

Chris

 

[dnw64]

Isn't there some rule about continuing to earn money when on SS? Like your payments are reduced by $1 for every $2 you earn over the current year limit.

Based on current numbers, as far as I can tell I wouldn't get a dime, so no point claiming until the max. May not get any then either, but at least I won't have lost anything.

The above all based on the fact that I don't intend to stop "working" until I can't. I mean, why stop doing what you love? Especially when you're getting paid for it?

 

[Jstpssng]

Isn't there some rule about continuing to earn money when on SS? Like your payments are reduced by $1 for every $2 you earn over the current year limit.

Based on current numbers, as far as I can tell I wouldn't get a dime, so no point claiming until the max. May not get any then either, but at least I won't have lost anything.

The above all based on the fact that I don't intend to stop "working" until I can't. I mean, why stop doing what you love? Especially when you're getting paid for it?

That's only if you start collecting at 62. I don't remember the formula but while you do get penalized on the short term it gets applied to your payments once you reach your maturity date... in my case at 66 years, 10 months.

 

[Travelover]

I mentioned this before , but it is important. When you die, your spouse gets your SS payment and loses theirs (assuming yours is greater). So, if you wait until 70 to begin SS , you leave a nice inflation adjusted monthly payment to see your spouse through the rest of her / his life.

I had my wife take hers at 62 and I took spousal (half what hers would have been at age 66), then I'll take mine at 70. In all likelihood I'll kick first and she gets the stepped up payment. Note that this only works if spouse was born before 1/1/1954 and you are 66 when you begin spousal benefits.

 

[Cat_Driver]

A lot of people die between 62and 67 so there is the possibility of never collecting a dime from SS if you don't live that long.
My advice is to take it early and enjoy life, that's what I did.

 

[4570Man]

A lot of people die between 62and 67 so there is the possibility of never collecting a dime from SS if you don't live that long.
My advice is to take it early and enjoy life, that's what I did.

And the break even date is closer to 80 years old. I didn’t bother doing the math myself so I didn’t know of that number included interest or not.

 

[goeduck]

A lot of people die between 62and 67 so there is the possibility of never collecting a dime from SS if you don't live that long.
My advice is to take it early and enjoy life, that's what I did.

If it were not for Medicare kicking in at 65 I might be thinking that way. When I cut the cord from work I want to cut the cord completely and having to cough up a bunch of money for maybe iffy medical would be a tough one.

 

[kenmac]

Being self employed. I have always had to pay for my insurance. So when I gave up working, It was no big deal to continue to pay health insurance.

 

[zzvyb6]

I've been making a lot more than 3% on my SS payouts. Plus, I'm spending money on stuff I want NOW and can still enjoy NOW. When I'm 77, those things will be hanging on the wall unused, un-driven, uneaten, un-thinkable, un-appreciatd and un-enjoyable.

 

[k0ua]

That's what I don't yet understand. Doesn't medicare kick in at 65 for most?

Unless you qualify for disability, medicare starts the month of your birth of your 65th year. So for most medicare starts at 65. Mine started November 1st.