Posted on 09/01/2014 7:52:57 AM PDT by shove_it
Summary
When should I start Social Security? How will I receive the highest annual income? How will I receive the highest cumulative income? When will I be able to retire?
Every year, more than 2 million people turn 62. Many of those people will wonder, "When should I start receiving Social Security benefits?"
The earliest age of eligibility is 62. The benefit increases each year you delay starting, until age 70, after which point there is no additional increase.
When should I start - age 62 or age 70?
[...]
(Excerpt) Read more at seekingalpha.com ...
spokeshave, was your wife 62 as well.
I would like to know more about why you did it the way you did.
I have a similar situation in about 15 months time.
See my reply #10 and Cold Heat’s at #30.
You must be interested in the topic of early retirement and SS implications otherwise you would not have clicked on this article I posted. And NO, I have no commercial involvement in SA other than using it as one source of many good ones that offer info at no charge to ‘retail investor’ little guys like me.
I tried to post the entire article but I couldn’t get the tables to reproduce coherently.
Hey that’s cool! Thanks for the info.
That's okay. President@whitehouse.gov doesn't mind their spam. It gives him something to read during the gaps between fundraisers and rounds of golf.
You will when the nursing home you'll be in no longer accepts the amount SS gives them to take care of you and you end up in a less than ideal (read that: really bad) nursing home as a result.
Just a thought.
There is no guarantee of tomorrow, and the instability of our SS system’s sources of funding say - take it sooner rather than later. There may be no “later”, or “later” could be a mess.
I agree and "retired" last year at 62.
FMCDH(BITS) Just my opinion, of course.......
There is no page 2 on my browser — WaterFox. The whole article is contained on one page.
The truth is that Social Security is a “dead man walking”, but in such a way that it shows how it should be ended with minimal harm to people.
That is, FICA taxes are just a trick to effectively double the income tax on people. Supposedly, FICA goes to pay for both SS and Medicare, but the truth is the money is spent, and more, as soon as they get it. Congress gets around this scam by just appropriating “right now” money, a fraction of what it should be, to pay current costs by beneficiaries.
So the way to end the racket is first, to assure beneficiaries that they will continue to get the SS owed them. But then, no longer admit young people to the system, to kill it off at the “front end”. Which also means that they no longer have to pay FICA taxes.
Young people who work in minimum wage jobs will still get withholding, but it will go into private individual retirement accounts, with strict limits as to how the money within can be invested, such as tax free municipal bonds.
The big trick then comes into play, which is to encourage those currently in the system to leave the system. This is by offering them a sweet deal. First of all, they no longer pay FICA, but these monies will go into their IRA. Second, each year they can get a previous years FICA rebate, so money from a previous year when they paid FICA will go back to them as well.
Say someone has been paying into the system for 20 years. The first year they pay no FICA, and the FICA money they paid for year 19 also goes into their IRA. This means that they will retire with a fat IRA, not just a small monthly SS check.
This way it may take about 30 years for SS and Medicare to fully die, but nobody will get screwed in the deal, and the lower tax revenues the government gets are paid for by reducing the size and cost of government.
Nicely done!
That's if you live to age 70. There is considerable risk you don't make it.
The Death Panels increase the risk.
However they do improve the financials for those who survive.
Why I Will Start Social Security At Age 62
Aug. 26, 2014 9:01 AM ET
Summary
When should I start Social Security?
How will I receive the highest annual income?
How will I receive the highest cumulative income?
When will I be able to retire?
Every year, more than 2 million people turn 62. Many of those people will wonder, “When should I start receiving Social Security benefits?”
The earliest age of eligibility is 62. The benefit increases each year you delay starting, until age 70, after which point there is no additional increase.
When should I start - age 62 or age 70?
Anyone can go to the Social Security web site and get an estimate for their benefit, based on when they start. I did that. I’m 58. I learned that if I start at age 62, I would receive $1965 per month, or $23,580 per year; if I start at age 70, I would receive $3486 per month, or $41,832 per year.
What is the benefit growth rate? From January 2000 to January 2014, the simple arithmetic average cost of living adjustment (COLA) was 2.47%.
Year Increase
2000 2.5
2001 3.5
2002 2.6
2003 1.4
2004 2.1
2005 2.7
2006 4.1
2007 3.3
2008 2.3
2009 5.8
2010 0
2011 0
2012 3.6
2013 1.7
2014 1.5
total 37.1
average 2.473333333
Simple arithmetic average of most recent 15 COLAs
Assuming the benefit growth rate continues at the same pace, here is a chart of what I can expect to receive.
Column 1 is the age at the beginning of a 12-month period.
Column 2 is the benefit received during that 12-month period, starting from age 62.
Column 3 is the cumulative benefit starting from age 62.
Column 4 is the benefit received during that 12-month period, starting from age 70.
Column 5 is the cumulative benefit starting from age 70.
Age Age 62 Income Age 62 Cumulative Income Age 70 Income Age 70 Cumulative Income
62 $23,580.00 $23,580.00 $0.00 $0.00
63 $24,162.43 $47,742.43 $0.00 $0.00
64 $24,759.24 $72,501.66 $0.00 $0.00
65 $25,370.79 $97,872.46 $0.00 $0.00
66 $25,997.45 $123,869.90 $0.00 $0.00
67 $26,639.59 $150,509.49 $0.00 $0.00
68 $27,297.58 $177,807.08 $0.00 $0.00
69 $27,971.83 $205,778.91 $0.00 $0.00
70 $28,662.74 $234,441.65 $41,832.00 $41,832.00
71 $29,370.71 $263,812.36 $42,865.25 $84,697.25
72 $30,096.17 $293,908.52 $43,924.02 $128,621.27
73 $30,839.54 $324,748.06 $45,008.95 $173,630.22
74 $31,601.28 $356,349.34 $46,120.67 $219,750.88
75 $32,381.83 $388,731.17 $47,259.85 $267,010.73
76 $33,181.66 $421,912.83 $48,427.17 $315,437.90
77 $34,001.25 $455,914.08 $49,623.32 $365,061.21
78 $34,841.08 $490,755.15 $50,849.01 $415,910.22
79 $35,701.65 $526,456.81 $52,104.98 $468,015.21
80 $36,583.48 $563,040.29 $53,391.98 $521,407.18
81 $37,487.10 $600,527.39 $54,710.76 $576,117.94
82 $38,413.03 $638,940.41 $56,062.11 $632,180.05
83 $39,361.83 $678,302.24 $57,446.85 $689,626.90
84 $40,334.07 $718,636.31 $58,865.78 $748,492.68
85 $41,330.32 $759,966.62 $60,319.77 $808,812.45
86 $42,351.18 $802,317.80 $61,809.67 $870,622.12
87 $43,397.25 $845,715.05 $63,336.37 $933,958.49
88 $44,469.16 $890,184.21 $64,900.77 $998,859.26
89 $45,567.55 $935,751.76 $66,503.82 $1,065,363.09
90 $46,693.07 $982,444.83 $68,146.47 $1,133,509.55
Comparison between starting at age 62 and starting at age 70
There are arguments in favor of starting at age 62:
It is unclear when the Social Security “Trust Fund” will be insufficient to pay out all mandated benefits.
It is unclear if Social Security benefits will be means-tested.
I would receive a total of $205,778.91 before I reach age 70, that I could consume or invest.
If you believe you might die before age 83, the cumulative benefit will be greater.
There are arguments in favor of starting at age 70:
The annual benefit will be higher at every age from 70 on up.
If you believe you might die after age 83, the cumulative benefit will be greater.
There are probably additional arguments on both sides, but I will stop here, because I believe the “start at age 62 or start at age 70” question is the wrong question for me to ask.
I believe the better question for me to ask is, “How many different ways are there to provide a stream of income that starts at age 62, pays $23,580 in the first year, and grows by 2.47% every subsequent year?”
One alternative is to start Social Security at age 62. Another alternative is to have a portfolio of dividend growth companies with $23,580 in dividend income and 2.47% in dividend growth. There are certainly other alternatives, but I’m choosing to limit my alternatives to these two. You are free to choose other alternatives.
Here is a chart showing various combinations of market value and current yield, all of which generate $23,580 in dividend income:
Market Value Current Yield Dividend Income
$4,716,000.00 0.5 $23,580.00
$2,358,000.00 1 $23,580.00
$1,572,000.00 1.5 $23,580.00
$1,179,000.00 2 $23,580.00
$943,200.00 2.5 $23,580.00
$786,000.00 3 $23,580.00
$673,714.29 3.5 $23,580.00
$589,500.00 4 $23,580.00
$524,000.00 4.5 $23,580.00
$471,600.00 5 $23,580.00
$428,727.27 5.5 $23,580.00
$393,000.00 6 $23,580.00
$362,769.23 6.5 $23,580.00
$336,857.14 7 $23,580.00
$314,400.00 7.5 $23,580.00
$294,750.00 8 $23,580.00
$277,411.76 8.5 $23,580.00
$262,000.00 9 $23,580.00
$248,210.53 9.5 $23,580.00
$235,800.00 10 $23,580.00
How to produce $23,580 in dividend income
Suppose I decide to retire as soon as my passive income is $50,000 per year. (That’s not my actual personal goal, it’s just a number for this example.)
Suppose I am able to invest in a portfolio of dividend growth companies whose current yield is 4%. (My actual current yield is 4.26%.)
I could retire when my portfolio has a market value of $1,250,000. Or I could retire at age 62 with a combination of $23,580 from Social Security and $26,420 in dividend income from my portfolio whose market value is $660,500. Mathematically, the $23,580 from Social Security is equivalent to the dividend income from a portfolio whose market value is $589,500.
Instead of retiring when my portfolio’s market value reaches $1,250,000, I could retire when my portfolio’s market value reaches $660,500, which is 47% less.
The less I need, the less time I need to wait.
The less I need, the less risk I need to take.
The less I need, the less yield I need to “chase”.
Conclusion
In investing, as in life, the trick is to ask the right question. For some investors, the right question might be, “Which alternative produces the highest cumulative income?”. For other investors, the right question might be, “Which alternative produces the highest annual income?” For me, the right question is, “Which alternative allows me to retire sooner?”
Source: Why I Will Start Social Security At Age 62
“Like you, I sold my business and retired 13 years ago at age 62, mainly because of my wife’s total disability requiring my help at home. By having more time to focus on managing my investments, I make far more $ in “retirement” than I did working my hiney off running a business.”
I did the same. My CPA advised me to really learn how to manage our IRAs and my wife’s 401k.
Which I did, and instead of flying the unfriendly skies and running from airports to my places of consulting, I felt better and have done just fine with our investments.
Would you prefer that we point out that page one had only commonly known information and failed to answer the question in the title of the article...
Not worth the click.
Here is the article, I apologize if it pasted ugly...
Why I Will Start Social Security At Age 62
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Summary
• When should I start Social Security?
• How will I receive the highest annual income?
• How will I receive the highest cumulative income?
• When will I be able to retire?
Every year, more than 2 million people turn 62. Many of those people will wonder, “When should I start receiving Social Security benefits?”
The earliest age of eligibility is 62. The benefit increases each year you delay starting, until age 70, after which point there is no additional increase.
When should I start - age 62 or age 70?
Anyone can go to the Social Security web site and get an estimate for their benefit, based on when they start. I did that. I’m 58. I learned that if I start at age 62, I would receive $1965 per month, or $23,580 per year; if I start at age 70, I would receive $3486 per month, or $41,832 per year.
What is the benefit growth rate? From January 2000 to January 2014, the simple arithmetic average cost of living adjustment (COLA) was 2.47%.
Year Increase
2000 2.5
2001 3.5
2002 2.6
2003 1.4
2004 2.1
2005 2.7
2006 4.1
2007 3.3
2008 2.3
2009 5.8
2010 0
2011 0
2012 3.6
2013 1.7
2014 1.5
total 37.1
average 2.473333333
Simple arithmetic average of most recent 15 COLAs
Assuming the benefit growth rate continues at the same pace, here is a chart of what I can expect to receive.
• Column 1 is the age at the beginning of a 12-month period.
•Column 2 is the benefit received during that 12-month period, starting from age 62.
•Column 3 is the cumulative benefit starting from age 62.
•Column 4 is the benefit received during that 12-month period, starting from age 70.
•Column 5 is the cumulative benefit starting from age 70.
Age Age 62 Income Age 62 Cumulative Income Age70 Income Age 70 Cumulative Income
62 $23,580.00 $23,580.00 $0.00 $0.00
63 $24,162.43 $47,742.43 $0.00 $0.00
64 $24,759.24 $72,501.66 $0.00 $0.00
65 $25,370.79 $97,872.46 $0.00 $0.00
66 $25,997.45 $123,869.90 $0.00 $0.00
67 $26,639.59 $150,509.49 $0.00 $0.00
68 $27,297.58 $177,807.08 $0.00 $0.00
69 $27,971.83 $205,778.91 $0.00 $0.00
70 $28,662.74 $234,441.65 $41,832.00 $41,832.00
71 $29,370.71 $263,812.36 $42,865.25 $84,697.25
72 $30,096.17 $293,908.52 $43,924.02 $128,621.27
73 $30,839.54 $324,748.06 $45,008.95 $173,630.22
74 $31,601.28 $356,349.34 $46,120.67 $219,750.88
75 $32,381.83 $388,731.17 $47,259.85 $267,010.73
76 $33,181.66 $421,912.83 $48,427.17 $315,437.90
77 $34,001.25 $455,914.08 $49,623.32 $365,061.21
78 $34,841.08 $490,755.15 $50,849.01 $415,910.22
79 $35,701.65 $526,456.81 $52,104.98 $468,015.21
80 $36,583.48 $563,040.29 $53,391.98 $521,407.18
81 $37,487.10 $600,527.39 $54,710.76 $576,117.94
82 $38,413.03 $638,940.41 $56,062.11 $632,180.05
83 $39,361.83 $678,302.24 $57,446.85 $689,626.90
84 $40,334.07 $718,636.31 $58,865.78 $748,492.68
85 $41,330.32 $759,966.62 $60,319.77 $808,812.45
86 $42,351.18 $802,317.80 $61,809.67 $870,622.12
87 $43,397.25 $845,715.05 $63,336.37 $933,958.49
88 $44,469.16 $890,184.21 $64,900.77 $998,859.26
89 $45,567.55 $935,751.76 $66,503.82 $1,065,363.09
90 $46,693.07 $982,444.83 $68,146.47 $1,133,509.55
Comparison between starting at age 62 and starting at age 70
There are arguments in favor of starting at age 62:
•It is unclear when the Social Security “Trust Fund” will be insufficient to pay out all mandated benefits.
•It is unclear if Social Security benefits will be means-tested.
•I would receive a total of $205,778.91 before I reach age 70, that I could consume or invest.
•If you believe you might die before age 83, the cumulative benefit will be greater.
There are arguments in favor of starting at age 70:
•The annual benefit will be higher at every age from 70 on up.
•If you believe you might die after age 83, the cumulative benefit will be greater.
There are probably additional arguments on both sides, but I will stop here, because I believe the “start at age 62 or start at age 70” question is the wrong question for me to ask.
I believe the better question for me to ask is, “How many different ways are there to provide a stream of income that starts at age 62, pays $23,580 in the first year, and grows by 2.47% every subsequent year?”
One alternative is to start Social Security at age 62. Another alternative is to have a portfolio of dividend growth companies with $23,580 in dividend income and 2.47% in dividend growth. There are certainly other alternatives, but I’m choosing to limit my alternatives to these two. You are free to choose other alternatives.
Here is a chart showing various combinations of market value and current yield, all of which generate $23,580 in dividend income:
Market Value Current Yield Dividend Income
$4,716,000.00 0.5 $23,580.00
$2,358,000.00 1 $23,580.00
$1,572,000.00 1.5 $23,580.00
$1,179,000.00 2 $23,580.00
$943,200.00 2.5 $23,580.00
$786,000.00 3 $23,580.00
$673,714.29 3.5 $23,580.00
$589,500.00 4 $23,580.00
$524,000.00 4.5 $23,580.00
$471,600.00 5 $23,580.00
$428,727.27 5.5 $23,580.00
$393,000.00 6 $23,580.00
$362,769.23 6.5 $23,580.00
$336,857.14 7 $23,580.00
$314,400.00 7.5 $23,580.00
$294,750.00 8 $23,580.00
$277,411.76 8.5 $23,580.00
$262,000.00 9 $23,580.00
$248,210.53 9.5 $23,580.00
$235,800.00 10 $23,580.00
How to produce $23,580 in dividend income
Suppose I decide to retire as soon as my passive income is $50,000 per year. (That’s not my actual personal goal, it’s just a number for this example.)
Suppose I am able to invest in a portfolio of dividend growth companies whose current yield is 4%. (My actual current yield is 4.26%.)
I could retire when my portfolio has a market value of $1,250,000. Or I could retire at age 62 with a combination of $23,580 from Social Security and $26,420 in dividend income from my portfolio whose market value is $660,500. Mathematically, the $23,580 from Social Security is equivalent to the dividend income from a portfolio whose market value is $589,500.
Instead of retiring when my portfolio’s market value reaches $1,250,000, I could retire when my portfolio’s market value reaches $660,500, which is 47% less.
The less I need, the less time I need to wait.
The less I need, the less risk I need to take.
The less I need, the less yield I need to “chase”.
Conclusion
In investing, as in life, the trick is to ask the right question. For some investors, the right question might be, “Which alternative produces the highest cumulative income?”. For other investors, the right question might be, “Which alternative produces the highest annual income?” For me, the right question is, “Which alternative allows me to retire sooner?”
I wouldn't say there's almost zero risk. Every year one chooses to work rather than take their social security benefit (read that: take their money back!) is one more year the Government has to screw up Social Security even worse, reduce one's pay out, and one less year of enjoyment in retirement of their own money.
I choose to look at it this way: What will one's QUALITY OF LIFE be if they retire at 62, and will they be able to maintain that quality of life for minimum 25 years?
I suspect for most who continue working until 70 it'll be because they have to, rather than being in a position of having a high quality of life at 62 or even 65.
The reality is also that the longer each one of us is a tax PAYER into the system, the more Big Government likes it because it's one less year of "benefits" they have to pay.
Me, I'm 52 and retiring at 55 as soon as youngest son is out of high school. He'll have to spend a year living on his own and making his own way, but at least then he'll qualify for government grants to pay for his college. I've paid far too much into the system at this point to pay for his college. Let the Government do it. The bastards have stolen from me on average 38-50% of my income every year for the last 32 years. Time to get some of that money back.
BTW: I plan on filing at 62. Fact is I don't even need it at this point, but it's MY MONEY and I want it back!!
“Seeking Alpha is much worse than normal sites that just require you to get a login and spam you for life. Seeking Alpha requires to provide them lots of information - endless questions. I once tried to register and aborted.”
There are a few good contributors, and a lot of schills for their investments.
I stopped going there due to the schills and if you posted some reality about their sponsors. Your posts would be removed and you would get chastised.
I haven’t really used the site in over a year, and I still get 5-10 emails a day.
Ping
Thank you for sticking to the topic.
My entire retirement strategy is predicated on the fact that Social Security will not be around when I'm ready to retire. All that FICA money I've had taken out of my paychecks over the years might as well have been tossed into a fireplace and set on fire. That's the assumption I'm basing my retirement on.
So that's why I've been maxing out my 401(k) over the past 20 years and have it well into six figures. If I can get another 20 years of work out of my body, I'll have the several million I will probably need to fund a retirement without Social Security. If Social Security is still around, it will be a bonus and I can use it for beer money.
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