Doesn’t inflation make the case for claiming benefits earlier?
“Doesn’t inflation make the case for claiming benefits earlier?”
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My motivation for collecting at 62 was I’m not one of those people that thinks they’re gonna live forever......tomorrow is not guaranteed people......and neither is the SSA benefit 10 years from now.
If inflation was out of control (i.e., Biden years), then there might be more of a case for this, but under more normal conditions, the answer is 'No', for two reasons:
(1) The starting benefit is based on your highest 35 years of income... indexed to current value by inflation. Presumably, your income in later years tends to be counted as part of those 35 years as lower amounts from the past drop off. If that's not the case, then... it might be worth doing the math to see if you're better off _not_ working.
(2) Because there may also be a spousal component to consider as well: my wife, for example, will be eligible for a benefit of 50% of whatever I get... so it's best to maximize _my_ benefits. Plus, whenever one of us passes, the other gets the highest benefit amount (unfortunately, it's not both, but it's still better).
SS benefits are adjusted for inflation every year. I started mine at 62 and have never questioned that decision.
I read (or heard on the radio) some financial advisor say that if you begin taking your SSI money at age 62 and invest it all in a mutual fund until you turn 70, then in the long run you'll have more money than if you wait till you're 70 to claim your SSI benefits.
Just for the record 67 felt about right for me but I waited another year. Good enough for me. Feels like the right balance of risk and benefit.
So might suspicions that the government will find another way to cut benefits in the future.
If one collects his Social Security but keeps working, he can save either his checks or his earnings, even shelter his earnings and get big tax refund the next year.....so it’s not such great advice to wait for the money. Who knows how long you are going to live or be well enough to enjoy retirement???
What needs to be fixed, is perverse Social Security rules about losing benefits permanently if you work and collect Social Security at the same time before age 67. It makes no sense for economics, fairness, social policy. I can retire at 62 or 63 and collect Social Security early, but get less money than if I waited until age 70.....maybe close to $1,000 per month, which would be $12,000 per year.......but I collect for 8 more years......during which time, I still can work and save. But under current rules, which have not been adjusted for inflation for many years, if I earn more than $21,000 per year or something close to that, and even though I am paying income and payroll tax on my earnings......I lose even more benefits and lose them permantly. Does it make any sense for somebody who works for more years and pays payroll taxes and income taxes for more years, lose Social Security benefits compared to somebody who retired at the same age, but did not keep working and paying tax? No. But after age 67, you can work as many hours as you want and earn as much as you want without any penalty, so even though I now am 65 years old, because of this, I have to wait until I am 67 years old to collect Social Security, so before that, I have to put as much money in my HSA and 401K plan as I can before I retire while still having enough left to live on. I imagine that this might be the reason for the rule, except that high rollers with huge paychecks are working into their 80s, and the rule won’t affect them, but ir will affect people who earn under $100K, who are trying to max out their HSA every year and their 401K every year before they retire and are allowed to “catch up” by putting $30,000 in their 401K plan. Getting a little less per month but collecting for more years while working and saving all the SS or the work income would be the best plan for many people. Or one can wait until one is 70 yrs old and not save as much, but get another $10,000 per year in SS. I think collecting at 65 and working, saving until 70 makes sense. One could save several hundred thousand dollars in tax sheltered manner, get big tax refunds each year.