Could you please show me where I am going wrong? I go to the SS.gov website and according to their retirement calculator I would get 1722/month at 62 and 2296/month at 66. Calculating to 80:
1722 x 12 = 20664 x 18 = 371952
2296 x 12 = 27552 x 14 = 385728
1722/2296 = 75% thus a 25% reduction for retiring early.
However, if you retire at 62 you are going to receive that 75% or $1,722 for an extra 48 months.
75% x 4 years is 300%
300% divided by the 25% increase you gave up is 12 or 12 years it will take for you to collect the same total $$$ as if you waited to 66 to retire and collected the higher amount. 66+12 is age 78 for the break even point.
This computation does not consider the income you would be making to continue working. It is merely a collect or not collect decision.
For people who have small businesses I often sell the business to a family member and then rent or sublease the real estate to the new business owner (even if it is your spouse). Rental income does not effect Social Security as it is not “earned income.”
This family transfer should not be done as a sham transfer and should only be done after consulting your CPA as I left many technicalities out that could make it fall apart.
I’ve often done this with corporations and owner retiring. It is one of the reasons that real estate should be held outside the operating corporation.