“While that doesn’t matter much if inflation continues at 2-4%...”
HA. You don’t shop much, do you? LOL
I know there are people that claim inflation has really been running 8-10% for the last decade or so, but I don’t buy it. At 10% prices double every 7 years, and there’s no way prices in general have done that, although it’s easy to find some things that have.
On the other hand, I think the government-reported 2-2.5% is a crock too, and that prices have been increasing between 3 and 5 percent for some time now, but at 4%, prices overall will take about 18 years to double, which is a lot closer to what I’ve observed.
I also think that this past year price increases are escalating faster than over the past four or five years and can understand your “HA”. We just haven’t had 8-10% inflation on a sustained basis....yet.
My point is that even though SS will probably understate inflation, if it does hit 10% for a decade or so, SS payments will at least be increasing 6-8% and that by waiting you’ll have a larger amount of your retirement income increasing steadily at that rate during the inflationary period. And in the unlikely event that we go through a sustained period of 15-20% inflation, Social Security might be about the only investment most retirees have that even comes close to keeping pace with price increases. That seems to me to be a reason to consider waiting and letting the ultimate monthly payments increase.
After all every $1,000 at 66 becomes $1,320 at 70, while $1,000 at 66 is only $640 at 62, so you earn almost twice as much at 70 as at 62. If you don’t need the money either because your investments support you, or you don’t mind working some after age 62, it seems to be something worth considering at least.
I changed the above numbers after I realized something. The 8% isn’t compounded. If you’re due $1,000 at full retirement age of 66, you’ll get 32% less if you retire at 62 and 32% more at 70, so $680 at 62 and $1,320 at 70. Actually, as I look at those numbers, the $1,320 is almost double the $680. The first year you wait, you’ll go from $680 to $760, or a 11.76% increase. That diminishes all the way to age 70 where $1240 to $1320 only gives you a 6.45% increase. The 8% figure is calculated on your full retirement income at age 66, and that number is deducted for each year you decide to draw early, and added for each year up to age 70.
At least that’s how I understand it. I might be mistaken on some of it.
The wifey about croaked the other day when she saw the prices of BACON!