I am nearing 62, so could start collecting Social Security early. If I wait until age 67 (full retirement), the amount I'd supposedly collect will go up substantially. And it goes up slightly every month I defer collecting, all the way up until 70.

If I start at 62 instead of 67, the math is pretty simple. How much I'll collect over those 5 years, divided by the increase in the amount if I wait. For me, breakeven is 118 months or greater, AFTER age 67, depending on if I continue to work and what level I pay in at. This assumes no earnings on the money collected during those 5 years.

So on it's face, if I expect to live past 77, then I'm better off waiting. But here are my concerns.

1) The payments stop if I die; ie. I could die next week and would collect nothing.

2) I don't trust the Feds to not screw with the benefits.
a) Maybe they would lower payments even if I were already collecting, but maybe those changes would only apply to those who haven't started yet.
b) Maybe they decide to means test it, and even though it's "my money", they decide since I have assets, I don't really need it.

And of course if I decide to wait past 62, the benefit amount changes every month, making the math problem that much more complicated.

I think there is a loophole in that if you start collecting early and change your mind prior to age 67, you can pay it back and start getting the higher amount at 67. Assuming I don't need it to get by, I'm leaning toward starting early and just saving it. If I don't think they'll change that!

If you've been through this, how did you decide when to start collecting?

Whether you have been through this yet or not, do you have any relevant thoughts on the matter?

EDIT: I fixed my math and some typos.

This message has been edited. Last edited by: honestlou,

You can go to the Social Security website and see your benefits at different ages . No math involved .
We started collecting at 62. The difference in 62 and 67 for me was about $700 a month . Decent money but not life changing . I had the same concerns you did . It's my money and I need it now . The older I get the less I'll be able to enjoy it .
You'll get a lot of advice about waiting till full retirement age and the number of years to break even and blah , blah . Do what is best for YOU .

I'd look closer. My memory is that there are other tax considerations and reductions in benefits if you have any significant income and collect before what they call "full retirement age".
That was 66 for me but is now higher and rises each year.
Without knowing the rest of your story, it's hard for any of us to know the answer.
My general advice would be that unless you have some serious health issues of a family history of dying early, don't start this too early.
I'm sure there are other sites out there with calculators, and maybe the Social Security site itself, where you can get better numbers based on your actual situation.

I turn 62 in a few months and will start taking Social Security then.

If you don't need the $$, you can invest it and make a good return (on average) which should equal or better the increase if you wait to take it.

Like you said, there's no guarantee of being alive tomorrow, and nobody gets anything if you hadn't started taking it. At least if I die before the break-even date there will have been some money that either I enjoy or I pass onto my kids to enjoy.

If you honestly expect to live into your late 80's or beyond, and if you have no need for the money now, there's no harm to you not taking it until age 72 other than leaving less in your estate to your heirs if you do happen to die younger.

If you plan to keep working, there can be stiff taxes on your Social Security when your taxable earnings are above a fairly low threshold, so it makes sense to wait to start collecting SS until you are no longer earning a full-time paycheck.

To your points:
1) Yup, I know people who died before starting SS. It can happen.
2a) Agreed, the feds are likely to screw with it. My opinion is they won't suddenly take it away from only those who haven't collected, so I don't believe there is worry we need to take it to protect it.
2b) They already means test it via income taxes and what they charge for Medicare. But they certainly could do something drastic like confiscate retirement savings or reduce your check based on the value of your home.

Yes you can change your mind but I believe it has to be within the first year you start taking it. You have to pay it back too.

For me, I would rather have the cash in my account now rather than bet on all kinds of contingencies.

I believe the feds will have to dramatically reduce payouts before much longer, but I don't think they will screw too badly with those already over 62. Our kids and grandkids though are likely to see very little.

Today was my SS monthly payday, 2nd Wednesday of every month. I waited an extra year after FRA (66) so my check is 108% of my FRA amount. If we get a 9.6% COLA increase next year that would add $303.84 to my monthly benefit. I'm on my wife's Medical and Dental plan so I don't pay for Medicare coverage but we do pay for her employer's coverage for me. I recently took a part time job at $17.50/hr. Looking at my paycheck, my Medicare and SS deductions amount to ~$200 monthly so while receiving SS, I'm still paying into SS and Medicare every payday.

I'd also consider what taking it at FRA vs early might do or, not do, to any spousal survival benefit down the road if that applies to your situation.

Finally, assuming you're in good health now I'd consider when my parents and grandparents passed to come up with a 'perfect world' scenario of how long I might live.

The biggest problem with taking SS early is you can not earn more than $19560 without huge penalty in 2022. For every $1 over $19560 in earned income you must repay 50%. This 50% is after income tax & SS so the % is really 75% or more of each $1 earned over $19560. This penalty is in effect until you reach full retirement age.

Retired military after 20+ years at age 52; hired on with FedGov 6 months later (14 months prior FedGov civ svc, bought that time) and retired at 60yoa/10 yrs svc; took SSA at 62 yrs. Didn’t trust Feds to honor promise. YMMV.

Here's a thread I started on this very same issue. I haven't taken SS yet, but I did retire in January of this year. I plan to start taking it in December. At that time I'll be a couple of months over 64. That decision was based purely on the dollar amount at that time....over an even number I wanted to achieve. I look forward to taking it early as who knows what the hell will happen with our gov and in the meantime, I can invest some or all of it and stay ahead of the game.

https://sigforum.com/eve/forum...630050774#2630050774

Other tax implications not considered, there is an a age SS thinks you will die at and the payout is based on that. It's been awhile so I won't attempt to quote those numbers. No matter if you take early or late, if you live to or past the expected die date you make out. The way you get screwed, no matter when you start taking disbursements, is if you die before that magical date. Lets say you die on the exact date they are basing their calculations on. If you start taking payments early, you get more payments, although less dollars in monthly payments. If you wait, you get higher payments but less number of payments. It all adds up to pretty much the same dollars on that projected die date. Inflation, affect on your income tax not considered. Common wisdom seems to be, get it while you can (take it early) because who the hell knows if it will keep going.

Rule of thumb:

Early SS retirement at 62, smaller checks but a lot more of them, so about 12 to 16 years to the break-even point. The math is pretty simple; take your early SS benefit and multiply by the number of months before "full retirement age", then divide by the "full benefit" amount. In my case it worked out to 17 years. I cashed in at 64, drawing the reduced "early" benefit, and all of my other income has been "unearned" (VA disability, interest, dividends, capital gains) so no decrease in SS benefits.

Income restrictions apply prior to "full retirement age", so significant earned income means that you will have to pay back a buck for every two bucks in earnings above the annual limit. But those added earnings can increase your SS benefits later on.

I'm sure that if I live to see 81 years I will regret that choice, but maybe I won't care very much by then.

Wait for our Social Security expert. Figuring this out is complex and involves many factors. Life expectancy and your health is one. Whether you continue to work is another. Once you turn 65 you will be on Medicare and Part B will automatically come out of your check. Due to our socialistic government you will pay MORE for Medicare depending on your income. That can be substantial. Means testing at its worst. You need to see a CPA and perhaps a financial advisor on this one. It involves MUCH MORE than looking at the tables.

quote:

Social Security expert

Fed161 worked for the Social Security Administration and replied in the thread I linked above. He offers helpful advice.

Oh. I did not click your link. I know he worked for them.

Simple math.

Figuring my expected life span (family history) and figuring I will not earn income during the years of withdrawing SS payments, taking the benefits at 62 yo will yield more money than 67yo. My company is done this year.

I retire towards the end of this year. I will take SS next year at the age of 62.

My full retirement was 66. I took mine shortly after I became Medicare eligible at 65 as I had no other source of insurance. Eight months early, cost me in 2017 forty eight bucks a month penalty.

The penalty for exceeding allowed earnings only affected me for eight months, I just watched my hours carefully and made sure I stayed under the limit, I think around 1680 per month but as others have said once you reach full retirement age that penalty goes away.

And unless something has changed you can “change your mind” in your first year, pay back all you have received up to that time and start again at a later date.

Are there general considerations for your non-working Spouse, while remaining 100% full time employed as the main and only bread winner ? That is my situation, and I don't know the ins and outs of that. Similar to the OP but reversal of persons. Spouse is asking about it, the xtra bucks could help, but not if the penalties are severe for annual joint filing etc.

Another big issue is what about medical insurance? If I retire before 65, I won't have Medicare. I guess a low earning job with insurance should be OK but then that's not really enjoying life and do things that I love.

Or Saigon, continue to work until you can get Medicare. It's a trade off. Or, go to work for Starbucks, Home Depot or Costco part time and get benefits which are pretty close to an 80/20 plan.

Worked for SSA for 43 years prior to retirement. I'm about to hit the sack for the night, so I may have a few additional thoughts based on my 43 years of experience in the next day or so if anyone is interested. But a few quick thoughts now.

1) The payments stop if I die; ie. I could die next week and would collect nothing.
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Absolutely correct (obviously!) This is an argument to collect early. More thoughts later.

2) I don't trust the Feds to not screw with the benefits.
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The single most powerful political constituency in the country is in my view seniors. Not sure what you mean by "screw with the benefits." Once you start collecting, that's it. That's your benefit rate for life. Of course you will have cost of living increases. Cutting SS benefits for seniors already collecting would be a political death sentence for any politicians who vote for it. If SSA runs out of money, the treasury will print whatever they need.

3) Maybe they would lower payments even if I were already collecting, but maybe those changes would only apply to those who haven't started yet.
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Benefits for people already collecting will never be cut. Won't happen. If there ever is a cut, it would be for new beneficiaries. You do have a point about that. Just my opinion, but I don't see any cuts on the horizon any time soon.

4) Maybe they decide to means test it, and even though it's "my money", they decide since I have assets, I don't really need it.[/quote]
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In a sense, it has already been means tested to a degree. It used to be that SS benefits were not taxable for anybody, regardless of income. Now SS is taxable for higher income folks who have income exceeding the thresh hold amount for taxation. I don't see any scenario where they will cut benefits based on assets.

I was working full time though 2020. I received a 6 month severance package starting in Jan. 2021. I applied for my SS benefits at 62 starting in July 2021. A few weeks ago, I received a letter from SS saying my 2021 income exceeded the allowable amount and that I would need to pay back thousands of dollars in benefits. They were nice enough to include an envelope for payment. Luckily, severance/vacation pay are not considered income. It was a pain in the ass getting this straightened out. I went to our local SS office and the first Rep. I talked to was demanding a ton of documentation. I asked to speak with her supervisor and got everything straight in short order with only my company supplied severance letter.