No. of Recommendations: 5
How does it "re-exposed yourself to mortality risk"?

This is pretty simple. I take my payments at 62, say I get $1500 a month ($18,000/yr). At age 65, I will have collected $54,000.

Oops, I say, I want to give it all back and start over, so I go through the application process, write a check back to the government for $54,000, and stand in line for my new, improved benefit of around $2,000 ($24,000/yr).

I die the next day. My estate is $54,000 poorer. In fact, just to catch up, since I'm only getting an "extra" $500 a month, it takes quite a while to break even.

The numbers in the chart below are cumulative. By re-starting at age 65 you get a bigger payout, but it takes you to age 73 to break even. If you die at any point before age 73, you (or rather, your estate) is behind.

Year Start at 62 Start at 65

1 $18,000
2. 36,000
3. 54,000
4. 72,000 $24,000
5. 90,000 48,000
6. 108,000 72,000
7. 126,000 96,000
8. 144,000 120,000
9. 162,000 144,000
10. 180,000 168,000
11. 198,000 192,000
12. 216,000 216,000


Of course this ignores any interest you might have gotten with the $54,000 during those first three years, but in today's climate that amount can pretty much be ignored.
 
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement