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I've searched for days and need help in planning SS payments. At age 62 I'm trying to decide whether or not to take early payments or wait. Can someone steer me to a source?
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<<need help in planning SS payments. At age 62 I'm trying to decide whether or not to take early payments or wait.>>

I recently met with my financial advisor. I had planned to wait till I had to take payments and get the higher monthly payment, since I won't need the SS amount at least to that point, if ever. My advisor did the arithmetic and showed me that between 62 and 70, I would get 43K that I could invest. The second part of the arithmetic was how long I would have to live to receive the same 43K in increased monthly payout. In my family, we don't live that long!
Bottom line--I'm taking it at 62. My sister's financial advisor had given her the same advice.
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Thanks for the reply. It seems we're in about the same boat except that I plan on living till at least 120(to hell with the family genes). Your advise was what I was thinking but wanted to get some reinforcement. Don't understand why none of the retirement planners (or at least the ones I've found) don't address this issue. Thanks again.
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Let me remind you that if you are under 70, collecting Social Security, and also working for wages (not merely collecting a pension) at the same time, there will be a clawback of your SS if your wage (or self-employment) income is over a certain amount. Here's the link (I hope): www.ssa.gov/pubs/10069.html.

The amount you can earn before the clawback starts is increasing, and by 2010 or so the limits may have gone away completely.
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Start social security at 62? 65? 70? Someone around TMF, intercst maybe, summarized it this way: If you have reason to think your life expectancy is less than average, pick 62; if average, pick 65; if above average, pick 70.

I just reran the numbers with my personal spreadsheet. It's a conservative plan: stabilization of the purchasing power of the assets from now (age 60) until age 95; using 8% return and 4% inflation, and my latest earnings statement from Social Security, prepared a month ago. It says that waiting from age 62 to age 65 years, 4 months, (I was born in 1939, so I have to wait to this age) to take my Social Security, and using the same after-tax standard of living, provides that the final balance in my retirement account is . . .

*** drum roll ***

1.24% bigger!

Guess it doesn't matter when I start it, partly because Social Security provides only about 13% of my expected income in those 35 years. Seem to me that people need to run the numbers for themselves, reflect on their probable longevity and recall that the inflation and investment return and income tax burden are only estimates.

Be well,

Chips


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My CPA said "take the money and run"
Bonnie
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I opted for early payments at 62 mainly for the following 3 reasons.
1. On a NPV cash flow basis, it takes 16 years or more for full retirement to be greater.
2. Who knows what the system will provide down the road. Despite politicians talk, a means test is probable.
3. Wife,who does not qualify on her own, can get 50% of mine early also

Of course all of this depends on one fundamental question. When are you going to die?
According to our local Social Security office, 90% of folks are taking it early.

Hope this helps. In any event, make your choice and enjoy life regardless
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It's very simple--just do the math.e.g. If you intend to continue working beyond the age of 62--DON'T TAKE EARLY RETIREMNET. On the other hand, if you're sure you will not need to work after 62, go ahead and retire early. Just know that the Govt. will punish you severely if you decide to continue to work---you'll lose all or most of any soc. sec. you have coming, while you are working. GOOD LUCK.
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Ric Edelman, a financial planner, wrote a money management book and devotes a section on this very topic. Go to his website and you can read it for free...or else buy the book.
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you dont really lose your social security benefit. Your amount is recalculated based on eventual actual retirement and your payment is higher than it would have been had you not worked. All you have to do is call them and tell them to stop payments for time you go back to work
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I just turned 62. I went to SS adm. to get info and they suggested taking the money ASAp which I did.
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Went to a seminar with my husband who will be 62 this year and was told by Social Security rep that retiring at 62 is better than 65. Person at 65 will never catch up to the person that went at 62 as far as money goes. If you have the finances to retire early do so...life is too short.
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Gorbo:

I'll tell you what I did; w/out knowing yr financial structure, yr ? really can't be answered anyway but here's an anecdotal record.
I had a mortgage @ 9 1/2% when I hit 62; I took the $$ & proceeded to put it ALL into paying off my mortgage. In that I couldn't get a fixed return anywhere near the mortgage rate, it only made sense to me to pay off my note as quickly as possible which I did. I'm "tickled pink" that I made that decision. I think the issue is do you need the $$ to live on? If so, you should go on working & wait 'til 65. Otherwise, take it!!
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I think I mentioned this before, but perhaps I should reiterate: it pays to collect early IF YOU ARE NO LONGER GOING TO WORK FOR WAGES. If you are, the clawback can represent a marginal tax rate that is just plain fierce. It doesn't have to, it depends on how much you earn (not make from capital gains and dividends, those don't count) and how old you are.
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Your source should be your own conscience. I retired
at age 60, I'm now 77, and I haven't regretted taking an early retirement one day of my life. Another thing, I seem to have more play time, and a little more cash to do it. If your health is real good, like mine, a long life of retirement is in store for you with nothing to hold you back from things you couldn't do while actively working. On the other hand, if you foresee health problems in the not too distant future, again take your retirement and live it to the hilt.

Free advice, Jimbo

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My husband owned his own insurance company and when he turned 62 he checked into taking SS early. He found out that the difference wasn't that great in the long run and if he retired at 62 he was in good health and we could do what we wanted to do now instead of waiting and possibly not being in good health by the time 65 rolled around.

You have to check on the difference between taking it now and waiting for 3 years. If you have enough money to live comfortably adding SS to your monthly income then it would be worth considering. If you will just be living on the edge and can't go and do anything anyway, then that should be taken into account also. It is a very personal thing and no two families are alike. These are just a few things to consider before making a decision. Lu
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SS at 62 is what makes sense if you are not employed. The amount you get roughly 1000 times the months will give you a total that you will find difficult to make up. If you invest the money foolishly you'll never catchup. 1000 times 36 months equals 36000 dollars What is the amount you get at 65?? Now how many months does it take you to make that back,remember you are still getting the 1000 plus three cost of living raises, compounding the 1000 into real money. You want the answer go to theSS office and you'll get a courteous no nonsense answer.
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You may wish to read my posting on the "ask a foolish
question message board". To get there double click on
my name above; you should get an author biography, page down until you see a small box on the left with 10 in it. Change to 40 and click, you should now see a list
of my postings in numerical order. Page down till you
see #89142 near the bottom. Click on this number and
"at last" you should see my posting on the subject.
There ought to be an easier way, but I have'nt found it
- Good Clicking! - - Matthew
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Ten years ago I had the same situation and realized that taking the lesser amount it would take ten years for the larger amount (available @65) to equal the total $ but I used less of my savings for 10 yrs.Not to mention the return on my unused savings for 10 yrs.
Good luck, no matter how you decide.
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Gorbo.
I too was 62 when I retired and opted to take the money early. I've read and heard from others that it may be beneficial to do so. None of us know for sure when were going to kick so why not take the money and run.
Lets say that you can draw 1175 a month and retiring at 62 you would have drawn around 43,300 by age 65. If you can draw 300 more a month at age 65,look at how many years it will take to catch up to that 43,300 figure. I didn't think it was worth the wait,but then,to each his own.
Sincerely,
RayBar.
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Whay are you retiring at the ripe young age of 62?? How will you spend your time in retirement? Why don't you just work until your earnings don't affect your SS income at age 70 or until you are unable to work (assuming that you are still able today)?
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Most definately take your Social Security as soon as you are elegible. If you wait until you are 65 years of age you have missed 36 payments that on the average take twelve years to recapture.
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Many years ago I talked my dad into early retirement at age 58, today at 82 he still thanks me. He got to do a lot of things he had wanted to do while he was working but never had the time. I was very fortunate myself and was able to retire at 46. Since then I have worked at jobs that I enjoyed, if they became drugery, I quit and found another that kepr my interest up. In four years I will be 62 and have every intention of applying for SS. A bird in the hand is worth 2 in the bush. It takes a lot of years to make up the difference
between taking SS ar 62 and waiting till 65. You may be a lucky one and collect for a long time or you may not. If you dont need the money right away it can always be invested. Lots of Luck
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Since none of us know how long we're going to live; everyone should take their SS as early as possible.
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I am a CPA with many years of experience. My advice to my clients has always been, if you no longer plan to work full time start drawing Social Security now. The tables are figured out so that you would have to live at least to 78 to break even and if you factor inflation and use present dollars you should even run it out six or seven years longer. Take it now if you arent going to be working.
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My first post to the Fool board, although I read them alot. Just wanted to thank you Sandio and all the others for your imput. I am within ten months of that magic 62 and was at a loss at what to do. I'm now convinced to take it sooner than later. I really appreciate these boards. It's like talking things over with the family. Good luck and a long life to all.
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A LOT DEPENDS ONHOW LONG YOU PLAN TO LIVE. ALSO HOW MUCH YOU CAN MAKE ON THE MONEY IF YOU TAKE IT EARLY. DO YOU NEED TO RETIRE NOW? DO YOU HAVE A SPOUSE YOU COULD CLAIM OFF. TAKE ONE AT 62 THEN TAKE THE OTHER BIGGER ONE AT 65+ IF YOU NEED THE MONEY TO LIVE ON NOW YOU HAVE NO CHOICE TO TAKE IT NOW. SERIOUSLY IF YOUR FAMILY IS LONG LIVED WAIT TO TAKE IT


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This is excellent advice. I'm 62 and just started drawing my SS monthly checks. A bird in the hand is worth two in the bush as the saying goes.
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<I've searched for days and need help in planning SS payments. At age 62 I'm trying to decide whether or not to take early
payments or wait. Can someone steer me to a source?>

gorbo, there's no easy answer to your question. If you
have a pension coming from a previous employer, the amount of your pension may be reduced by the amount of SS you would receive if you waited till 65 even though you will only receive about 80% of that amount at age 62.
If no employer benefits are affected, then what you might want to consider is that if you wait till your 65 to take your payments, it will take 12 years to make up for the 36 SS payments you would receive if you started at age 62.

Bobabc
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Best to take the money ASAP and run. A bird in the hand is worth more that two in the bush, as they say.
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I see that most Fools recommend taking the money now. I agree completely.

Several years ago a good friend, who is also a very astute financial analyst reached age 62 and faced the same issue. (He had already been retired for a number of years.) His analysis was quite simple.

If you start Social Security at age 62 instead of age 65 you are ahead of the game until your late 70's. That's at zero percent return on investment. If you assume the money is invested at some modest rate of return, then the breakeven point is even further in the future.

No need for a spreadsheet or any fancy analysis -- you are better off taking it as soon as possible, even with a reduced payment. The only caveat is if you continue to work and the added income affects your Social Security payments and taxes. Then you should do a more thorough analysis (though I suspect the results will be the same).

Fool on
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Thanks everyone for all the good information. Although I have a few years to go before making this decision, I now have all these factors to consider.

Take the money and run sounds good to me!
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You are probably better off taking payments now, because when you reach 65 you already have money in your pocket, especially if you are in good health, because it will probaly take 8-10 years to catch up to your payments received by waiting til 65 to start receiving payments. Example. your payments at 62 are $800, payments at 65 are $1100.00. At 70 with the 62 payments you have received $76,800, At 70 with the 65 payments you only received $66,000. You will break even at age 73. Determine what your life expectancy is, take into consideration your current health and your current financial status. If you can afford to wait and expect to live longer than 73 you might want to wait. These are rough numbers and you need to put your own numbers in to determine your break even, but you get the idea I hope. Quicken is a good sight that could help you as well. Good luck in your determination and happy retirement.
Skibahb
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Ah, I envy you all. I'd love to take SS at 62 but that difference in monthly payment will be important to me for income. As a hospital employee (nurse) there is no such thing as a pension, just what you can put into your 403b or 401k and at our wages that isn't a tremendous amount.

So for me as well as many others there really isn't much choice, we need to work to at least 65. And of course there is that other big important item, medical insurance. I noticed that no one mentioned it, so I guess that the posters have enough income to also pay insurance premiums each month and that will not be cheap.

This is an interesting thread and does provide food for thought.
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royrun99 says

3. Wife,who does not qualify on her own, can get 50% of mine early also

Question about this?? My research would indicate that this figure is also reduced (37.5%) for "early" retirement (meaning prior to age 65, 65.5, 66, or whatever it is for you). Anyone confirm or refute this?

Persevere!
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All of your posts were very interesting to me.  
I'm at 59 and holding!  Plan to retire in 3 years
anyway and will be faced with this choice: 
62 or 65.5 for SS?

Here's my quantitative analysis using the estimates
sent to me by the SSA.  I'm assuming spouse gets 50% 
of mine at 65.5 and 37.5% at 62.  I have a record
(from the SSA) of all my inputs.  My first input was $18 in 1958!  
I assume there are no inputs after 
age  62. I've adjusted the ROI for 3% inflation:

            
LIFE         START AT 62    START AT 65        
EXPECTANCY   REAL ROI       REAL ROI
90             6.47%         6.92%
85             6.15%         6.57%
80             5.62%         5.96%
75             4.67%         4.82%
70             2.73%         2.19%

My sense is that the Gov'ment would like you to wait.
After all, if you "kick" (as someone put it) they
aren't out as much.

One possible other strategy that I want to look at
is starting my own at 62 but delaying the spouse's
benefit until she reaches the magic age
(65.5 in our case).

Of course, there are many other options also, such as
waiting until 63 or 64 to start.  Each of these choices 
can also be combined with a strategy regarding
the spouse's benefit.

Persevere!
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FoolishProf writes:

<<royrun99 says

3. Wife,who does not qualify on her own, can get 50% of mine early also

Question about this?? My research would indicate that this figure is also reduced (37.5%) for "early" retirement (meaning prior to age 65, 65.5, 66, or whatever it is for you). Anyone confirm or refute this?>>


The spouse drawing on the primary woker's benefit will have his/her benefit reduced 25/36% of 1% for each month that spouse is younger than age 65. At age 62, that brings the benefit down to 37 1/2% of the primary worker's age 65 benefit.

Regards..Pixy
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As usually happens when I get on these boards, I learn
 something from TMFPixy:

The spouse drawing on the primary woker's benefit
 will have his/her benefit reduced 25/36% of 1%
 for each month that spouse is younger than age 65. At
 age 62, that brings the benefit down to 37
1/2% of the primary worker's age 65 benefit.

I have been calculating the spousal benefit as 37.5% of
 my benefit at age 62 instead of 37.5% of my benefit at age 65.5.  
When I redo my comparison of the returns 
(see my earlier post on this thread)
associated with life expectances and retirement ages,
 starting at the "full" retirement age of 65 never wins
 except if I live to be 90 (0.01% advantage):


	START AT 62		
	LIFE	REAL	
   EXPECTANCY	ROI	
	90	6.91%	
	85	6.61%	
	80	6.10%	
	75	5.20%	
	70	3.36%
	
	START AT 65		
	LIFE	 REAL	
   EXPECTANCY	 ROI	
	90	6.92%	
	85	6.57%	
	80	5.96%	
	75	4.82%	
	70	2.19%	

Persevere!
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I contacted my CPA who said I needed to retire at 67yo
(due to phasing back each generation). I would have to give back almost all of my s.s. money due to not being able to live on $988mo (62yo) plus $5,000 investment(average). Also I wanted to continue working parttime and I would make too much money to get 100% of my s.s. benefits. It's going to be a stretch at 67yo.......Social Security is sending out three months before your birthday a copy of your benefits at each of the three age milestones 62,65-67,70). SO if you have a great pension, great investments, your house paid off and other supplemental income, retirement at 62 looks good. I recommend consulting your CPA. It was worth my time as he recommended several strategies. Good luck!!
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Take the money and run. You receive 80% of full benefit at age 62, thus to receive the same total amount, the 65 year old has to wait 12 more years, or age 77. Run the numbers. Consider $800/month at age 62 vs. $1000/month at age 65 (for example). Also, this does not include any possible investment of the 36 months of SS received.
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Gorbo,
While I don't have a specific answer for you, here is a reference that might help you.

In the current quarterly issue of "Where to Retire" magazine, an article entitled, "When to Take Social Security Benefits," begins on page 20.

There is a website for the magazine at:
http://www.wheretoretire.com/
A picture of the current issue containing the article is visible which may help you find a copy at your local newsstand.

Worst case, you may be able to order a reprint of the article if you cannot locate the magazine.

Cheers...

OUFoolU
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Most of the commentary i have heard says the mathematical calculation of your benefits from the period 62 - 65/66/67 when you are eligible for full benefts would not equal the amount of full benefits unless you lived approx 19 years beyond 65/66/67. once you have the information from social security you can easily do the math.

good luck
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I'm retiring at 63 1/2 for two reasons:

MAIN REASON: I can use COBRA to get me to 65 & Medicare (though prescription drugs is an issue) SECONDARY REASON: The average age at death of my parents is 86 (which would argue for working a bit longer, though am getting burned out in my job.

IMPORTANT CONSIDERATION: Think about Medicare and COBRA if your current employer doesn't continue your health benefits through retirement.
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The problem with collecting at 62 is that your not going to receive your full benefits. If you have other investments (Such as a 401K, mutual fund or IRA) to depend on and Social Security will be a small part of your retirement benefits and you want to stop working and enjoy yourself. Then by all means cash in at 62. But beware that you could be losing as much as 20% off the top of your payment. The smart money says hold off the three years (Actually two years and eights months) and collect the one hundred percent if you can afford it. This is asuming your in relatively good health and will live a number of years after retirement to enjoy it. So make sure you look at your family's health history as well to give you a clue into to your life expectancy.(As morbid as that maybe) How long you live is an important factor, dying at age 64 or even 66 isn't going to make sense if your start collecting at age 65.
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Then by all means cash in at 62. But beware that you could be losing as much as 20% off the top of your payment. The smart money says hold off the three years (Actually two years and eights months) and collect the one hundred percent if you can afford it.

You may lose some money off the top of each payment, but overall, your return may be better if you start taking money at 62. Several studies have shown that taking the money early is the better way to go.

I think this was recently discussed on the Retire Early Homepage message board in Speaker's Corner, but I don't have any direct links.
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I think some arguments for the minority opinion are needed here. Consider the case where your Social Security income and investments will allow you to live well for about 20 years of retirement, but not so well if they have to last for 30+ years. In this case, delaying SS to 65 or later is a good deal. You do have to live into your 80s before delaying the start of SSA pays off, but that is exactly the case you need to worry about most.

The extra money I can get from SSA if I have a long life is much more useful to me than the money I lose if I die early. (My wife has her own independent entitlement, and leaving a larger estate is not a major concern for me.)

Think of delaying SS to 65 as equivalent to putting maybe about $40,000 into an annuity with payments guaranteed for life--an annuity with no fees and less risk than with an insurance company. It would be useful if a financial planner could make this comparison explicit.

I did some rough calculations on another comparison between taking SS at 62 vs. 65. First, I think SSA inflation adjustments are neutral with respect to this decision. The key issue is what investment rate ABOVE inflation and taxes you think you can earn on the money received with the earlier retirement at 62. My calculation is that if you believe you can do 4% above inflation, then breakeven is around 82, if 5%, then 85, and if 6%, then around 89. Remember these percentages are long term above inflation and after taxes, and on basic retirement money you can't afford to lose.

I would love to see somebody else check these computations. I plan to live beyond 85, and the extra money I get in that case is more important to me than the money I will lose if I'm dead.

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I've read the entire thread (Which I'm sorry to say, I missed originally), and there is one consideration that nobody has even hinted at. It takes quite a long post to explore this, for which I apologize, so here goes.

To start with, if one is contemplating retirement at age 62, then that person is necessarily reasonably well off. If this were not the case, then the argument for continuing working would be overwhelming. (I'm assuming that finding a job or continuing a job is not a problem. Not a bad assumption in today's economy.)

A reasonably prosperous retirement implies a constantly rising net worth. Obviously, a falling net worth will leave the retiree in dire straits if he/she lives too long. And, if we read between the lines of the Trinity study, any attempt to maintain one's net worth (or retirement nest egg) at a constant level is perilous at best. Just exactly maintaining a constant net worth leaves one in danger of going broke during the next sustained bear market.

So, the prudent route is to adopt a plan in which net worth is constantly rising. The more money you have, the better positioned you are when the bear market arrives. And if it never comes, you have more with which to enjoy life.

If I (successfully) follow this strategy, my income, in terms of real purchasing power, will continue to rise. Indeed, in the Trinity study, the result of most successful strategies is considerable wealth. The natural result of a successful retirement strategy is to become wealthier as one grows older. The unacceptable alternative is to become poorer. Exactly maintaining the same standard of living throughout retirement is next to impossible.

In a properly executed retirement strategy, the overwhelming probability is that my net worth will increase. I could get unlucky, and retire just before a sustained bear market -- bad luck for me. But, more likely, the market will continue to give me reasonable returns over the long haul.

If I become wealthier as I grow older, the advantage of a higher Social Security benefit decreases because my SS benefit becomes a smaller part of my income every year. If I execute my strategy correctly, my SS benefit will be unimportant during later life. So, I conclude that it's best to take the money early and run.

Let's shift gears a bit. Many posters have attempted to answer the question posed by this thread by calculating how old one must get to break even, but this is the wrong way to look at the question, IMHO. Instead, let's suppose that the question is whether to retire at age 65 with (say) $1000 monthly, or to retire at 64 and 11 months with $4.63 less per month. (That's 5/9 or 1% of $1000). You could invest your one month of early benefits ($995.37) at, say, 8%/year and earn $6.64 per month, bringing your monthly benefit up to $995.37 + $6.64 or $1002.01 You will therefore benefit by retiring a month early by $2.01 per month.

So, It turns out that taking benefits early will be to your advantage if your market returns can beat an interest rate that starts at around 6.67% for the first month, and rises to about 8.33% at 36 months (i.e. age 62)

Actually, tax considerations come into play, because SS benefits are not taxed at the same rate as the ordinary income you would earn by investing the money. Moreover, they are at least partially protected from inflation. But even in the most extreme cases, it looks like taking early benefits will always gain if your investments get a 10% return (or greater). If your investments gain between 6.67% and 10% per year, you have a close decision.

Finally, it seems to me that having a higher net worth is preferable to having an increased income stream, because you have more money to meet emergency needs. And, of course, your heirs will no doubt appreciate it if you opt for the higher net worth avenue.


Tim




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Lots of messages here are missing the fact that the inflation adjustments are higher if you take full retirement at 65. E.g. a 2.5% inflation adjustment on $1200 is more than on $960. Cumulative inflation adjustments over 20-30 years will really matter. With either full or early retirement, all the inflation after you are 62 is credited to you, so you get the right answer if you do all comparisons in constant dollars and ignore inflation and the inflation adjustment. BUT, when you consider the investment value of the money received between 62 and 65, then you can only count returns that exceed inflation and taxes. An 8% return last year is really 5.5% in constant dollars probably less after taxes.

Despite everyone's experiences in recent years, it is really unlikely that in the long term you can beat inflation by more than 4%. With 4% investment returns after inflation, the breakeven point between early and full retirement is about 82. Do the math yourself with your own assumptions and check it out. I think previous posters who have tried to justify an opinion with some math have gotten it wrong.
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Here's another way to look at it.

Let's assume I am age 62 and I can draw $800 for life starting now at age 62. If I wait until age 65 I can draw $1000. That's an additional 200 per month for life. How much capital does one need to produce 200 per month for life. Using a 5% withdrawl rate, which seems to be the norm here on the MF, I would need $48000 of capital. $48000 * 5% = 2400.

How much of my current income, assuming I am still working, would I need to save to accumulate $48000 in 3 years? Using my trusty Tex Instruments BA II says that I need to save 1184 per month for the next 36 months. (Assuming 8 % after tax rate of return.)

For a person who is currently working and has not been able to save much for retirement, and believe me there are many people living from paycheck to paycheck, waiting til age 65 appears to be a pretty good investment.

Fools, have I missed something in my calculations?

cf
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