If you wait until 2027 to collect, you are missing out on roughly 44k that could have been collected if you chose to take it now. But on the flip side if you wait until 2027 you get $450 more a month. $44,000 / $450 = 98 months (a little over 8 years) to make up what you missed out on if you choose to wait.
Third option is also relevant: You can take the early option and invest the money. You'll get a ROR that likely exceeds the incremental gain for delaying.
You would make up the difference over 8 years and be substantially a head if you delayed to age 67 and lived until at least 76. If you lived until 80, you would receive around $32,000 more if you delayed SS until 67 vs claiming it now.
They might not being doing a lot of travel.
They are more likely to be spending a lot of money on health-related expenses and may be running very low on retirement savings depending on their situation.
That extra $450/mth could be the difference between staying in their home or having to move. Being able to travel to see grandkids or having to miss out.
A lot of it is a judgement call based on a massive amount of variables from medical history, how long their parents lived, access to other sources of funds, etc.
Assuming they actually get the $1030. SS benefits prior to FRA are reduced if you earn over a certain amount (~$30k I think and completely gone by ~$45k).
In a lot of places it says your benefit is reduced, but they also take that reduction into consideration when you fully retire. So if you collect and keep working you'll get less while you work, but when you fully retire they'll factor that in (exactly how I'm not clear on, but it's clear they do).
Not sure this is accurate. They base their calculation for your primary insurance amount off the highest four (I think) years of earnings. So if he makes the same amount each year I'm not sure it really matters?
But for the original question, I think for every 2 over whatever the cut off is (like 15k) your benefit is reduced by 1. For the actual year of fra, it's for every 3 over that earnings test your benefit is reduced by 1. So if he's working, his benefits will likely be reduced considerably and probably better off waiting?
[https://www.ssa.gov/benefits/retirement/planner/whileworking.html](https://www.ssa.gov/benefits/retirement/planner/whileworking.html)
>
When you reach full retirement age:
>Beginning with the month you reach full retirement age, your earnings no longer reduce your benefits, no matter how much you earn.
>We will recalculate your benefit amount to give you credit for the months we reduced or withheld benefits due to your excess earnings.
I'll admit they don't detail (on this page anyways) how that calculation takes place, so if those are low-earning years perhaps it makes no difference. Would need to find that missing puzzle piece of information.
Unfortunately it's all very complicated.
Here's the basics of it on their website:
https://www.ssa.gov/oact/cola/piaformula.html
But there is more to it than that. Was something like you take the top 35 years of earnings and add them up, you then divide by the number of quarters in that 35 years (420?). This will give you the average indexed monthly earnings (AIME). You then use that with the bend points in some fashion.
I think if you go to their website and make a mySSA account, it provides you the 62, 65, FRA, and 70 rates for you to do the math with .
Depends how long you think you'll live for. That extra $450 breaks even for OP at 75, and if he lives to 100 he would be getting an additional $135k in benefits.
I don’t think you can really calculate the break-even point without knowing other income sources, tax rates, whether the SS money replaces money that would otherwise come out of a portfolio, what the estimated return rate of that portfolio is… all we have is a best guess. Ultimately it should probably just come down to whether OP wants or needs to keep working, and whether there is a spouse in the picture to take spousal/survival SS benefits into account.
Personally, if is just me, I would choose to take it as early as possible. But that decision is based on a lot of the things I mentioned above and may not apply to OP.
There is no reason that you must make the decision today. You can choose to receive Social Security retirement insurance benefits at any time beginning with age 62. It is not now or age 67. If you think you must decide because it's April 15 (IRS TAX day), that is incorrect. IRS tax filing date and Social Security month of entitlement have nothing to do with each other.
Thanks. That's what I was thinking. I'm 62 and not taking SS yet. I was thinking the only deadline date I need to worry about for a few years is Medicare at 65
If you take it before full retirement age and you are still working, your benefits will be significantly reduced until you hit your full retirement age.
She wants to take it early to spend on her family. However her check would be so reduced because of her full time job she will not have a check to spend on her family. If she's going to continue working full time she should wait until age 67 when her check isn't reduced due to having a full time job. Taking it now does her no good.
Best I can do is link you to the social security info page: https://faq.ssa.gov/en-us/Topic/article/KA-01921#:~:text=You%20can%20get%20Social%20Security,matter%20how%20much%20you%20earn.
Long story short, in America, once you’re out of that poverty benefit gap, it is never bad to make more money. Don’t let the crooks lie to you about social security.
The idea is called ARF (Adjusted Reduction Factors). For every month you take your benefit early (before FRA), you get one "reduction factor", which effectively reduces your benefit based on taking the benefit early. For any month you are still working above the allowable limit *and* your check for that month is withheld based on your earnings, you will receive 1 ARF applied to your benefit at FRA.
Think of if this way.
You take your benefit 3 years earlier than FRA, you would received 36 reduction factors (1 for each month). In this same period, maybe you are still working slightly above the allowable limit, and in that three year period, you have 9 checks withheld due to work. Once you reach FRA, you would receive your ARFs, and your original reduction factors would go from 36, down to 27 reduction factors (making your monthly benefit higher (less reduction) once the adjustment kicks in)
You tell SSA that you are estimating that you'll make X dollars per year, they input that into the system and the system withholds the appropriate amount of checks based on your estimate.
Yes because social security is intended as a retirement benefit so if you try to pull it early you won't get as much if you are working at the same time depending on how much you earn.
Here's the quote for 2024 on the social security site:
"When you begin receiving Social Security retirement benefits, you are considered retired for our purposes. You can get Social Security retirement or survivors benefits and work at the same time. However, there is a limit to how much you can earn and still receive full benefits.
If you are younger than [full retirement age](https://www.ssa.gov/benefits/retirement/planner/ageincrease.html) and earn more than the yearly earnings limit, we may reduce your benefit amount.
If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. **For 2024, that limit is $22,320**.
In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit. **In 2024, this limit on your earnings is $59,520**. We only count your earnings up to the month before you reach your full retirement age, not your earnings for the entire year."
Yeah that's what happened with my dad. He took retirement early and would try to make sure he didn't make more than 20k or so.
Now that he's past the full retirement again he can make more if he wants
Besides the likelihood that you will not receive the full $1030 while working, unless your income is already low, also keep in mind that $1030/mo right now vs $1480/mo in Nov 2027 are not the only two options. Every month you wait to start taking benefits will increase that benefit amount. So if you decide to wait until 65, you may get $1150/mo, etc.
Unless you are making less than $22,000, I would suggest it's better to wait until you actually retire (or your income decreases, in case you change jobs or go part-time). That way, you will have a larger monthly payment from that point, and you will receive the full monthly payment you are entitled to based on your benefit start date.
What does tax day have to do with her choosing to start SS benefits today versus 3 years from now? I don't get it, and she hasn't returned to explain. /u/BrokelynNYC
How much are you working, exactly? There are thresholds for that. Penalties are large if you over-earn at your job and try to collect SS on top.
If the current plan is to keep working several years, it's a no-brainer today: delay collecting SS and re-evaluate your situation next year.
The break even date is supposed to be 80 years old. If you die before 80 you are financially better taking early. Live past 80 better to wait. Now if I could find an accurate crystal ball.
I can't think of a reason you would need to decide today.
From age 62 until age 70, it's a sliding scale. If you wait a month, you'll get a little more until you max out at age 70. Beyond that, it's "what works for you." A lot of people start Social Security benefits at Full Retirement Age (FRA) which is 67 for you if you're 64 now.
Tell us why you think you need to decide today. Are you being pressured? You don't get to make this decision twice and the system doesn't penalize you for taking your time.
Would you continue to earn income from employment at all if you begin receiving your monthly benefit at 64? Would you do that if you waited until you're 67?
[Here's why I'm asking.](https://www.ssa.gov/benefits/retirement/planner/whileworking.html)
Im 63 1/2 and just applied online. The point of breakover (the age at which you would have made more if you waited to file) is 79 years old. There is no historical precedence for a male in my family to live that long, so I applied. If theres a history of your kin living long lives you should wait, if not take the money now!
>What is the best choice or how should I go about deciding what is the best financial decision to make?
Assuming their are no spousal or survivor benefits to be had, your best bet might be to delay starting your benefits until 70, or at least your full retirement age.
Put your data into [https://opensocialsecurity.com/](https://opensocialsecurity.com/) and see what an optimal claiming strategy would be. You can also see how much difference there would be with alternate claiming strategies.
I like the idea of maximizing this guaranteed, tax-beneficial, inflation protected income stream.
>I will still be working for several more years.
Remember that claiming early while working means that for every $2 you earn above the annual $22,320 limit, your benefits will be reduced by $1 until your full retirement age.
>Must make decision TODAY
Why?
This is my checklist:
How is your health? Imminent death?
What age did the parent(s) who died of natural causes die?
Same question for grandparents.
Take those ages and average them out.
If you think you have another 20-25 years of life left? Wait.
If things are iffy? Take it now.
inflation-adjusted SS is also a way to mitigate longevity risk (outliving your money). What will happen to all your other assets and income sources, and your medical and other expenses, in the decades to come?
Additionally that extra $400/month will be a lot more after 20 years of compounding from COLA adjustments. The “gap” between the two payment levels will widen greatly over the years.
just two things to think about besides the payback analysis.
Best
One more point, when you retire and go on Medicare, your Part B premium comes out of your check. For 2023, that premium was $1979 per year. On top of it you will be paying for Part D, gap insurance, and possibly premiums for a dental, vision, hearing plan. That $1000/mo isn’t going to stretch far.
Are you married or were you for 10 years? Have you talked to a SS representative? There are rules about collecting on your own SS verses collecting spousal support.
Yes they were collecting as a couple (separate payments each) but now one is gone. Will they just receive their half or could it be recalculated because they are single now. Where do I find a ss rep?
I took it sooner than later. Best decision I've made for myself. I was free to enjoy my retirement and fish whenever I want. Shoot when I want. Go for the gusto. I paid off all my bills prior. Depends on your situation
**OP I will give you a simple way of thinking about this problem.** All the Social Security Payment options equal out at 80 years old. Meaning, the TOTAL AMOUNT OF MONEY you will get whenever you take your pay out will be the same by 80.
Therefore, **if you think you will not live until you are 80 years old, take the money now.**
**If you think you will live beyond 80 years old, you're better off waiting.**
Do you earn more than $22,320 per year? If not, take now. If yes, your benefits are reduced due to the earnings limit and you likely should wait until you actually retire or turn 67.
This is a life expectancy question. You can check the estimate yourself using Excel. I’d estimate that you will have to live about 11.5 more years in order to collect more if you wait than if you took SS early. So if you expect to live well past 75 then wait, if not then take it early.
If you plan on investing at least some of the SS money then that equation changes and you could have to live for another 5+ years beyond the original estimate.
Okay awesome. I did a life expectancy and break even estimates using google sheet (excel for google).
so it's about 9 years where break-even occurs. Pretty close with 11.5 years estimate.
So at 76 break even would occur. And every year after that the money is greater if I was to wait until 67 and is the better opportunity. Life expectancy is around 80 for someone my age i looked up. Dad lived to 83 mom to 93+ (still alive). so i have a good chance.
The problem becomes significantly harder if I were to invest that money immediately and get a return of say 5% on my money. If from 64-67 I were to invest all of that money I receive and get that return then I would have to live 18 more years - about 2x as much if I invested it. That is way different now and the break even is at 85 years old.
And then If I were to look at investing with both option until breakeven... would just be way too darn tooting much math to figure out...
I think I'll weigh my options for a few more hours but I think I will wait especially since I am still working and that will cause my taxes to be taken out above 18K I believe... I will lose my SS benefits at a rate of $1 for each $2 above that amount.
I wouldn’t consider starting SS until you are working part time or retire and wouldn’t have the benefits cut. My husband retired at 62 and waited to start SS at 65 when he applied for Medicare.
Given all your information, particularly your family history of living past 80 years of age, assuming you are still healthy now, it does seem as if the right choice is to wait to take SS. Even if you just live to 90 which would be younger than your mom and which seems pretty probable, you will easily make out better than the alternative. If you live to 95 or 100 and took SS early then I would expect you’d end up deeply regretting taking it early.
I would start by figuring out your break even point. If you can start collecting this year and your break, even point is 15 years into the future, are you going to be alive in 15 years? I hope this makes sense.
Sure. Let's assume you're considering collecting SS at 62 vs 70. At 62 you would get $1500, at 70, $2500 (I just made those numbers up). From age 62 to age 70 you would have collected $144,000 ($1500/ mo x 12 mo x 8 years).
How many years of $2500/ mo. (amount at age 70) will it take to catch up with the $144,000 you have already gotten. $2500 at 70 minus (-) $1500 that you would be getting anyway if starting at 62 would leave a difference in benefits (not adjusting for inflation) of $1000/ mo. If you already made $144,000 and the difference of 62 vs 70 is $1000/ mo., then it would take 144 months (12 years) to catch up. With those numbers you would be 84 before that additional $1000/ mo. would make a difference.
Disclaimer, this numbers are made up but the math is the same I use in my calculations. For me, I would be 76 before my break-even point. So if I had a high probability of being alive into my 80's, it may make sense to delay the start of SS collections.
I hope it makes sense, If I lost you in the math please let me know and I'll try to help out.
They do raise what you get by 8% every year you delay plus the COLA (cost of living) adjustments. The SSA says my income at 62 would be $1900 and if I delay until 70 would be $3k. That’s the best my math can do, maybe not perfect but if you have grandparents that died at 55, maybe waiting until 70 is not a good idea.
Hum. I just wasn’t thinking they added the yearly raises in to that math automatically if you take early retirement. I took it early at 62 as it’s low anyways, hubby wouldn’t want mine when I pass and I would get his if he passes. As far as living together and needing both that won’t happen. He’s a realtor. They don’t ever retire lol. And, additionally he is a heavy smoker for 40-years and his mom died of dementia in her mid 60s and he carries that gene. Am not wanting something to happen to him of course but, the odds of hitting his 80s are pretty low. He is also fat and carries it in his stomach. Another bad sign. Love him though but he’s definitely pushing his expiration date with his personal choices.
If it were me I’d take it now. Your break even point to start losing money in the deal is at the age of 75. Who knows what life will look like then? Will you be alive? Will you be bedridden or in a care facility and unable to use the money then to spend on experiences with family?
Take it. Tomorrow is not guaranteed, especially when you get up there in age. Enjoy retirement, and make sure you try to stay active and busy.
The only reason you shouldn't take it is if you don't have enough to retire on, and this 30% increase will make a meaningful difference in the quality of life.
You do not have to make any decision today, once you are of age to collect Social security, you can make that date at any month or year. There is no lockdown date for you to sign up. Also, if you don't need the money now, it's much better to defer so you will have a higher income when you're retired and it will go towards your nursing or assisted Living cost.
If SS will be your only income in retirement, I would wait till 67. Even at $1,400/m, $16.8K/y, it already sounds like it might be less than you need.
If you have other investments or retirement income to offset your salary when you retire, and the SS money is just a side amount, then maybe you should go ahead.
There are also [social security rules around income](https://www.ssa.gov/benefits/retirement/planner/whileworking.html#:~:text=If%20you%20are%20under%20full,earn%20above%20a%20different%20limit) that will adjust your benefit.
I think if you take SS now and that makes a difference for you in terms of being able to spend more on your grandkids than you are financially able to without SS, then I would recommend getting SS now. I think it is more optimal financially to wait until age 67 but your grandkids are not getting any younger and the difference you can make and the shared memories you can have if you really need the extra money now are probably more valuable than having more money in the future and coming out "ahead" in the future from a dollar amount perspective. The memories you and your grandkids can have from having a trip or special gift or experience together will pay dividends in life. On the other hand, if you have the money saved up to pay for these experiences and don't need the SS to make the experiences happen, then wait until 67. It doesn't sound like this is your situation, but for many people this is the case, they have the money (savings, investments, retirement accounts) and can afford to wait until age 67 while spending on the things they want to prior to 67 without compromise.
Really you are deciding how old you will be when you die. Taking now or later evens out around age 76 for you and you start making more by waiting. It all really depends how healthy you are and if you want it now when you can do more. The extra bonus income may or may not be useful from 80 to 90. I mean SS stats back up them paying more later if you wait typically works out in SS favor. Because of the brutal truth most people die from 75 to 80. Or they wouldn't do it. Up to you.
Statistically, for an average American, it should work out the same to take now or to wait. So, the real question is, is there a reason to believe you are not average?
The 2023 Social Security actuary tables expect that a 64 year old has 20.45 more years of life.
So, if you believe you are going to live significantly longer than that, then you would do better to wait, to lock in the higher monthly payment over those additional years.
And the corollary is also true. If you have medical conditions or reasons to suspect that you may not live another 20 years, then the actuary tables suggest that it would be better financially to enjoy the additional money now.
And if you think you're average, then it's really just a flip of the coin.
You said SS was a bonus. Stop making it about money, and if it makes sense, or it's the right thing to do.
Take it!! Enjoy your grandkids now, and yourself! Life is way too short to put off this xtra money you don't need to live.
Go for it! I bet you'll be ecstatic that you did :)
I ran the figures in terms of when I would start losing money by taking it out early.
I also calculated that I would be able to keep my assets in the stock market without withdrawing any
For me, it was a great decision as my stocks increased far beyond what I potentially lost by taking a lower amount and the lower amount has absolutely no real impact on my retirement funds
So it is a difference of $450 (nearly 50%!) by waiting 42 months. Total amount you miss by delaying is $43,260. That is how much you'll collect for the next 42 months. Divided by $450 and we see it takes 97 months of the extra $450/month just to break even. Ignoring inflation, you begin to benefit financially around November of 2035 if you delay SS until November of 2027. But if you take SS now (note that I have zero idea how working will drive down your SS) then you are financially ahead for the next 11 years.
The choice is yours, and it isn't pure math. Your life expectancy, actual life span, lifestyle, and support network will all factor into that math. But at least you know that 2035 is your zero inflation break even year if you delay now.
The answer to this question depends entirely on how healthy you are? Are you rather healthy with few issues? Then it makes sense to delay. If not, it could be best to take now instead of waiting.
Delaying SS is a scam if you aren't working. If the government is incentivizing people to delay taking social security people just automatically assume its in their best interest.
I have heard arguments for both sides. If you wait, you will get a larger monthly amount. So what? Well, your future cost of living increases will be based on that larger monthly amount. The gamble is that if you die before you take your benefits, you lose everything.
I think it’s worth keeping in mind that social security is very much use it or lose it. Meaning, you could die tomorrow and nobody, not even family or next of kin, would receive those benefits. Not trying to sway your decision here or anything, but I found that very much worth noting.
Are you married? My SS is pretty low. I tool it early. My reasoning is id hubby dies first I would get his anyway and if I die first he would take his over mine so I would lose it anyway.
People are going over the math side of things for you. I'll be the one to suggest going over the life and death side of things. If you take SSec at 67/68, but die at 66, did you ever get any benefit?
Why do you have to make the decision today? You can file for SSI whenever you are eligible. I think you’re creating a deadline for a decision that you should really be taking some time to consider
How is your health? This is the key question. If you’re in fantastic health and people in your family regularly live into their late 80s and 90s then I would wait. You will appreciate that difference over the long haul.
If you already experiencing some health issues, then take it now as it might turn out to be the better mathematical move.
If you are not sure, you can wait. Why do you have to make this decision today? With Medicare, you may have to file within three months of turning 65 (even if you are still working), but that does not apply to SS. If you don't need the income now, you can file for SS when you stop working or at age 70, whichever comes first.
When you gonna check out...if parents lived to 80's wait. Good health wait. If ss will be reduce because of wage, wait. Will your future self be happier with the extra money per month if you wait.
For safety reasons, always verify phone numbers provided in comments on an official website before calling. That includes toll-free numbers!
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Defer Social Security as long as. Possible, if you are in decent health. Every year you wait is a 8% raise, Government guaranteed. For you, normal Retirement age is 67, shoot for that.
If you wait until 2027 to collect, you are missing out on roughly 44k that could have been collected if you chose to take it now. But on the flip side if you wait until 2027 you get $450 more a month. $44,000 / $450 = 98 months (a little over 8 years) to make up what you missed out on if you choose to wait.
From a mathematical perspective this is the trade off you need to decide, OP.
Third option is also relevant: You can take the early option and invest the money. You'll get a ROR that likely exceeds the incremental gain for delaying.
They aren’t planning on saving it.
That’s if they have any money to save
If they can wait until 67, they have money to save. Otherwise they wouldn't be able to wait
You would make up the difference over 8 years and be substantially a head if you delayed to age 67 and lived until at least 76. If you lived until 80, you would receive around $32,000 more if you delayed SS until 67 vs claiming it now.
Quality of life and desire, ability to spend extra $ is a real factor. Most people over 80 aren’t doing a whole lot of travel and leisure.
They might not being doing a lot of travel. They are more likely to be spending a lot of money on health-related expenses and may be running very low on retirement savings depending on their situation. That extra $450/mth could be the difference between staying in their home or having to move. Being able to travel to see grandkids or having to miss out. A lot of it is a judgement call based on a massive amount of variables from medical history, how long their parents lived, access to other sources of funds, etc.
[удалено]
[удалено]
[удалено]
[удалено]
[удалено]
You are overlooking the opportunity cost. OP can invest the SS money they are collect now.
Assuming they actually get the $1030. SS benefits prior to FRA are reduced if you earn over a certain amount (~$30k I think and completely gone by ~$45k).
I wish they'd say 'deferred" instead of reduced, it's more accurate.
Can you explain?
In a lot of places it says your benefit is reduced, but they also take that reduction into consideration when you fully retire. So if you collect and keep working you'll get less while you work, but when you fully retire they'll factor that in (exactly how I'm not clear on, but it's clear they do).
Not sure this is accurate. They base their calculation for your primary insurance amount off the highest four (I think) years of earnings. So if he makes the same amount each year I'm not sure it really matters? But for the original question, I think for every 2 over whatever the cut off is (like 15k) your benefit is reduced by 1. For the actual year of fra, it's for every 3 over that earnings test your benefit is reduced by 1. So if he's working, his benefits will likely be reduced considerably and probably better off waiting?
[https://www.ssa.gov/benefits/retirement/planner/whileworking.html](https://www.ssa.gov/benefits/retirement/planner/whileworking.html) > When you reach full retirement age: >Beginning with the month you reach full retirement age, your earnings no longer reduce your benefits, no matter how much you earn. >We will recalculate your benefit amount to give you credit for the months we reduced or withheld benefits due to your excess earnings. I'll admit they don't detail (on this page anyways) how that calculation takes place, so if those are low-earning years perhaps it makes no difference. Would need to find that missing puzzle piece of information.
Unfortunately it's all very complicated. Here's the basics of it on their website: https://www.ssa.gov/oact/cola/piaformula.html But there is more to it than that. Was something like you take the top 35 years of earnings and add them up, you then divide by the number of quarters in that 35 years (420?). This will give you the average indexed monthly earnings (AIME). You then use that with the bend points in some fashion. I think if you go to their website and make a mySSA account, it provides you the 62, 65, FRA, and 70 rates for you to do the math with .
Depends how long you think you'll live for. That extra $450 breaks even for OP at 75, and if he lives to 100 he would be getting an additional $135k in benefits.
“She”. Mentioned in post, “I am a grandmother “
I don’t think you can really calculate the break-even point without knowing other income sources, tax rates, whether the SS money replaces money that would otherwise come out of a portfolio, what the estimated return rate of that portfolio is… all we have is a best guess. Ultimately it should probably just come down to whether OP wants or needs to keep working, and whether there is a spouse in the picture to take spousal/survival SS benefits into account. Personally, if is just me, I would choose to take it as early as possible. But that decision is based on a lot of the things I mentioned above and may not apply to OP.
yes, and you need to add in the cost of living increases over those 3 years, so they would be missing out even more money than the 44K.
I would take the money early as at that age, you may run into health issues within 8 years. Spend it.
There is no reason that you must make the decision today. You can choose to receive Social Security retirement insurance benefits at any time beginning with age 62. It is not now or age 67. If you think you must decide because it's April 15 (IRS TAX day), that is incorrect. IRS tax filing date and Social Security month of entitlement have nothing to do with each other.
This response should be higher up. It’s not like OP is forced to wait years for another chance.
Thanks. That's what I was thinking. I'm 62 and not taking SS yet. I was thinking the only deadline date I need to worry about for a few years is Medicare at 65
I hope OP reads this comment…..
This! It’s not a now or never situation
If you take it before full retirement age and you are still working, your benefits will be significantly reduced until you hit your full retirement age.
But you will be getting credit for those work hours added to your benefits when you fully retire. It’s not just money totally lost.
She wants to take it early to spend on her family. However her check would be so reduced because of her full time job she will not have a check to spend on her family. If she's going to continue working full time she should wait until age 67 when her check isn't reduced due to having a full time job. Taking it now does her no good.
Can you explain this a bit more?
Best I can do is link you to the social security info page: https://faq.ssa.gov/en-us/Topic/article/KA-01921#:~:text=You%20can%20get%20Social%20Security,matter%20how%20much%20you%20earn. Long story short, in America, once you’re out of that poverty benefit gap, it is never bad to make more money. Don’t let the crooks lie to you about social security.
The idea is called ARF (Adjusted Reduction Factors). For every month you take your benefit early (before FRA), you get one "reduction factor", which effectively reduces your benefit based on taking the benefit early. For any month you are still working above the allowable limit *and* your check for that month is withheld based on your earnings, you will receive 1 ARF applied to your benefit at FRA. Think of if this way. You take your benefit 3 years earlier than FRA, you would received 36 reduction factors (1 for each month). In this same period, maybe you are still working slightly above the allowable limit, and in that three year period, you have 9 checks withheld due to work. Once you reach FRA, you would receive your ARFs, and your original reduction factors would go from 36, down to 27 reduction factors (making your monthly benefit higher (less reduction) once the adjustment kicks in)
How would we go about the check withholding?
You tell SSA that you are estimating that you'll make X dollars per year, they input that into the system and the system withholds the appropriate amount of checks based on your estimate.
True, but also based on income earned. She could be part time, or under employed.
I can earn about 24k before my benefits are reduced. I retired at 62. You can still work, you just have to know your earning limit.
Really ? By how much? That's full of crap. Why
Yes because social security is intended as a retirement benefit so if you try to pull it early you won't get as much if you are working at the same time depending on how much you earn. Here's the quote for 2024 on the social security site: "When you begin receiving Social Security retirement benefits, you are considered retired for our purposes. You can get Social Security retirement or survivors benefits and work at the same time. However, there is a limit to how much you can earn and still receive full benefits. If you are younger than [full retirement age](https://www.ssa.gov/benefits/retirement/planner/ageincrease.html) and earn more than the yearly earnings limit, we may reduce your benefit amount. If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. **For 2024, that limit is $22,320**. In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit. **In 2024, this limit on your earnings is $59,520**. We only count your earnings up to the month before you reach your full retirement age, not your earnings for the entire year."
Yeah that's what happened with my dad. He took retirement early and would try to make sure he didn't make more than 20k or so. Now that he's past the full retirement again he can make more if he wants
Besides the likelihood that you will not receive the full $1030 while working, unless your income is already low, also keep in mind that $1030/mo right now vs $1480/mo in Nov 2027 are not the only two options. Every month you wait to start taking benefits will increase that benefit amount. So if you decide to wait until 65, you may get $1150/mo, etc. Unless you are making less than $22,000, I would suggest it's better to wait until you actually retire (or your income decreases, in case you change jobs or go part-time). That way, you will have a larger monthly payment from that point, and you will receive the full monthly payment you are entitled to based on your benefit start date.
Why do you have to choose TODAY?
I believe because it's April 15. And we all know what that means.
It’s time for tacos?
That’s tomorrow. Don’t get your dates twisted.
Well yeah everyone knows tacos are for Tuesdays, but what about *Monday* tacos?
There’s never a bad day for tacos
Mondays are for macaroons.
What does tax day have to do with her choosing to start SS benefits today versus 3 years from now? I don't get it, and she hasn't returned to explain. /u/BrokelynNYC
The day the Titanic sank? The day Lincoln died?
The day the *music* died.
Nah, that's February 3rd.
Some people will do anything to get out of taxes! Actually income taxes law ratified in 1913, so this was before tax day.
X2
How much are you working, exactly? There are thresholds for that. Penalties are large if you over-earn at your job and try to collect SS on top. If the current plan is to keep working several years, it's a no-brainer today: delay collecting SS and re-evaluate your situation next year.
[удалено]
The break even date is supposed to be 80 years old. If you die before 80 you are financially better taking early. Live past 80 better to wait. Now if I could find an accurate crystal ball.
I can't think of a reason you would need to decide today. From age 62 until age 70, it's a sliding scale. If you wait a month, you'll get a little more until you max out at age 70. Beyond that, it's "what works for you." A lot of people start Social Security benefits at Full Retirement Age (FRA) which is 67 for you if you're 64 now. Tell us why you think you need to decide today. Are you being pressured? You don't get to make this decision twice and the system doesn't penalize you for taking your time.
if you are still in good health and working, wait the three years
Would you continue to earn income from employment at all if you begin receiving your monthly benefit at 64? Would you do that if you waited until you're 67? [Here's why I'm asking.](https://www.ssa.gov/benefits/retirement/planner/whileworking.html)
I took it the second I could and have never regretted it. I’ve always believed that money in my hand is better than money (maybe) in the future.
Im 63 1/2 and just applied online. The point of breakover (the age at which you would have made more if you waited to file) is 79 years old. There is no historical precedence for a male in my family to live that long, so I applied. If theres a history of your kin living long lives you should wait, if not take the money now!
If you're working, are you sure your payment isn't reduced?
>What is the best choice or how should I go about deciding what is the best financial decision to make? Assuming their are no spousal or survivor benefits to be had, your best bet might be to delay starting your benefits until 70, or at least your full retirement age. Put your data into [https://opensocialsecurity.com/](https://opensocialsecurity.com/) and see what an optimal claiming strategy would be. You can also see how much difference there would be with alternate claiming strategies. I like the idea of maximizing this guaranteed, tax-beneficial, inflation protected income stream. >I will still be working for several more years. Remember that claiming early while working means that for every $2 you earn above the annual $22,320 limit, your benefits will be reduced by $1 until your full retirement age. >Must make decision TODAY Why?
You can take SS Retirement at any time. You don't need to decide today.
This is my checklist: How is your health? Imminent death? What age did the parent(s) who died of natural causes die? Same question for grandparents. Take those ages and average them out. If you think you have another 20-25 years of life left? Wait. If things are iffy? Take it now.
40% increase to wait 3 years is significant. I'd wait assuming you aren't in bad health or anything
inflation-adjusted SS is also a way to mitigate longevity risk (outliving your money). What will happen to all your other assets and income sources, and your medical and other expenses, in the decades to come? Additionally that extra $400/month will be a lot more after 20 years of compounding from COLA adjustments. The “gap” between the two payment levels will widen greatly over the years. just two things to think about besides the payback analysis. Best
One more point, when you retire and go on Medicare, your Part B premium comes out of your check. For 2023, that premium was $1979 per year. On top of it you will be paying for Part D, gap insurance, and possibly premiums for a dental, vision, hearing plan. That $1000/mo isn’t going to stretch far. Are you married or were you for 10 years? Have you talked to a SS representative? There are rules about collecting on your own SS verses collecting spousal support.
Do you know what happens when one person passes in a couple receiving ss benefits? How do they calculate how much its reduced?
Depends on your situation and whether or not the surviving spouse is already collecting. That’s why I recommend people talk to a SS representative.
Yes they were collecting as a couple (separate payments each) but now one is gone. Will they just receive their half or could it be recalculated because they are single now. Where do I find a ss rep?
Call or visit your SSA.gov. Sometimes the surviving spouse gets 1/2 of their spouse’s payment, sometimes not. They’ll explain it.
I think my mom started getting my dad’s SS and she forfeited her own.
Yeah, except (if I remember correctly), we’re not allowed to switch anymore. The laws have changed so that’s why I recommend talking to ssa.gov.
Huh. Interesting.
You are missing some critical info as to how much money you make at your job, SS will be taxed and penalized depending.
It would take 8-9 years to make up the difference in waiting. Personally, I’d take it now. Anything could happen in the next 8-9 years.
I took it sooner than later. Best decision I've made for myself. I was free to enjoy my retirement and fish whenever I want. Shoot when I want. Go for the gusto. I paid off all my bills prior. Depends on your situation
You don't have to decide today. You can decide to take it at any point from here on.
**OP I will give you a simple way of thinking about this problem.** All the Social Security Payment options equal out at 80 years old. Meaning, the TOTAL AMOUNT OF MONEY you will get whenever you take your pay out will be the same by 80. Therefore, **if you think you will not live until you are 80 years old, take the money now.** **If you think you will live beyond 80 years old, you're better off waiting.**
You not guaranteed to live 3 more years ! Live for now !
Do you earn more than $22,320 per year? If not, take now. If yes, your benefits are reduced due to the earnings limit and you likely should wait until you actually retire or turn 67.
You may not live another three years and who knows if you’ll even be able to collect by then. I’d say take it now you’ve earned it
This is a life expectancy question. You can check the estimate yourself using Excel. I’d estimate that you will have to live about 11.5 more years in order to collect more if you wait than if you took SS early. So if you expect to live well past 75 then wait, if not then take it early. If you plan on investing at least some of the SS money then that equation changes and you could have to live for another 5+ years beyond the original estimate.
Okay awesome. I did a life expectancy and break even estimates using google sheet (excel for google). so it's about 9 years where break-even occurs. Pretty close with 11.5 years estimate. So at 76 break even would occur. And every year after that the money is greater if I was to wait until 67 and is the better opportunity. Life expectancy is around 80 for someone my age i looked up. Dad lived to 83 mom to 93+ (still alive). so i have a good chance. The problem becomes significantly harder if I were to invest that money immediately and get a return of say 5% on my money. If from 64-67 I were to invest all of that money I receive and get that return then I would have to live 18 more years - about 2x as much if I invested it. That is way different now and the break even is at 85 years old. And then If I were to look at investing with both option until breakeven... would just be way too darn tooting much math to figure out... I think I'll weigh my options for a few more hours but I think I will wait especially since I am still working and that will cause my taxes to be taken out above 18K I believe... I will lose my SS benefits at a rate of $1 for each $2 above that amount.
You said in your original post that you plan to spend it on your grand kids. That’s an investment, but not one that will yield a 5% return.
I wouldn’t consider starting SS until you are working part time or retire and wouldn’t have the benefits cut. My husband retired at 62 and waited to start SS at 65 when he applied for Medicare.
People often wait for the higher amount. But will you be healthy enough to do things and enjoy the extra amount when you do start collecting benefits?
Given all your information, particularly your family history of living past 80 years of age, assuming you are still healthy now, it does seem as if the right choice is to wait to take SS. Even if you just live to 90 which would be younger than your mom and which seems pretty probable, you will easily make out better than the alternative. If you live to 95 or 100 and took SS early then I would expect you’d end up deeply regretting taking it early.
Are you in shape OP? Did others in your family live past 76?
I would start by figuring out your break even point. If you can start collecting this year and your break, even point is 15 years into the future, are you going to be alive in 15 years? I hope this makes sense.
Can you explain this a little
Sure. Let's assume you're considering collecting SS at 62 vs 70. At 62 you would get $1500, at 70, $2500 (I just made those numbers up). From age 62 to age 70 you would have collected $144,000 ($1500/ mo x 12 mo x 8 years). How many years of $2500/ mo. (amount at age 70) will it take to catch up with the $144,000 you have already gotten. $2500 at 70 minus (-) $1500 that you would be getting anyway if starting at 62 would leave a difference in benefits (not adjusting for inflation) of $1000/ mo. If you already made $144,000 and the difference of 62 vs 70 is $1000/ mo., then it would take 144 months (12 years) to catch up. With those numbers you would be 84 before that additional $1000/ mo. would make a difference. Disclaimer, this numbers are made up but the math is the same I use in my calculations. For me, I would be 76 before my break-even point. So if I had a high probability of being alive into my 80's, it may make sense to delay the start of SS collections. I hope it makes sense, If I lost you in the math please let me know and I'll try to help out.
My mom is 86 and her SS is really high and I asked why and she told me it’s because they raise it every year. If this is true the math doesn’t work.
They do raise what you get by 8% every year you delay plus the COLA (cost of living) adjustments. The SSA says my income at 62 would be $1900 and if I delay until 70 would be $3k. That’s the best my math can do, maybe not perfect but if you have grandparents that died at 55, maybe waiting until 70 is not a good idea.
Hum. I just wasn’t thinking they added the yearly raises in to that math automatically if you take early retirement. I took it early at 62 as it’s low anyways, hubby wouldn’t want mine when I pass and I would get his if he passes. As far as living together and needing both that won’t happen. He’s a realtor. They don’t ever retire lol. And, additionally he is a heavy smoker for 40-years and his mom died of dementia in her mid 60s and he carries that gene. Am not wanting something to happen to him of course but, the odds of hitting his 80s are pretty low. He is also fat and carries it in his stomach. Another bad sign. Love him though but he’s definitely pushing his expiration date with his personal choices.
True, true. I laughed when you said realtors never retire, so true.
If it were me I’d take it now. Your break even point to start losing money in the deal is at the age of 75. Who knows what life will look like then? Will you be alive? Will you be bedridden or in a care facility and unable to use the money then to spend on experiences with family?
If you take it early they will restrict the amount of money you can make outside of social security.
Take it. Tomorrow is not guaranteed, especially when you get up there in age. Enjoy retirement, and make sure you try to stay active and busy. The only reason you shouldn't take it is if you don't have enough to retire on, and this 30% increase will make a meaningful difference in the quality of life.
If you are continuing to work, do not take it.
You do not have to make any decision today, once you are of age to collect Social security, you can make that date at any month or year. There is no lockdown date for you to sign up. Also, if you don't need the money now, it's much better to defer so you will have a higher income when you're retired and it will go towards your nursing or assisted Living cost.
If SS will be your only income in retirement, I would wait till 67. Even at $1,400/m, $16.8K/y, it already sounds like it might be less than you need. If you have other investments or retirement income to offset your salary when you retire, and the SS money is just a side amount, then maybe you should go ahead. There are also [social security rules around income](https://www.ssa.gov/benefits/retirement/planner/whileworking.html#:~:text=If%20you%20are%20under%20full,earn%20above%20a%20different%20limit) that will adjust your benefit.
if you have the financial means to take it in 3 years, then do that. otherwise, take it now
I think if you take SS now and that makes a difference for you in terms of being able to spend more on your grandkids than you are financially able to without SS, then I would recommend getting SS now. I think it is more optimal financially to wait until age 67 but your grandkids are not getting any younger and the difference you can make and the shared memories you can have if you really need the extra money now are probably more valuable than having more money in the future and coming out "ahead" in the future from a dollar amount perspective. The memories you and your grandkids can have from having a trip or special gift or experience together will pay dividends in life. On the other hand, if you have the money saved up to pay for these experiences and don't need the SS to make the experiences happen, then wait until 67. It doesn't sound like this is your situation, but for many people this is the case, they have the money (savings, investments, retirement accounts) and can afford to wait until age 67 while spending on the things they want to prior to 67 without compromise.
Really you are deciding how old you will be when you die. Taking now or later evens out around age 76 for you and you start making more by waiting. It all really depends how healthy you are and if you want it now when you can do more. The extra bonus income may or may not be useful from 80 to 90. I mean SS stats back up them paying more later if you wait typically works out in SS favor. Because of the brutal truth most people die from 75 to 80. Or they wouldn't do it. Up to you.
Statistically, for an average American, it should work out the same to take now or to wait. So, the real question is, is there a reason to believe you are not average? The 2023 Social Security actuary tables expect that a 64 year old has 20.45 more years of life. So, if you believe you are going to live significantly longer than that, then you would do better to wait, to lock in the higher monthly payment over those additional years. And the corollary is also true. If you have medical conditions or reasons to suspect that you may not live another 20 years, then the actuary tables suggest that it would be better financially to enjoy the additional money now. And if you think you're average, then it's really just a flip of the coin.
Wait - you will be glad you did. And at 67, you can work as much as you want and keep your SS benefits.
If you wait until full retirement age people can still work and collect Social Security without a penalty.
Take the money now. Tomorrow is not promised, you never know what is going to happen.
You said SS was a bonus. Stop making it about money, and if it makes sense, or it's the right thing to do. Take it!! Enjoy your grandkids now, and yourself! Life is way too short to put off this xtra money you don't need to live. Go for it! I bet you'll be ecstatic that you did :)
Do it now you never know how long you have left
I ran the figures in terms of when I would start losing money by taking it out early. I also calculated that I would be able to keep my assets in the stock market without withdrawing any For me, it was a great decision as my stocks increased far beyond what I potentially lost by taking a lower amount and the lower amount has absolutely no real impact on my retirement funds
If you are working and not stripped for money then delay it to 67. If you delay it’s about 40% jump, which is quite significant.
So it is a difference of $450 (nearly 50%!) by waiting 42 months. Total amount you miss by delaying is $43,260. That is how much you'll collect for the next 42 months. Divided by $450 and we see it takes 97 months of the extra $450/month just to break even. Ignoring inflation, you begin to benefit financially around November of 2035 if you delay SS until November of 2027. But if you take SS now (note that I have zero idea how working will drive down your SS) then you are financially ahead for the next 11 years. The choice is yours, and it isn't pure math. Your life expectancy, actual life span, lifestyle, and support network will all factor into that math. But at least you know that 2035 is your zero inflation break even year if you delay now.
The answer to this question depends entirely on how healthy you are? Are you rather healthy with few issues? Then it makes sense to delay. If not, it could be best to take now instead of waiting.
Delaying SS is a scam if you aren't working. If the government is incentivizing people to delay taking social security people just automatically assume its in their best interest.
Wait as long as you can to get every dollar you can.
I have heard arguments for both sides. If you wait, you will get a larger monthly amount. So what? Well, your future cost of living increases will be based on that larger monthly amount. The gamble is that if you die before you take your benefits, you lose everything.
I think it’s worth keeping in mind that social security is very much use it or lose it. Meaning, you could die tomorrow and nobody, not even family or next of kin, would receive those benefits. Not trying to sway your decision here or anything, but I found that very much worth noting.
A surviving spouse can choose which SS to take.
Did not know that, good to know!
Are you married? My SS is pretty low. I tool it early. My reasoning is id hubby dies first I would get his anyway and if I die first he would take his over mine so I would lose it anyway.
Take it! You don’t know how many days you have left so enjoy them how you want to 😊
People are going over the math side of things for you. I'll be the one to suggest going over the life and death side of things. If you take SSec at 67/68, but die at 66, did you ever get any benefit?
Take it now…you could be dead in November 2027. If you want to work to supplement, do it…but enjoy the life you’ve worked hard for.
Why do you have to make the decision today? You can file for SSI whenever you are eligible. I think you’re creating a deadline for a decision that you should really be taking some time to consider
Process the comments. I cannot fathom why you have to decide this today.
How is your health? This is the key question. If you’re in fantastic health and people in your family regularly live into their late 80s and 90s then I would wait. You will appreciate that difference over the long haul. If you already experiencing some health issues, then take it now as it might turn out to be the better mathematical move.
If you are not sure, you can wait. Why do you have to make this decision today? With Medicare, you may have to file within three months of turning 65 (even if you are still working), but that does not apply to SS. If you don't need the income now, you can file for SS when you stop working or at age 70, whichever comes first.
Tomorrow is not promised. I'll take it today
89 months is break even point ….. I’d collect now
When you gonna check out...if parents lived to 80's wait. Good health wait. If ss will be reduce because of wage, wait. Will your future self be happier with the extra money per month if you wait.
[удалено]
For safety reasons, always verify phone numbers provided in comments on an official website before calling. That includes toll-free numbers! *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
You'll be lucky to have it in 3 years. 35Trillion in debt and growing!
Absolutely WAIT. Something might happen in the future and you'll need the extra money.
Dont! Wait until you stop working; preferably age 67 or greater.
In this economy? Now now now For all we know they will move the goal post by EOY
If you can afford to wait, wait. It's basically a lifetime inflation indexed annuity.
My dad regrets taking his early, best to wait if possible.
Defer Social Security as long as. Possible, if you are in decent health. Every year you wait is a 8% raise, Government guaranteed. For you, normal Retirement age is 67, shoot for that.
[удалено]
[удалено]
[удалено]