The short answer is “it depends”.
I’m reading “Social Security Strategies” because
*I’m a nerd
*So you don’t have to
I’ll be writing some posts about this as I read and learn, so that perhaps its as simple as a website, spreadsheet or tool.
But don’t I just get out what I put in?
It’s a complex formula that takes inflation and buying power into account. A rule if thumb is that the cost of something doubles every 24 years as do salaries. If you have a 30 year work history, your starting salary is bumped up to today’s dollars.
Social Security formulas are very complex, based upon if you are single, how long you worked, how much you made, and your life expectancy.
*You don’t qualify if you worked outside the home less than 10 years. (You can receive widow(er) benefits if your spouse worked more than 10 years outside the home).
*If you made over $100,000 during your working years, or over $50,000 24 years ago, you may only get 14% of your benefit. If you made minimum wage, you get more -90%.
*Your life expectancy is a huge deal and they bet on you not living so long.
Get a piece of paper and a pen, I will walk you through this first part:
1. Determine your life expectancy and write it on a piece of paper.
If married, write spouse’s expected age also.
“Oh! That’s terrible!”
2. Determine what year you were born and possible dates to start collecting. Hint: it may not be 67.
(if Jan 1st, use the previous year, lucky you. Use the DAY BEFORE your birthday to determine the date you can start) and your FRA (Full Retirement Age). You might be able to take it earlier at 62, depending on several things in later posts:
Year Earliest Full benefit
1941 61+364 days 65+8months
1942 “” 65+10mo
1943-54 “” 66
1955 “” 66+2mo
1956 “” 66+4mo
1957 “” 66+6mo
1958 “” 66+8mo
1959 “” 66+10mo
1960+ “” 67
Example: you were born Dec 8, 1955. You would either begin to collect Social Security Feb 7, 2018 or calculate from Dec 7, 2021 and add 2 months to receive full benefit Feb 7, 2022.
Why would I just NOT take it early if it will run out? Projections are that it won’t “run out”. There are investments that Social Sec does to keep it safe.
Why not wait for the full benefit?
It depends upon how long you and your spouse live. There is a “breakeven” point of about age 80, where it makes no difference if you take it at 62 or 67.
More to come as I learn 🙂
Source: Social Security Strategies.2011.
Image is the Strawberry Moon 2016 which happens about every 70 years or so.