Yeah, their are pros and cons concerning retiring early at 62 or waiting until your Full Retirement Age (FRA). My FRA is 66. After much decision, I compromised on this, and retired at 64.
The one thing I would comment on (noting that I do agree its best to wait as long as possible) is that the initial money you recieve between 62-70 can be reinvested and although you may not make up the entire difference in the long run it does allow for a small closing of the gap.
Putting 17K per year into a safe portfolio may net you some return, but that assumes you don't need the 17K immediately, which may defeat the purpose of taking early SS. I only put this out there as another point, not to debunk the authors comments.
My dad died after only 1 year of retirement. But setting that aside. The cost of living (which will not be constant) at the time of retirement 62 versus retirement at 66 or 70 (if a person lives that long) will have what effect on the social security you actually get?
In other words, factoring in the cost of living, do you actually get more in real dollars/spending power if you wait to retire at 66 or 70? Might it not be better to retire at 62 and enjoy being not be quite as destitute for a few years?
The math is way too simple. You can't just take the initial annual income and add it up for the years received because the dollars you get at 62 are more valuable than the ones you'll get at 66 and 70. You need to do a net present value calculation of the 3 income streams in excel to account for inflation and the impact of missing the first 4 or 8 years of revenue. Each income stream starts at age 62 (zero income for 4 years and then start at 66, zero income for 8 years and start at 70) and goes as long as you think you'll live. Do this for a few different lengths of time and see what you get.
Also, " it's more likely you'll live close to your life expectancy or beyond" doesn't make sense as the life expectency of a 62 year old is the average expected length of life left which means that roughly half will die before that and half will die after that. So your odds are just as likely that you'll die before as they are that you will die after that date.
And for starting early and investing - "To win this bet, you'll need to die early" is just the opposite. If you die early you will not have had the chance to spend the money. You win if you live longer, the investment grows, and you spend the larger amount.
You're on the right track, DaveInRacine, the article completely ignores the time value of money. The future value of monthly payments invested over 48 months (the time from 62 to 66 years of age) at a given percentage adds up very quickly. It is actually best to get SS at 62. Waiting 4 more years just doesn't make sense when TVM is applied; remember it's compounded NOT simple interest. Besides, SS will probably disappear soon, get it while you can. Ref. Tschultz1955 - he understands. It is in the Fed's best interest for us to postpone collecting SS as long as possible.
I notice that they conveniently left off how the Windfall elimination Program/ Government Pension offset affects your Social Security check as the amounts will then vary greatly and you will find that you will not get more money in the long run.
I am 62 yrs old, my wife is 65 yrs old and will collect SS on my work record. If I retire at age 63 and begin taking SS benefits it will, by my calculation take 20+ years before B/E with FRA benefits. Because my wife cannot begin collecting until I am collecting benefits we are losing $$ every month. I think this is different than delaying to get a higher benefit later. She cannot receive more than 50% of my FRA so waiting will only result in small increases in her checks. Am I not considering all the variables?
That's very true. Also,I think it's better to get that retirement money now at a younger age so you can have fun spending it. Getting more later is tempting, but you will be older and the extra money may not mean that much then. With each coming year, you start slowing down and old age starts creeping in.......
If I could have found a full-time job or even a good part-time paying job, I would have never opted to take my reduced Social Security at 62. With my savings dwindling, I didn't have enough to cushion any differential between the payouts at age 62 until age 66, even with a prospect of a part-time job. Once the payouts began, I continued making efforts to secure a job during the first year of reduced SS so I could repay my payouts and have them redeposited; SS only gives you a one year window to do this and stop any further payouts. I'm still trying to find work, since I can earn up to $14k without SS reducing any of the monthly payouts. It was a difficult decision, albeit a necessary one in order to survive.
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Putting 17K per year into a safe portfolio may net you some return, but that assumes you don't need the 17K immediately, which may defeat the purpose of taking early SS. I only put this out there as another point, not to debunk the authors comments.
-Derek
In other words, factoring in the cost of living, do you actually get more in real dollars/spending power if you wait to retire at 66 or 70? Might it not be better to retire at 62 and enjoy being not be quite as destitute for a few years?
Also, " it's more likely you'll live close to your life expectancy or beyond" doesn't make sense as the life expectency of a 62 year old is the average expected length of life left which means that roughly half will die before that and half will die after that. So your odds are just as likely that you'll die before as they are that you will die after that date.
And for starting early and investing - "To win this bet, you'll need to die early" is just the opposite. If you die early you will not have had the chance to spend the money. You win if you live longer, the investment grows, and you spend the larger amount.
It is in the Fed's best interest for us to postpone collecting SS as long as possible.
Retiree