I suppose if you were 85 looking back, wishing you had deferred to 70. Your monthly payment would be higher. Though I have never heard a regret as you propose.

But it depends.

My dad took it at 62. He died at 67. Likewise I plan to take it early given my family history.

Good luck with your decision.

I was just thinking about this some more.

Say you were 85. Hale and hearty. Why would you regret taking SS at the normal retirement age as opposed to waiting until 70?

If you worked between 66 and 70, it might (probably would ) make sense to keep deferring. Taxes may have reduced the benefit considerably, and deferring those taxes was a good business decision.

If you didn't work between 66 and 70 but had a lot of pension and/or investment income and didn't need the money, it might have made sense to defer. The increase in the benefit (is it around 6% per year?) makes your decision a good inverstment decision.

But if you weren't working, and didn't have an excess of money coming in from pensions and investments, maybe you didn't really have the choice to defer 3 or 4 more years. You made the best decision you could at the time.

According to most analysts, every year of deferral is worth about 8%. Looking at my own SS history, that's accurate for me.

"According to most analysts, every year of deferral is worth about 8%"

There's no need to do an analysis to understand the alternatives - this information is readily available from normal Social Security Admin info sources. When you sign on to your account, the monthly benefits to be received at the different age choices are shown. Subtraction and division will tell you how much the amount changes by year.

In making the choice, everyone should understand that the alternatives - take less sooner or take more later - are actuarialy equal. Actuarial life expectancy shows what is the statistically expected remaining years before death for a person of a given age. If YOU live to the exact mean age that the data SSA uses shows, then the choice you make doesn't matter because all choices produce the same financial result. If you expect you (or your spouse) to live longer than average for persons your age, you should delay until the maximum benefit is obtained. If unmarried and or you expect to die sooner, you should start benefits sooner.

Tax is not a consideration other than for people who expect a significant change in their personal tax brackets.

Many choose to take the benefits early for the simple reason that they need the money. There's nothing wrong with that, that's why you get a choice.

Sorry about the time delay in responding. SnidelyW, and/or others, what if one collects at 66 but keeps working, possibly to 70, and in the interim, puts the SS in CD's? I hesitate to say invest the SS$ for the chance of losing due to market downturns, but if interest rates begin to rise a little, and if one starts collecting in a couple years or so, wouldn't that make taking SS at 66 a better choice?

On December 4, 2015, there was an article by Maryalene LaPonsie published in U.S. News & World Report regarding the new rules for SS (no more "file and suspend" after April 30th of this year, etc.).

Regarding filing early vs. waiting until age 70, the article quoted Andrew Moss, senior vice president of investments at Merrill Lynch in Bloomfield Hills, Michigan, as follows: "Do whatever you can to delay taking Social Security under your full retirement age, as long as you think you’ll make it to age 83."

It goes on to say, "According to Moss, 83 is the age a person must reach in order to make delaying benefits more profitable than filing early. For those who think they may have a shorter life expectancy, filing at age 62 could be a better choice."

I retired when I was 64.25 years old (I'll be 67 in August), and began drawing SS benefits right away. My mother was 53 when she died, and her parents were 78 and 81 when they died. My father was 56 when he died, and his parents were 64 and 85 when they died.

My husband retired when he was 63 and began drawing SS benefits right away. His mother was 45 when she died, and her parents were 52 and 61 when they died. Hubs' father was 61 when he died, and his parents were 48 and 94 when they died.

Hubs and I both retired from the State of California, so we each receive a monthly pension from the retirement system. That's the money we live on. We both save our SS benefits each month. California doesn't tax SS benefits (only 14 states do tax SS benefits), but 85% of our SS benefits are federally taxed. (Depending on your total income, your SS benefits may not be taxable at all, or the percentage may vary.)

grandmarows, what you do with the money doesn't matter - a box under your bed, CDs, pork belly futures, or wine, men and song. This is a discrete question - do you get more by taking less sooner or more later? And as said, the better choice is determined only by knowing whether you will live longer or shorter than the mean expected mortality data would suggest. Put another way, for everyone it will never be anything other than a guess.

Lindsey, an income dollar from one source is the same as one from another. Are you saving for something in particular or are you using the source as just a convenient mechanism for determining a savings amount?

What is "file and suspend"? Why are the getting rid of this practice? What was the advantage? Thanks.

F&S was a technique mostly used by high-income couples. Not everyone could see a benefit from it; like anything else you needed to work out the #s for your particularly situation to see if it was advantageous.

File and suspend is a technique that boosts the benefits of a married couple. For a married couple expecting an average or longer life expectancy, the spouse with the higher benefit would file at age 66 but defer (suspend) benefits. Doing so allowed the other spouse to start collecting the spousal benefit (a gain if that amount was higher than the standalone benefit of the lower earning spouse) while still allowing benefits to continue to increase to age 70 because of the deferral by the higher wage earner.

You might say it was for higher earning couples only to the extent it required postponement of receiving full social security benefits, something many do anyway. The benefit boost was available to anyone, regardless of income level.

A law was passed removing this approach to claiming benefits, it was viewed as an unintended loophole and windfall in the law. It's no longer available for initial Social Security claims filed after this month.

Thanks for explanation. Very clear now.

Gram, there are income limits. If you make over x dollars, your SS is reduced.

I have met several people who both worked and collected SS, and they often commented, they were working for free. I used to work with two people who would not work full shifts because they would lose SS income.

Opps - I went to edit my response and accidentally deleted it.

Jim, from what I understand, including from my recent meeting at my local SS office, once I hit 66, my full retirement age, I can make as much as I can without penalty.

gramarows,

You are correct. There is NO SS Benefit reduction if you are working after age 66. Only during the period of early benefits and even that is actuarial neutral.

Also, your SS Benefit will be calculated and raised each year that you work beyond age 66.

Snidely had asked, "Lindsey, an income dollar from one source is the same as one from another. Are you saving for something in particular or are you using the source as just a convenient mechanism for determining a savings amount?"

I know that you are a CPA, and math was always my worst subject. (It had to do with moving a lot as an Army brat and different methods of teaching math in different states or even in the same city but different school districts.) I generally try to shy away from discussions of religion, politics, and finances. Having said that, I'll give a rambling, possibly quite stupid, answer. But, hey, it's what I do.

First, I guess it helps to know that I have my state retirement pension and my SS benefits on direct-deposit to my checking account. (And when I was still working, my monthly state salary check was on direct deposit to my checking account.) I chose to start collecting my SS benefits right after I retired because with my family history, I don't think I have an exceptional chance at living past age 83.

I have, for as long as I can remember, had money automatically transferred out of my checking account each month and into a savings account. Actually, two transfers into two accounts. One savings account accumulates the money to pay our property taxes each year (we've always put down more than 20% on houses we have purchased so we've never had an impound account), and the other savings account is my "fun stuff" money. I have never pulled money from the property taxes savings account for any reason other than to, twice a year, pay the property taxes. The money in the "fun stuff" account is what I use to pay for airline tickets when we travel, hotels, car rentals, etc. (Yes, I charge the amounts on one of my charge cards, then I use the money from the FS account with my online bill pay thing with my bank to pay off the charges on the card.) Also the money in that account is available for other purposes if needed. For example, as you know we recently had a new roof and gutters/downspouts installed on our house. That cost a bit over $23,000. We could have financed it, but we didn't see any reason to do that. I simply transferred the money from the FS savings account into my checking account and wrote a check. (I know, a new roof isn't exactly "fun stuff," but that's where I had an easily accessible $23,000+ to pay for the roof and gutters. And my husband has given me slightly more than 1/2 of that money back which I've put back into that savings account.)

So.... I guess, basically, my "answer" is that my net income each month (federal taxes are deducted from my state pension and SS benefits and state taxes are deducted from my state pension) is higher in retirement than it was when I was working. My expenses are a lot lower in retirement (e.g., no more paying $100 each month to park, $100 a month for union dues, no more deductions for SS and Medicare taxes, no more paying for monthly health care premiums [because they're covered by our retirement health benefits], etc.), so after I pay my monthly bills I have money left over from my state pension, and don't dip into the SS benefits at all. So, I simply transfer the SS benefits and some of the leftover pension benefits into the FS savings account. My husband's net income is more than $2,000 higher each month in retirement than it was when he was working. It's nice to know that, should there be some sort of emergency, we have access to a good amount of cash, as well as a stupidly high amount of available credit.

Your mileage may vary.

Yeah, so it isn't so much that it's the social security amount you save, per se, but rather you have money left over from all your sources of cash inflow and you save it. You could also say it the other way around ("we live on our social security plus as little of our pensions as we can get by with") and it's the same thing. Good for you.

There no right or wrong, you think about what you do in a way that makes sense to you and have developed a system that works for you. Nothing better than that. Good luck.

My Dad took it at 62, received one check, then passed away. Over his lifetime (he owned his own business so had to pay employer part, as well as employee part), he paid 2 million dollars into SS and received only one check. Sad, sad, sad.

I don't understand why some professions are exempt from paying into SS. It just doesn't seem right.

2 Million Dollars? Not based on one person's income.

SaltiDawg, I just guestimated and probably should not have. The last time he mentioned it several years before he passed away, he had payed in one million. I just thought that for all the other years he lived and worked, it was probably another million. This was also not based on his income, it was based on his having to pay as an employer and as an employee.

One million is also an impossible contribution for one employee... might your father have been talking about his company's contribution for all of his employees?

I started to draw SS at age 55Y10M, Full Pension at time eight years ago. In 19 months I had received an amount equal to my lifetime contribution. Double or triple it if you want to pretend I was self-employed. lol

You can find tables showing the maximum individual and employer contribution, assuming your father earned the max each year, I did later in life, I did not when I was young. (US Navy Submariner Retired. lol) Add up those contributions for your father.

I was not in a comparable situation to your father's, but my lifetime contribution was on the order of $40,000 IIRC.

Indexed pensions and SS earnings are a great benefit. I have received more pension earnings in 32 years then I did in Active duty pay for 24 years - and as I said, I got my SS contributions back in 19 months.

I'm sorry for your father's passing at an early age, and he is a prime example of the other end of the retired financial spectrum re contribution vs benefit received.

My grandfather got one check and died. My grandma received benefits for another 30 years. She passed away at 95.

It's insurance.

Also...

$2,000,000 employer contribution means a payroll of about $20 million over the years. Or if that was just the business portion paid by your father, and the other half was the employee contribution withheld from their paychecks, a payroll of $40 million.

Not a bad business. Not sure I would be grumbling about FICA taxes!

Walnut Creek, you're off by a factor of 10 or more. I too paid the self employment social security tax, it is roughly double the rate paid directly by employees. But that one-half rate indeed doesn't include what's paid by the employer, which is why self employed people pay double what an employee pays on their own because the charge is the employer and employee shares together. For people who own their businesses, it's the same whether the business is incorporated (and so there are the two pieces) or unincorporated (and so there's one at 2x)

Currently, it's 15% on $120K, or about $18 K per year plus 3% on excess for the medical part. As recently as 2000, the wage max was$75 K, 15%, or$10k per year. If your father paid the max for 40 years, it was likely less than $200 K in total, because the wage base was much lower in past years.1990= $50K wage base, 1980=25K base. Etc

(edited for clarity)

snidely,

You're absolutely correct in your point... some of the numbers are off and there is no "3% on excess" for SS... Medicare Contribution earnings ceiling is unlimited IIRC.

In my post above I had my numbers for my retirement in 2008 at age 66. I last year working was some 14 years earlier when I was making well above the SS Income Cap, however the first year I worked was 1960 and I made half of Minimum Wage.

You put more effort in answering then I was willing to do. I got so far as to look at 2016 Income Max of 118,500 with max contribution for self-employed person @ $14,694 AND 1976 Max of $15,300. (I don't know the percent tax in 1976, but if 6% would mean max contribution for self-employed person of $918.

Fun fact. If you retire from SS this year (2016) at age 65, and you earned the Max SS Wage for at least 35 years, you'll receive the largest SS Pension possible: $2639/mo.

One of the situations where being old is a good thing. (On second thought... lol)

I don't do this kind of thing regularly but I looked at my own numbers on the Social Security site and here's how it works for me at a simplified level:

If I delay the start for 4 years from age 66 to age 70, my monthly payment goes up 32%. But doing so requires me to receive nothing for 4 years.

The amount of the 4 year payments not received (ages 66-70), divided by the monthly increase resulting from waiting until age 70, is 150 months. So, it will take 150 months (12.5 years) starting at age 70, of receiving the higher payments to recover the payments not received. This calculation ignores the time value of money (which would make the SOONER choice more attractive), inflation adjustments on the increase after age 70 (which would make the break-even point sooner), and inflation adjustments on the increment over the age 66 amount that would increase the payments when started at age 70. There may be other factors to consider but I think these are the main ones. I think in general when looking at the 62-70 range of benefits, the break-even age is in the late 70s to early 80s.

The choice of when to start also affects the SS benefits received by your spouse during your lifetime and after your death as a surviving spouse.

Because these numbers will always be estimates and the ultimate determining factor is a person's life expectancy (which one can NEVER be certain of), you shouldn't expect to be able to do a financial analysis to determine THE right answer for you.

If you die in the year of the projected so-called "break-even point", then the choice didn't matter because the result was the same in total. If you plan to die younger, start benefits sooner. If you're certain that you or your spouse will live until you're 100, delay until age 70.

Click on the link below to find a webpage prepared by a thoughtful financial adviser to give you a suggestion about what approach to take. This calculation takes the numbers and slices and dices alternatives to produce a result based on Net Present Value. What I said and any other thoughts you find are only general thoughts, so don't take any advice as being carved in stone.

SS Analyzer

Hello Snidely,

Thank you for the response and the link to SS Analyzer.

It looks like the way you calculated the break even point is the same as mine. Earlier I posted my calculation, but deleted it when I realized the amount I used for the 4 year payments not received (ages 66-70) was wrong. Instead of multiplying the yearly amount to be received at age 66 by 4, I should also factor in the 8% annual increase for each year's SS payment.

I will receive pension, I now think I should make decision on if I should delay pension payment or withdraw it at 66. I am waiting for Benefit office's response to confirm the annual increase rate and the age limit when a pension withdrawal is required.

There are plenty encouragements from publications and seminars to delay Social Security, but I am not so sure.....For example, if the choice is taking SS or withdrawing from 401k/ IRAs, may be some people should take SS first before cashing out 401k and IRAs; as SS stops when we die, but balances in 401k and IRA could pass down to heirs if they need the fund.

It would be wonderful if I know for sure when I would die. The longevity calculator says my life expectancy is 97, what a drag!

Does deferring increase your benefit if you will not be working and continuing to pay into SS during those years? When the SS calculator estimates your future benefit I think it assumes that nothing else changes. Isn't the benefit weighted to your most recent years? Meaning that, if you retire from your career at 66 and only make a fraction of your salary thereafter, it is better to start collecting when your salary is at its highest? Thank you for clarifying this for me. No one at SS has been able to explain it to me.

kit,

I found the following information on the Motley Fool link below:

http://www.fool.com/retirement/general/2014/08/02/how-are-social-security-benefits-calculated.aspx

What factors do not affect Social Security benefits?

Working longer doesn't necessarily mean you get more Social Security benefits. Only your 35 highest-earning years (adjusting for inflation) count, so continuing to work won't boost your benefits unless it increases your average income for the highest-earnings years.

And working fewer hours or for less pay as you near retirement won't hurt your Social Security benefits. Some people mistakenly assume that Social Security benefits are based on the last years worked. Fortunately, you can work as long as you want, and your Social Security benefits are still based on your 35 highest-earning years.

Thanks azmom. And do you think that means that if you have worked LESS than 35 years, you will have zeroes for the non-working years pulling down that basis?

Yes. So even if you only work part time a zero year will be replaced by a year with at least some earnings.

kit,

A while ago from the link I listed above I sent for a copy of "Money for a Lifetime: 7 Simple Steps to Getting the Most From Social Security" from Motley fool. You may want to get your own copy as I doubt they would be happy if I posted the content here.

I just finish reading it, I found they answered the questions that folks in our local SS office did not. For most people, what in the booklet is very helpful.