Social Security Calculator Can Help Tell When to Take Benefits

Here's an interesting comment left on my post titled When Should You Take Your Social Security Retirement?:

I downloaded a calculator from the SS administration website and calculated my benefits at every year from 62-70. Assuming 8% return, the break even point where all had the same value was age 85. With 10%, there was no break even point. I have 35 years to make that decision. If the market still returns 10.5% through then, I'll probably take it early.

Also, if you are in your 30s, you may end up hitting 62 just a couple years before SS is supposed to run out. If so, take the early option.

Interesting thought -- if you think you can do better than what they have in their projections, then taking your benefits early may make sense.

Ahhhh, the debate goes on. ;-)

Comments

[Bill D]

How about the government lets me take it NOW (at 25) and invest it as I like...

Oh wait - it's because my generation probably isn't getting a dime of social security anyway...

[EMF]

I would like more detail as to how this was calculated.

For example, when the value of Social Security benefits were figured in, was an allowance made for the annual cost of living adjustments for Social Security benefits?

And if you take Social Security early, will you be investing it? Or will you be spending it?

Maybe you have in mind that at age 62, you'll keep working awhile longer but start taking your Social Security benefits and invest them. Wrong, wrong, wrong. At age 62, or any year short of your Normal Retirement Age, you have to give back $1 of Social Security for every $2 of earnings above a threshold. The threshold is only $12960 this year. http://www.ssa.gov/retire2/whileworking.htm If you can manage to live on $12960 a year, then sure, you can invest your Social Security benefits.

[Brandon Lee]

Social Security isn't scheduled to "run out" in 2041, that's just when the "Trust Fund" runs out. Really, the "Trust Fund" is just all of the money that the government has been borrowing from Social Security, so it's really already "run out" in reality. Excluding that minor detail, Social Security income (withholdings from payroll) will fall below outlays (paid benefits) in 2017. Later, in 2041, the "Trust Fund" runs out, and benefits will only be 75% of what they should be unless something is done. According to the Trustees, we need to immediately increase SS income by 16% or decrease benefits by 13% to bring everything in balance for the next 75 years. We'll see what happens.

http://www.ssa.gov/OACT/TRSUM/trsummary.html

[Phil]

"How about the government lets me take it NOW (at 25) and invest it as I like...
Oh wait - it's because my generation probably isn't getting a dime of social security anyway..."

Actually many in your generation have no clue as to the purpose of Social Security. It's an insurance program *not* an investment program. I'm 46 and I don't expect I'll get much from SS, either - at least I don't account for it in my retirement plans. I expect SS will still be around, but there will be some sort of means testing added in since there won't be enough of your generation working when I reach that certain age (I'm at the tail end of the boomers). It will be interesting since the current demographics won't support future needs as the third poster pointed out. Either the congresscritters will cut all benefits a little, or cut benefits a lot (through means testing) for those that successfully planned for their later years. Either way, our current political system will make this a tough choice since old people actually vote and will punish the politicians who cut their benefits.