Not sure why (probably because I am old), but I actually looked at my social security statement tonight. I had glanced at it before, but for some reason I really read it this time. It took about 20 seconds for me to read and reread the payouts by age to decide to put them into a spreadsheet. The gubmint does everything possible to sell us on the idea of waiting until "full retirement age" to get the "big payout". And it looks like a good plan. On the surface. If you have no idea what opportunity cost is.
Going at 62 with the reduced benefit means 5 years of collecting benefits prior to the full retirement age at 67 (or 70 for you kiddies). The extra benefit you get annually takes years to make up the difference lost in opportunity cost. For me, if I wait until 67, I won't break even until age 88. It takes that long for the extra payment to make up for those 5 years of not taking the cash earlier.
Now, the trick is going early means being hella taxed if you work. The untaxed max is 21k of work income. So the trick is finding a way to get around that income limit. For example, if you and the wife own a business, you can funnel all the distributions to the wife and let her record the income instead of splitting it. Jobs were the bulk of the money is in tips also works.
Lots to think about. But believe me, if you are getting to close retirement you should really start digging into how to game the system.
Going at 62 with the reduced benefit means 5 years of collecting benefits prior to the full retirement age at 67 (or 70 for you kiddies). The extra benefit you get annually takes years to make up the difference lost in opportunity cost. For me, if I wait until 67, I won't break even until age 88. It takes that long for the extra payment to make up for those 5 years of not taking the cash earlier.
Now, the trick is going early means being hella taxed if you work. The untaxed max is 21k of work income. So the trick is finding a way to get around that income limit. For example, if you and the wife own a business, you can funnel all the distributions to the wife and let her record the income instead of splitting it. Jobs were the bulk of the money is in tips also works.
Lots to think about. But believe me, if you are getting to close retirement you should really start digging into how to game the system.
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