Social Security breakeven

rrlund

Well-known Member
I guess I'll have to eat my words and take my Social Security this year. I'd been saying all along that I wouldn't take it until I'm 67. I've been sitting here with a pen,paper and a calculator figuring where I'd break even if I wait.

I've figured in an average 2% annual increase for inflation and to compound it. At the age of 85,I'd still be over $10,000 short of breaking even for the total I'd collect overall. I'm not gonna figure it beyond there because I doubt I'll live much beyond that anyway.

So,if I do plan to start taking it in June,how much money can I earn this year without being penalized? Should we start selling cattle in the wife's name right now? Will that matter if we're filing a joint return? A question for DaveH I guess.
 
Only if you live a long time.It depends on what you can afford to live on if you start at 62,and if you still work,and can work,etc.,etc.,etc.Mark
 
You can make right at $16K and not have to pay back any. After that it is one dollar for every three of income.

If your at FULL retirement age then you can earn up to around $45K BEFORE the month you reach full retirement age. These are close to the actual numbers as I looked them up just in the last month or so.

If your wife is younger then moving income to her MAY help her with her when she retires but usually not because most wives draw more off their husband's earnings. The usual is 50% of what the husband draws.

Funny fact: Any person that your married to for longer than 10 years, can draw against your income. That stays the same 50% of what the larger wage earner can draw. My Father has three women drawing 50% each of what he would draw. So they combine to draw 150% of his SS amount.
 
No. That's what I had always thought would be best,but that's not what the arithmetic shows. If I take it at 62,by the age of 85,I'll draw $421,238 total. If I wait until 67 to take it,by the time I'm 85 I'll only have drawn $411,129. I honestly thought the breakeven would be around 77 or 78.
 
Randy,

If you don't need it you will make 8% interest on it if you wait till you are seventy. I don't know of anywhere you are assured of 8%.
 
If you are drawing strictly SS retirement benefits based on your own personal payments over the years then your Wife's income will not count against your benefits, even if you sell a few head in your name only the net profit will count. But the safest option is definitely to try to keep the income all in her name, I would also put her name on the schedule "F"next year.
 
I should have done this yesterday. We just went and picked up our finished return last night. I'll have to give her a call. Unless Dave has the answer. I have no problem with selling cattle in her name,I just wonder about the joint return thing. Might have to set up two sets of books. Run some income and expenses in my name,some in hers.
 
Ya,I'm aware of that too. I can draw around 40% more at 67 than at 62. I figured by compounding the difference,plus a reasonable CPI,it would catch up and pass the total lifetime payout a lot quicker than it does.
 
I ran the numbers when I was 62---and it was 14 years in the future to break even---was a no brainier for me to sign up!
 
If I could have caught up at 76,I'd wait,but 85 and it still doesn't catch up? There's the no brainer.
 
The other thing is the grim reaper shows up too early like he did with my neighbor. He was 64 and was on blood thinners. Passed out or something, but opened himself out and bled out on the kitchen floor. He just signed up and never collected a dime. He had some health issues to deal with, worked all his life and though a smoker, was thin and seemingly in decent health otherwise. Really sad being just outside clearing snow and the guy is inside bleeding out until his wife came back to find him.

You have improved your odds by exercising and if you eat reasonable food, I bet you stand a good chance to make it longer than you think. It was great to hear of you results with the elliptical exercise machine, I now have one in the family room for the same purpose!
 
OK, I'll climb onto my little soapbox for a spell.

The decision as to when to draw should not be based on how long it will take you to "break even"- you should be looking at what you will have to live on when you're fully retired (ie, can't farm anymore). You'll have 25% less per month Social Security if you start at 62 than if you wait until "full retirement age"- I'm thinking 66 for you. If you have a farm to sell, or have put a lot into an IRA, it might not be as much of a problem. But lots of guys with few other assets get $1,500 SS at 62, and when they are in their 70's struggling to stay afloat, it occurs to them that the extra $500 a month they would have gotten by waiting would sure come in handy.

The other problem with starting at 62 (if you're still making an outside income) is that you are heavily penalized on SS if your other income exceeds a fairly small amount. I'm not familiar with the exact numbers- talk to a CPA. But if you wait until full retirement age, you can make as much as you want, without reducing your SS. You just pay ordinary income tax on 85% of your SS.

So, IMHO, you're better off to wait until full retirement age unless you have little or no other income, and need SS to survive. Lots of guys in physically demanding jobs retire and draw at 62 because they can't "cut the mustard" any more, which is perfectly understandable. But if you're still going to work past 62, it just doesn't make much sense to start early.

Wife and I are taking it one step further- I started drawing at full retirement age (66), and then she started drawing half of mine. That way her account (which is better than mine) continues to grow at 8% a year until she reaches 70, at which time she can drop off mine and start taking hers. The $900 a month that she will get on mine for 4 years has no effect on anything, and its like money falling out of the sky. This only works if both of you are about the same age, because you both have to be at full retirement age to do it.

And it used to be even more bizarre- I could start drawing at 66, she could start getting half of mine at 66, then I could "suspend" (stop drawing and pay everything back that I had drawn), then BOTH of our accounts would grow at 8% a year until 70. They did close that loophole last year.
 
Ya,that monthly income thing was what I'd been looking at too. It's odd how this happens,but with the numbers I ran,the starting monthly income is $400 more at 67 if I wait,but by taking it at 62 and adding 2% a year and compounding the increases,the monthly income closes to a difference of only $285.50 at age 67. That's less than $3500 a year difference in my case at that point. When I get out there to age 70,it goes back out to a little over $300 a month again then starts to widen. Even at age 85 though,I'm only back out to $373 a month more if I wait until 67. Amazing how figures work that way.

The wife is 7 years younger than me,so it'll be a while before she can draw anything. She paid in a pretty good sum while she was working as a nurse,so when she's able to draw on her own,I think she'll better off drawing on her own account.
 
There are many things to consider when signing up for SS. I waited to get full benefits at age 66. 8% more for each year you wait. Then I DISCOVERED my SS pushed my income into 25% bracket. So I get 32% more only the pay 25% of it back in Federal taxes.

My brother started drawing at age 62. Now at age 72 he is living in the poor house. In poor health too.

All I have to say, if you need SS to retire on, better work longer.

I retired at 55 and waited for 11 years to start drawing.
 
Did you ever sit down with a pencil and paper and run two columns side by side and see what the difference was year to year? I'm as shocked as anybody with how the numbers work out. I had been as vocal as anybody when it came to the virtues of waiting,but when you see it year to year,side by side,it looks a whole lot different than it does in your head. If we can farm in the wife's name so we don't have to pay a penalty,it looks to me like there's no way I can ever make it worth waiting.
 
(quoted from post at 11:16:17 02/25/17) No. That's what I had always thought would be best,but that's not what the arithmetic shows. If I take it at 62,by the age of 85,I'll draw $421,238 total. If I wait until 67 to take it,by the time I'm 85 I'll only have drawn $411,129. I honestly thought the breakeven would be around 77 or 78.

LOL me too, I'm putting in for SS starting in June at 62, I came to the same conclusion.

Rick
 
I calculated mine at age 62 also and it would take 147 months to break even.
Of course, I would get more by waiting, but why leave 60 thousand on the table with the possibility of getting it back in 12 years, if you live another 12 years.
 
Talk to a good financial planner or CPA before making your decision.

Case in point: My father in law did not consult anyone. He was an independent farmer that quit at age 62 after a couple heart attacks, bypass surgery and other medical issues. The reduced monthly payout at age 62 looked pretty attractive at the time - more than ample he believed. So signed up and began to draw.

He lived another 30+ years. However after 20 years on SS his modest savings were spent; his monthly check now barely covered his heat and electric. We had to step in and help with taxes, insurance, food, medications, etc. in order for him to continue living "independently" in his final years.

Bottom line: Think it through thoroughly before making the plunge!
 
Have to be 61 years and 9 months to sign up. I'll be 62 in several weeks.
My first check should arrive late June.
We show very little farm income.
Wife has no income.
 
GET WHAT'S YOURS- Social Security by Philip Moeller Spend the $17.95 and get the truth. You will not be disappointed. Also go to the computer and ASK LARRY. Your social security questions you can ask for free ,right from your easy chair .CM
 
I just sent an email straight to SS Administration through their secure server about the whole farm in the wife's name thing. If I'm gonna do this thing,I'd better start getting some real answers pretty quick.
 
(quoted from post at 12:01:40 02/25/17) Ya,that monthly income thing was what I'd been looking at too. It's odd how this happens,but with the numbers I ran,the starting monthly income is $400 more at 67 if I wait,but by taking it at 62 and adding 2% a year and compounding the increases,the monthly income closes to a difference of only $285.50 at age 67. That's less than $3500 a year difference in my case at that point. When I get out there to age 70,it goes back out to a little over $300 a month again then starts to widen. Even at age 85 though,I'm only back out to $373 a month more if I wait until 67. Amazing how figures work that way.

The wife is 7 years younger than me,so it'll be a while before she can draw anything. She paid in a pretty good sum while she was working as a nurse,so when she's able to draw on her own,I think she'll better off drawing on her own account.

I'm having trouble following the math. It sounds like you are counting on 2% cost of living increase each year but not expecting the base at retirement to increase by the same 2%?
 
I'm in almost the same exact spot as you are. I turn 62 in March. I'm retiring in June and signing up to draw starting in June. Was told it dosen't matter what I earn up until that point. What matters is what you earn after you start drawing. My CFP (my son) told me my break even is at the age of 84.
 
Correct. I'm not trying to complicate things too much with my math. I know from experience in dealing with the Consumer Price Index and it's relationship to Michigan Property Taxes,that a 2% average increase in CPI is pretty much a given over time.
 
OK, and we know it can be more or less. But if you retire at 62 you are adding 2% per year. That is reasonable. But if you wait until 67, are you increasing the benefits you will receive at 67 by 2% each year you wait? My understanding is that the retirement age benefit level increases with the COL increase.

I've been waiting until age 70 but you're making me have second thoughts.
 
Hello rrlund,

Your are erroneously assuming 2% increase. This year increasy wiped out by the Medicare health insurannce increasy 100%. Some years there is no increasy, but the health premiums still go up. Call or visit the IRS office they will tell you what your tax liability will be. At worst I thing only 1/2 of your social security amount will be taxable.
Take away the 2% increase, and your $10.000 will certainly increase. I may have told you before on on other post already.......Take the money now!


Guido.
 
So what you're saying is,if they tell me now that I can draw $1500 a month at age 67 for example,that figure will actually be $1656 if I figure a 2% annual increase compounded?
 
Man, the math in this thread is pretty heavy stuff. If you ever feel you are living too long and it becomes a financial drag or encumbrance, you can solve that problem any time you wish.
 
I won't have to pay the Medicare premium until I turn 65 in three years though,so for at least those three years,my increase will be paid out to me won't it?
 
I did one better, I put mine on spread sheet. If I make it to age 80, I'm ahead of the game.

If I die before, so what I really don't need SS to retire. I lived without SS for 11 years. SS is about 30% of my total income.

Ever situated is different.

I've seen way too many people thinking they will be able to live comfortably drawing sooner. Then inflation kicks them in the butt.
 
I am now 71, and went through the same mathematical exercises you younger guys are discussing when I was 62. One other piece of this $$ puzzle nobody has spoken about is the benefit available to a disabled dependent, based on my SS acct and the age at which I begin taking benefits. Our 32 YO special needs daughter lives with us and got a bigger monthly check, compared to her earlier SSI, when I filed for my earned benefit. With my health record and heart attack and possible lymphoma (diagnosis still pending), taking the reduced benefit at 62 meant money NOW for all 3 of us. I am planning to live a "full" life, but the betting odds are not even 50/50. I do some farming, and wife does some part time work, so we make ends meet.

Then add in the uncertainty of the politicians always yammering about the system being underfunded. My pension was cut by 70% by a group of such politicians. That was a big blow to our financial planning.

So for us, the bottom line is "take our earned benefits ASAP, before some unknown factor screws us out of future benefits". As an example, my father never made it to his 62nd birthday, and never collected $1 of disability or SS even though he was 100% disabled due to nuclear radiation exposure on a military job with the nuclear bomb.

Many factors, no one correct answer for all cases!

Paul in MN
 
(quoted from post at 10:52:19 02/25/17) I guess I'll have to eat my words and take my Social Security this year. I'd been saying all along that I wouldn't take it until I'm 67. I've been sitting here with a pen,paper and a calculator figuring where I'd break even if I wait.

I've figured in an average 2% annual increase for inflation and to compound it. At the age of 85,I'd still be over $10,000 short of breaking even for the total I'd collect overall. I'm not gonna figure it beyond there because I doubt I'll live much beyond that anyway.

So,if I do plan to start taking it in June,how much money can I earn this year without being penalized? Should we start selling cattle in the wife's name right now? Will that matter if we're filing a joint return? A question for DaveH I guess.

My break even point is 84. I signed up. Why not have the income now? By 84, I expect to be downsizing the little farm here, my wife's shop and the rental. I also have a fairly decent IRA, as does my wife. We don't have any kids, no sacrificing for he kids thing going on here.
 
I turned 62 over three years ago. I did the Math at that time and figured I'd break even and start coming out ahead at the age of 78. That is if I started drawing at 62 instead of waiting until I turned 66. You are limited as to what you can earn between the ages of 62-66 if you do draw at 62. I just got done with a bout of cancer at 61 so I figured it was a no-brainer for me. I never made much money playing farmer and just drive a little school busing part time so I don't earn that much anyway. But I did pay in allot the forty some years when I had a real job. I've buried some friends who died right before they drew a dime, I didn't want that to happen to me.
 
I turned 65 last year.They told me if I waited a few years to collect I would loose the income from those years and would have to live to 80 to make up the difference.
 
I went through this same process when I was about to turn 62. I did not factor in any theoretical 2% increases ( which have NOT occurred in recent years BTW) but used current day figures from the Social Security Administration. For me, the breakeven point in dollars received would occur at age 79.5 . If I made it to 85 I would be way ahead in dollars received by taking early retirement. My family's history doesn't have many in it that made it past 80. I knew many people younger than myself who have already passed. So, I retired at 62. I continued to work part time (almost full time at first), and still do yet at a reduced pace, and have never had one regret. We have had more time to enjoy our remaining years. That was four years ago. I'm glad I retired early. The reduced stress might just make me live longer too.

I did not factor in any theoretical 2% increases in any of the numbers because I learned a long time ago to not count my chickens before the eggs hatched. I used real numbers.
 
JD here is another little bit of information sent to my 92 year old dad. It doesn't pertain to him but I'm interested in this one since I turned 66 yesterday.

It states; If you are at full retirement age (now age 66 or older) you may keep all of your benefits no matter how much you earn.

If you are younger than full retirement age at any time in 2017, there is a limit to how much you can earn before we reduce your benefits.
 
Re-do your calculations at about a 0.2% annual COLA, rather than 2%- its been even less recently. This year it was virtually zero- I think mine went up about 3 bucks a month. Would be interested to see what you come out with.
 
I took my SS at 62 and am happy I could do a lot more at 62 than I can now at 68 enjoy it while you can. Randy
 
Andy Martin never did answer me,so I'll ask everybody. If that letter they send to me annually says that if I turned 66 and nine months today,I could draw $1500 a month,does that mean that five years from now it would be $1500 a month,provided I didn't have any more "good years"? Or do they index that amount to inflation? When I compound 2% to that $1500 over 5 years,it comes to $1656 a month. If that was the case,I'd have to do that one whole column of numbers over and that would shorten the break even year.
 
I don't plan to "retire". Like I said,it would all depend on whether or not we could put the farm income in the wife's name so I didn't get penalized. With the price of cattle dropping like it is,I just might need the income.
 
Randy, I believe it is $16,920. I have some notes on my desk to that effect but cannot remember where I got the fool number. This is a recertification year for me and I take lots of continuing ed. Probably from one of those.

Another consideration, portions of your social security could be taxable, depending on what other income you have.

I was curious in figuring your breakeven if you used any interest calculation in coming up with your final numbers. A fairly involved calculation if you did, but you really cannot do it without taking into consideration the time value of money and the amounts you paid in each year.
 
Maybe I shouldn't be responding as I can't answer your question. I think the only certain thing is, whatever the number is, it will be different. But I don't think we can know exactly. I believe the SSA is careful to call their numbers "estimates".

I can choose to sell/buy to effect my farm income, so I'm not concerned about making too much. Besides, they make it clear you don't lose it, it is just held back until later.
 
No,I didn't figure any interest. I went fairly simple. I took the amount they said I could draw at 62 and multiplied that by 1.02,then multiplied that by 1.02 and so on,out to age 85. I did the same with the number they gave me if I was to draw at age 67.
What I'm not clear on yet is whether that number for age 67 will increase with inflation as long as I'm not drawing it,since I didn't figure it in,and whether or not we can farm the same way we have been but do it under the wife's name,and not have to pay a penalty on my SS income.
 
According to the gov. there is no inflation when talking about SS. But they did get generous this year and gave us a whopping .3% raise. I'm going on an around the world cruise with mine. TDF
 
rrlund- I may be reading this wrong from SS.gov....

Latest COLA
The latest COLA is 0.3 percent for Social Security benefits and SSI payments. Social Security benefits will increase by 0.3 percent beginning with the December 2016 benefits, which are payable in January 2017. Federal SSI payment levels will also increase by 0.3 percent effective for payments made for January 2017. Because the normal SSI payment date is the first of the month and January 1 is a holiday, the SSI payments for January are always made at the end of the previous December.

How is a COLA calculated?
The Social Security Act specifies a formula for determining each COLA. According to the formula, COLAs are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). CPI-Ws are calculated on a monthly basis by the Bureau of Labor Statistics.

A COLA effective for December of the current year is equal to the percentage increase (if any) in the average CPI-W for the third quarter of the current year over the average for the third quarter of the last year in which a COLA became effective. If there is an increase, it must be rounded to the nearest tenth of one percent. If there is no increase, or if the rounded increase is zero, there is no COLA.

COLA Computation
The last year in which a COLA became effective was 2014.
Poke here
 
I can hazard a guess, but not going to be held to it. Need to know...Schedule F or another entity form like 1065, 1120-S? Feel free to throw that in an email if you are like me and don't think the world needs to know 100% of your business. :)
 
Hope you get it figured out, hate to see you when you are 107 on here and be kicking yourself for not waiting! LOL My dad took his at 62 but mom is waiting till 67, dad hasn't complained yet, and that has been 11 years ago that he took his. Circumstances are different for each of us!
 
I just might send you that email tomorrow,but I can tell you this much,my name is the only one on the 1040F and on the 4562. I wonder if we'd have to do enough business in my name without going over the income limit to use the depreciation and sell the rest in her name with enough of the receipts for inputs in her name to offset some of "her" income?
 
OK,so COLA is adjusted monthly instead of annually then? The chart where I got that 2.5 CPI for 2016 broke it down monthly from January 2016 through January 2017.
 
If no one is breaking even, where is all the money going? Must be too many people drawing that never paid into the system?
 
OK...well you sort of answered the question. In theory, if you were to do a Schedule F and put her name on it instead of yours...might just keep you below the limit. I'll see if I can run a scenario where that is done and let you know.
 
rrlund:

1. email is not secure. Send it by mail.

2. I was told in the eighties somewhere for crossover, but then again it depends on your own situation.

3. I would think when you take it depends a lot on your health, desires, and if you retire at 62 can you live on SS and what other incomes you have.

I took it at 62, and my wife. No regrets.

Paul
 
No sooner did I hit send on that last post and I realized I knew the answer I would give you...and that is a qualified "maybe". At this point it is no longer a tax question. If you change the farm schedule over to her, you would need to run this by someone who has done it. I just cannot tell you if SSA is going to look at the joint tax return with your wife's name on Schedule F and (I think properly) allocate the income away from you and not reduce your benefits. This is something you would need to ask them or, like I said, find someone in the same situation but a bit older who has already done it. I don't want to tell you they will do it and then find out there is some obscure law that splits the income due to filing status. Good luck!
 
I will admit I don't understand where you got that 2% increase per year from,I have been collecting SS fro 12 years now, because I never expected to last this long, and there have been years where there have been no cola increase. I don't expect any increases from the govt. You sound as if you plan to continue working probably until you can't any longer. I'm sure if you find a good investment counsellor you can take your SS check, invest it and get more than 2% interest, If I can do it,anybody can.
 
well I have read all the replies ,take the money now,no one knows how long they will live.my dad started collecting at 66 he died at 67!!!!
 
I believe it is $18,000 now before they cut back on your benefits. After that you lose $1 in benefits for every $2 over $18,000 you make. At least that what the accountant told my wife. Very, very few people will ever live long enough to pay for them to wait until "full" retirement age to collect SS. For me, I had to live to 86 to break even. There's one reason and one reason only the goobermint is pushing people to wait until full retirement age to draw. They stole all of our money for other things and don't want to face the music when they have to steal more from future generations to cover what they stole from us.
 
I was ten months shy of full retirement age when I started. The SS man said the break even age for me was 84 and change. I told him seeing 84 was the least of my worries. Go for it. TDF
 
You are right. I waited to draw full SS and SS told me I can now go back to
work and make as much as I wanted without losing any benefits.. I just laughed
them and said no way will I ever go back to work.
 
(quoted from post at 17:10:32 02/25/17) Very simple solution to going over the income limit.Buy more tractors!Works for me.

I agree....keep the agi down with your depreciation schedule. My problem (if I live that long) will be the minimum withdrawal on my IRA's putting me in a higher tax bracket than I am now. Never did plan on SS anyway, did my own investing....
 
I guess SS marches to a different drummer- CPI may have been 2.5%, but we only got about .1% I think they use the new math.
 
Put it in a separate account and at the end of the year write a check from the account to pay the tax if you made too much from your operation.. Won't have to pay over half back.
 
I took SS at 62. Main reason was my younger brother died at age 43 from a rare form of cancer.
I may be mistaken but I think if your income for a particular year would reach the point to where you would be penalized, you could freeze your monthly benefit from that point on to the end of the year.
You might want to research this to be sure.
 
My Grandparents from the farm side got SS benefits starting at age 65 and lived to be 97 and 94. Grandma never had a job off farm, and Grandpa said he never earned more than $10K in one year.

Dad retired at 63 due to major changes in medical plan coverage. He took his full SS at 65.5. When the market tanked and drew his 401K down, he stopped his retirement draws and they still managed to save money just from the SS checks! Thank God he kept that full insurance coverage, wth all the costs of cancer treatments for a decade, they would have been destroyed.

I never planned to get anything from SS. I figured, if I did, it would be a bonus. For all my family has received, I am good if they never give me a dime.
 
Randy, it sounds like you would only have about 5 years to worry about making too much income to reduce your SS benefit. I would think with a little more diligence, you could pre-pay inputs or bunch contributions or finesse your depreciation list for five years without too much trouble. Maybe you could have Dave-MI move some more bins to your place and just keep all the corn for five years. OR, I happen to know a guy not too far from you who would be willing to take 20-25 cull calves for free from you every year for the next five years, to improve my, I mean, his bottom line!!! :wink:
 
Yeah I had to go do some work. As I said I think it increases what you will eventually get. I don't know for sure. It's hard to tell while you are still working because each yearly letter includes that year's income too. However if it never increased it seems the benefits would be a lot lower than they are now. I couldn't find anything on the SS website, and I don't get a letter any more. I'm drawing on half my wife's disability and they stopped telling me what I will get when I draw my own.

I plan to call them Monday and ask that question about whether the age 70 benefit goes up if there is a cost of living increase.
 
Hello rrlund,

There is increase this year at .3% The INCREASY was the exact amount needed to pay the Medicare premiums.
You seem to be stuck on INCREASE! NOT written in stone! DOES NOT HAPPEN EVERY YEAR! This is a year with one, with many other ones with zero increase!

Guido.
 
A lot of interesting reading and a little bit of information. I would like to start drawing now but I have already made too much this year from deferred grain checks to start taking SS at 66 without penalty. Maybe next year. My dad started drawing at 62 because his family ancestry didn't live all that long. He's 92 now, proving it's hard to tell how long we will make it in life.
 
(reply to post at 03:31:25 02/26/17)
u can earn all you want in the year you turn 66 prior to turning 66. After that month that you turn 66 it is pro rated for the rest of the year. Self employment is difficult because you don't know for sure until your taxes are done.
DWF
 
My wife and I are same age ( she is actually 3 months older). She started her SS at 62. I started mine at 66. When we are both 84 we will have received the same amount. Only thing is I can make as much as I want and she is limited or has to pay a penalty. She draws more than me now.
 
I will shed a bit of light on this...
First, you NEED to FORGET that 2% annual COLA increase. Last year, it was ZERO. This year it was .3%. That is three tenths of one percent. Pennies!
Second, waiting does indeed increase your benefit. Your benefit increases EACH MONTH that you wait. Not each year.
Third, COLA increases are NOT factored into your benefit. As far as I know, the calculation of your benefit when you apply does not include any yearly increases.
So, what happened to me was that I went into the SS office in November of the year that I applied. I was told by the agent that my benefit would increase by around $20/month for each month that I waited to collect. BUT, if I did NOT sign up then, I would lose the COLA increase for the coming year. So, I applied. I got my check for December of that year at the rate I was told by the agent. Then there was an increase that year. It brought my benefit to the SAME dollar amount that it would have been had I waited to January to collect. That meant that my check for December was "found" money because if I had waited until past the increase, it would not have affected what would have been my benefit. Confusing.

You need to keep in mind that yearly increases are NOT chiseled in stone. Some years, there is an increase. Other years there is none. sometimes there is no increase for several years. You can only count on the hard numbers that you already have.
 
(quoted from post at 12:25:35 02/25/17) I ran the numbers when I was 62---and it was 14 years in the future to break even---was a no brainier for me to sign up!

Yep, me too! 8)
 
My stock broker is waiting until he is 70 before he starts drawing his SS because his wife has never paid into SS. At age 70 he will get $4000/mo and his wife of more than 10 years can draw half of his SS, $2000. So they will have a total of $6000 a month from his SS. Not to mention he will have to start drawing form his 401 investments.

So it more than just what can I draw before I break even. It more like how much will I draw and retire in style.
 
Realistically, you'd better assume todays 1500 bucks will buy you LESS in the future, AND!,
chances are, our medical expenses must rise in order to support the noncontributers.
My experience this year even with the whopping cola, with the additional medicare held out, wife & I are getting 15 bucks ea. LESS then last year!
 
(quoted from post at 07:51:52 02/26/17) My stock broker is waiting until he is 70 before he starts drawing his SS because his wife has never paid into SS. At age 70 he will get $4000/mo and his wife of more than 10 years can draw half of his SS, $2000.

I'm curious how many years your stock broker has to wait to retire to get $4,000 per month in SS.

46047.jpg
 

Social Security COLA increases for last 8 years
(taken from SS website)

Year COLA

2009 0.0
2010 0.0
2011 3.6
2012 1.7
2013 1.5
2014 1.7
2015 0.0
2016 0.3

1.1% average COLA increase over last 8 years

0.8% average COLA increase over last 4 years
 
I think you might have to go back to pre 2008 to get a good handle on CPI wouldn't you? After the crash,we've been in a recovery with 0 interest rates. As we continue to climb out of it,don't you think those numbers will rise? The CPI for 2016 has already been pegged at 2.5%.
 
rrlund- I don't understand where you keep getting that 2.5% increase from?

This is from SS.gov....
"The latest COLA is 0.3 percent for Social Security benefits and SSI payments. Social Security benefits will increase by 0.3 percent beginning with the December 2016 benefits, which are payable in January 2017"
Poke here
 
I wrote to that ask Larry guy that somebody suggested. Here's what I got in an email this morning. I don't know who this Jerry is,but he's the one who wrote back.

"Self-employment earnings are supposed to be reported under the Social
Security number of the self-employed individual.? I'm not a lawyer, but what
you are proposing sounds shady at best, and potentially fraudulent.? Not only
that, what you are proposing could very well turn out to be counter
productive.

If you start taking your benefits at age 62, your benefit rate will be about
76% lower than the rate you would receive if you waited until age 70 to file.
? And, most of this reduction would carry over to your wife's potential
widow's rate if you die first.? Furthermore, diverting your self-employment
earnings to your wife's record may have the effect of lowering your benefit
rate, which would also lower your wife's benefit amount if she eventually
qualifies for spousal or widow's benefits on your record.

You may want to strongly consider running the maximization software available
on this website before making any decisions about when to file for benefits.

Best, Jerry"
 
I'd always thought SS benefits were tied to the Consumer Price Index. When I searched 2016 Consumer Price Index,it came up with a chart showing the CPI by month for all 12 months of 2016 and for January 2017. If you're saying SS increases aren't tied to CPI,OK. Michigan Property taxes are tied to it and I'm pretty sure that 2.5% is what our taxable value will increase when the notices come next week.
 
rrlund- SS uses a different formula based on the CPI. It shows how SS calculates the increase in the link I provided...

COLA Computation
The last year in which a COLA became effective was 2014. Therefore the law requires that we use the average CPI-W for the third quarter of 2014 as the base from which we measure the increase (if any) in the average CPI-W. The base average is 234.242, as shown in the table below.

Also shown in the table below, the average CPI-W for the third quarter of 2016 is 235.057. Because this average exceeds 234.242 by 0.3 percent, the COLA effective for December 2016 is 0.3 percent. The COLA calculation, with the result rounded to the nearest one-tenth of one percent, is:

(235.057 - 234.242) / 234.242 x 100 = 0.3 percent.
Poke here
 
OK,here's the chart and a link to it. Go to the site. Maybe I'm reading it wrong. There's a lot of text before the chart. The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent
in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics
reported today. Over the last 12 months, the all items index rose 2.5 percent
before seasonal adjustment.
2016 2016 2016 2016 2016 2016 2017 Jan.
2017


All items.................. .0 .2 .3 .3 .2 .3 .6 2.5
Food...................... .0 .0 .0 .0 .0 .0 .1 -.2
Food at home............. -.2 -.2 -.2 -.2 -.1 -.2 .0 -1.9
Food away from home (1).. .2 .2 .2 .1 .1 .2 .4 2.4
Energy.................... -1.1 .0 2.4 2.5 1.0 1.2 4.0 10.8
Energy commodities....... -3.1 -.7 4.4 4.8 2.0 2.4 7.6 20.0
Gasoline (all types).... -3.3 -.8 4.6 5.1 2.1 2.4 7.8 20.3
Fuel oil (1)............ -1.3 -2.5 2.4 5.9 -1.2 6.0 3.5 24.8
Energy services.......... .8 .6 .6 .4 .0 .0 .3 2.9
Electricity............. .4 .3 .5 .3 .0 .0 .0 1.0
Utility (piped) gas
service.............. 2.5 1.5 .8 .9 .2 .1 1.5 10.1
All items less food and
energy................. .1 .3 .1 .1 .2 .2 .3 2.3
Commodities less food and
energy commodities.... -.1 .1 -.1 .0 -.2 .0 .4 -.2
New vehicles............ .2 .0 .0 .2 .0 .1 .9 .9
Used cars and trucks.... -.7 -.5 -.2 -.1 .2 .2 -.4 -3.7
Apparel................. .0 .2 -.5 .2 -.3 -.4 1.4 1.0
Medical care commodities .5 1.1 .6 .2 -.4 .5 .3 4.7
Services less energy
services.............. .2 .3 .2 .2 .3 .3 .3 3.1
Shelter................. .2 .3 .3 .3 .3 .3 .2 3.5
Transportation services .1 .2 .0 -.1 .5 .5 .6 3.2
Medical care services... .5 .8 .1 .1 .2 .2 .2 3.6
link
 

It's more involved than just the CPI index as shown below:
(from ss website)

COLA Computation
The last year in which a COLA became effective was 2014. Therefore the law requires that we use the average CPI-W for the third quarter of 2014 as the base from which we measure the increase (if any) in the average CPI-W. The base average is 234.242, as shown in the table below.

Also shown in the table below, the average CPI-W for the third quarter of 2016 is 235.057. Because this average exceeds 234.242 by 0.3 percent, the COLA effective for December 2016 is 0.3 percent. The COLA calculation, with the result rounded to the nearest one-tenth of one percent, is:

(235.057 - 234.242) / 234.242 x 100 = 0.3 percent.
CPI-W for—
2014 ....................................2016
July 234.525................... 234.771
August 234.030............ 234.904
September 234.170...... 235.495
Third quarter total 702.725 705.170
Average (rounded to the nearest 0.001) 234.242 235.057
 
Not criticizing you at all for posting it,but help me understand it. Part of what I read seems to say that the latest COLA is based on the third quarter of 2014,then they throw in 2016 somehow? Maybe I'm just not awake enough to understand how they calculate it. Maybe too,we're not supposed to.
 
Clear as mud. Pretty much,we got skrewed in 2014 and benefits were effectively capped and will never keep up with actual inflation again. Better start taking it now before inflation eats it up entirely. Is that the take away here?
 

In the fall of each year, the U.S. Bureau of Labor Statistics determines the CPI-W for the third quarter. Officials then compare it with the CPI-W for the third calendar quarter of the last year in which a cost-of-living adjustment (COLA) was awarded. If the comparison shows prices have gone up between those third-quarter periods, Social Security grants a cost-of-living hike. Increases are rounded to the nearest 10th of a percent and paid starting in January.

What does this mean for 2017? Social Security's last inflation increase came in 2014. That means the 2017 decision will be based on comparing the third quarter of this year with the third quarter of 2014. In June, Social Security's trustees estimated that the upcoming comparison would lead to a 2017 inflation increase of 0.2 percent.
 
(quoted from post at 11:24:02 02/26/17) Clear as mud. Pretty much,we got skrewed in 2014 and benefits were effectively capped and will never keep up with actual inflation again. Better start taking it now before inflation eats it up entirely. Is that the take away here?




I'm confused... average life span is 78 to 79 years now. All you guys are saying you will beat the odds. That cant be true. [u:f7417b0859] [b:f7417b0859]Half of you are wrong. [/b:f7417b0859] [/u:f7417b0859] That statement is 100% correct.
 

From SS website

As a result of changes to Social Security enacted in 1983, benefits are now expected to be payable in full on a timely basis [b:5fceaff4e9]until 2037[/b:5fceaff4e9], when the trust fund reserves are projected to become exhausted.1 At the point where the reserves are used up, continuing taxes are expected to be enough to pay 76 percent of scheduled benefits. Thus, the Congress will need to make changes to the scheduled benefits and revenue sources for the program in the future. The Social Security Board of Trustees project that changes equivalent to an immediate reduction in benefits of about 13 percent, or an immediate increase in the combined payroll tax rate from 12.4 percent to 14.4 percent, or some combination of these changes, would be sufficient to allow full payment of the scheduled benefits for the next 75 years.
 
So like I said then,with the actual CPI being 2.5% for 2016,we're skrewed. No wonder AARP leans left. This is starting to tick me off if that's what congress has done to our Social Security.
 
sotxbill- I agree.

3 out of my 4 grandparents died in their 60's. My dad died at 67 and
my mom died at 74.

We don't live to a ripe ol' age in my family.
 
rrlumd- You are using CPI-U which is.....What is CPI-U?

The Consumer Price Index (CPI) is the statistical metric developed by the Bureau of Labor Statistics used to monitor the change in the price of a set list of products. The idea is that by monitoring the fluctuations in price it costs to purchase a set basket of goods, the government can track the cost of living for most individuals. The CPI-U is the CPI value for Urban Consumers, which excludes rural populations and represents approximately 80% of the population. The CPI and CPI-U do not directly measure inflation, but it gives a very good idea of whether we are in a period of inflation or deflation and how severe that change may be. As the Bureau of Labor Statistics states, "The CPI is generally the best measure for adjusting payments to consumers when the intent is to allow consumers to purchase at today's prices, a market basket of goods and services equivalent to one that they could purchase in an earlier period."


SS uses CPI-W which is.....Term CPI-W Definition: The abbreviation for the Consumer Price Index for Urban Wage Earners and Clerical Workers, which is an index of prices of goods and services typically purchased by urban wage earners and clerical workers. This carries the official abbreviation CPI-W to distinguish it from it's more famous sister index CPI-U, which is the standard Consumer Price Index for All Urban Workers, (commonly abbreviated simply as CPI). Like the standard CPI, the CPI-W is compiled and published monthly by the Bureau of Labor Statistics (BLS), using price data obtained from an elaborate survey of 25,000 retail outlets and quantity data generated by the Consumer Expenditures Survey. The CPI-W is a continuation of the original CPI developed early in the 1900s to provide cost-of-living adjustment information to wage-earning workers."
 
Ya,I'm well aware of CPI. I deal with it every year on Township Board of Review since Michigan property tax increases are tied directly to it. When it caused deflation,the state legislature had to do some fast work because there were no accommodations for taxable value to ever decrease.
 
OK,in 2037,I'll be 82. At that time my increased benefits from waiting would be cut anyway,so I might as well take what I can in full on the front end for the next 5 years. In other words,collect the full amount available for 20 years instead of waiting and taking it for 15 years.
If that's true,it's settled. I'm taking it now.
 

I just retired Feb 1st @ 60

Calculated my break even point (they are all different depending on your earned income)

Mine break even point is 78

I choose to start collecting SS at 62

Reasons:

- Not sure if I'll make it past 78 and if I do, what will my quality of life be

- not sure how long the SS fund will be viable as more people are taking out than are putting in and the government refuses to confront the issue
 
OK,here's what I just ran again,assuming no increases and that the benefits are pretty much gone in 2037. That's 20 years from now,so I took the amount I can get at 62 x 12 months x 20 years. Then I took the amount at 66 and 9 months and assumed it wouldn't increase from what they're telling me right now. When I take that amount x 12 months x 15 years,it's only $6000 more lifetime total. It's pretty hard to believe that actual inflation won't eat up the $6000 several times over in the course of 20 years.

The only thing to settle now is how to take it and not have it effect my income tax,tax credits and so on.

Forget the wife getting half of my SS. She made good money as a nurse,and when the time comes,I think she'll be better off drawing off her own earnings anyway.
 

I'm guessing that as we close in on the SS fund becoming insolvent, the government will be forced to take action.

If the feds act as they normally do, one of the first things they will do to extend the life of the SS fund will be to cut current benefits or eliminate COLA's. Cutting benefits has already been discussed by the feds so it's nothing new for them.

How long you live and your quality of life are big factors

Others sources : pensions, IRA's, 401K's, stocks, mutual funds, savings, etc

Many things are involved in making the decision when to retire and when to collect SS benefits...,.,.everybody has to make their own decision using the "info" they choose

My personal choice is to take it as early as I can...62

Good Luck RR...you'll make the right choice
 
Let me get one more thing straight. If I make more than I'm allowed,they take $1 for every $2 I collect in benefits. Is that in the form of reduced benefits or do I have to mail them a check to refund it to them?
Then,from what I gather,it's given back to me at some point. When and over how long a period of time do I get it back?
 


https://faq.ssa.gov/link/portal/34011/34019/article/3739/what-happens-if-i-work-and-get-social-security-retirement-benefits
 
(quoted from post at 09:31:32 02/26/17)
(quoted from post at 11:24:02 02/26/17) Clear as mud. Pretty much,we got skrewed in 2014 and benefits were effectively capped and will never keep up with actual inflation again. Better start taking it now before inflation eats it up entirely. Is that the take away here?




I'm confused... average life span is 78 to 79 years now. All you guys are saying you will beat the odds. That cant be true. [u:edbefbfaab] [b:edbefbfaab]Half of you are wrong. [/b:edbefbfaab] [/u:edbefbfaab] That statement is 100% correct.


I just looked up the median life expectancy of a US male: 76.4 years. So only 1/2 of us will live past that date.....
 
If taking SS earlier ie 62 allows you to retire and you can afford to DO IT It can give you 8 more years of retirement which are probably your best health years. The "experts" say wait until 70 to get max monthly payments but you give up 8 years of retirement.
 
(quoted from post at 06:11:53 02/26/17)
(quoted from post at 07:51:52 02/26/17) My stock broker is waiting until he is 70 before he starts drawing his SS because his wife has never paid into SS. At age 70 he will get $4000/mo and his wife of more than 10 years can draw half of his SS, $2000.

I'm curious how many years your stock broker has to wait to retire to get $4,000 per month in SS.

46047.jpg

Stockbroker may be lowing some smoke. Never seen that before.

Currently the maximum SS benefit tops out at about $3,500 per month for a 70 year old (not full retirement age as shown above). Unfortunately maximum family benefit is only $4,500 per month, roughly. So his spouse can't draw the full 50%.

He may be a young guy assuming a rate of inflation that does or does not happen.

I'm 68 in April and have been waiting until 70 but in redoing the calculations I've decided (by inputs from this thread, thanks guys!) to go ahead and get mine started. Even at this age I break even with waiting until 70 at age 77 but i realize that the nedd and desire to spend money decreases rapidly after age 80.
 

People have to get real information and do their homework

Word of mouth and hearsay may not be correct....your numbers are based on your earnings

Social Security has a great website where all the information you need is in one place....get the facts then do your math

Each of our situations is different and our choices vary because of that fact...a personal choice

In 2016, nearly 61 million Americans will receive approximately $918 billion in Social Security benefits.
************************************************
Snapshot of a Month: June 2016 Beneficiary Data

41 million Retired workers...$55 billion in benefits paid.

$1,348 average monthly benefit
 
(quoted from post at 14:40:27 02/26/17)
I'm guessing that as we close in on the SS fund becoming insolvent, the government will be forced to take action.

If the feds act as they normally do, one of the first things they will do to extend the life of the SS fund will be to cut current benefits or eliminate COLA's. Cutting benefits has already been discussed by the feds so it's nothing new for them.

How long you live and your quality of life are big factors

Others sources : pensions, IRA's, 401K's, stocks, mutual funds, savings, etc

Many things are involved in making the decision when to retire and when to collect SS benefits...,.,.everybody has to make their own decision using the "info" they choose

My personal choice is to take it as early as I can...62

Good Luck RR...you'll make the right choice


We really need to go to means testing for SS. It's been a pay as you go program from day one and there aren't enough people working and making enough to support the huge number of recipients now.

I don't particularly care to hear people say, "But I put into SS my whole life! I'm entitled to that money!" You are only "entitled" to what some bureaucrat decides you are entitled to. There has never been a guarantee you'd get "your money". Far too many people think of SS a retirement investment but don't realize that they could have invested the money themselves and done many, many times better. It's been a scheme from day one and it's worked just like FDR intended it to.
 
First off, every individual's situation is different. I'm 66.5, wife is going to turn 65 June 30th this year when she'll go on Medicare. About 5-10 yrs ago, we started planning our retirement in earnest. Before that, we were busy working careers, raising kids, putting them through college. I never looked at the "break-even" point. Life is a "throw the dice" kind of thing and there's no guarantee how long you'll live, so I'm not going to try and out-smart SS.

I've got a very detailed spreadsheet with our SS income, IRA, 401ks and wife's small pension figured in for the next 25 years (until I'm 92). I've used various rates of return (1-3%) on our investments and find that we can live comfortably at 90% of our present-day income for those 25 years without draining our retirement savings. Under any scenario, there will still be some money to leave to our kids when we're in our 90's. And that is not something I'm worrying about too much. :wink: The biggest variable is what happens when one of us dies to the other person's income. It will be reduced and there will most likely be some lifestyle changes, sale of some assets.

The big reason we didn't start drawing earlier is that we didn't need it and by delaying our retirement until now, we have been able to build our nest egg further so that we will be able to maintain our current lifestyle (financially) with more leisure time to do the things we want to do without worrying about paying the heating bill, health insurance, food, etc.

I do know of people who retired early and counted on their pensions and SS to carry them through. But inflation has eaten into it and what they retired on 25-30 years ago doesn't cut it today.
 
I took mine at 62, break even would have been 72, am now 73 heading toward 74. Wife did not take at 62, checked but she was making too much to be able to do that, She did not make it to the medicare age dieing at 64. March 16, 2015 and she would have turned 65 on sept 30, 2015. I never made enough to get a decent SS check. They switched me to here earnings and it more than doubled my check. Still only getting a bit over $900 per month. And not able to go out and work. That $900 per month does not begin to pay my bills. Worked hard full time but never made enough to pay in for years.
 
(quoted from post at 06:08:56 02/27/17)
(quoted from post at 14:40:27 02/26/17)
I'm guessing that as we close in on the SS fund becoming insolvent, the government will be forced to take action.

If the feds act as they normally do, one of the first things they will do to extend the life of the SS fund will be to cut current benefits or eliminate COLA's. Cutting benefits has already been discussed by the feds so it's nothing new for them.

How long you live and your quality of life are big factors

Others sources : pensions, IRA's, 401K's, stocks, mutual funds, savings, etc

Many things are involved in making the decision when to retire and when to collect SS benefits...,.,.everybody has to make their own decision using the "info" they choose

My personal choice is to take it as early as I can...62

Good Luck RR...you'll make the right choice


We really need to go to means testing for SS. It's been a pay as you go program from day one and there aren't enough people working and making enough to support the huge number of recipients now.

I don't particularly care to hear people say, "But I put into SS my whole life! I'm entitled to that money!" You are only "entitled" to what some bureaucrat decides you are entitled to. There has never been a guarantee you'd get "your money". Far too many people think of SS a retirement investment but don't realize that they could have invested the money themselves and done many, many times better. It's been a scheme from day one and it's worked just like FDR intended it to.

While what you say is true, the "entitlements" added starting in the 60's decimated a strong system. Aid to dependent children, etc. are all good programs but they drain SS which would have been in very good shape had they left it alone and only paid out benefits to those who paid in. Now it seems almost anybody can get benefits if they haven't paid in, if they have paid in, they are limited by calculations based on their payments.
 

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