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Social Security Benefits breakeven - very OT
A good explanation of the breakeven point in the decision of early versus later
Social benefits receipt can be found at: http://www.fpanet.org/journal/articl...0601-art13.cfm Here's an extract applicable to us old guys: "Applying the same calculations for individuals born between January 1, 1943, and December 31, 1954, where the scheduled percentage of full Social Security benefit reduction at age 62 is 25 percent and the full retirement age is 66, the results are very similar. Early retirement at age 62 would produce 75 percent of the eligible full retirement benefits—or by today’s amounts, $1,071 a month at age 62—compared with $1,428 at age 66. A person opting for early Social Security retirement benefits at age 62 would receive $51,408 ($1,071 x 48 = $51,408) by age 66, but then receive $357 a month less for the balance of his or her life ($1,428 – 1,071 = $357) or ($1,428 x .25 = $357). All Social Security retirement benefits are subject to annual cost-of-living increases. Without adjusting for the time value of money, it would take 144 months, or 12 years, to break even. A person would have to live past 78 (66 + 12 = 78) in order to benefit from delaying retirement to age 66. When time-value-of-money analysis is applied, again assuming a conservative four percent interest rate, $1,071 a month for 48 months compounded monthly at an annual rate of four percent is worth $55,649.25 at age 66. The $357-a-month extra a person gains for waiting until age 66 would take 220.29 months, or 18.36 years, to equal the value of the early benefits received between age 62 and 66. A person would have to live past age 84 and 4 months to recover the value of the monthly benefits not received between age 62 and 66 if early retirement is not taken." If I live beyond 84 years and 4 months, I probably won't be too concerned about the extra $357/month. So, my decision is made. -- John H "All decisions are the result of binary thinking." |
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