What does it mean to BREAK EVEN with Social Security?
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- เผยแพร่เมื่อ 9 พ.ค. 2024
- What does it mean to “break-even” with the timing of your Social Security?
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🔑 KEY TOPICS
0:00 - Break Even Intro
1:10 - Break Even Explained
1:55 - JPMorgan Study
3:27 - Reasons to Break Even
4:11 - The Downside
4:51 - COLA
5:26 - Nick's General Rule
5:58 - Conclusion
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I retired at 61 and when I looked at Social Security it was not much at all. I have discovered that what they wanted to give me was more than the average which was pretty disturbing. How do people live? Anyway, I have a lot in traditional IRAs and some in Roth IRAs. So , I decided to wait for awhile and do some Roth conversions. My wife is 11 years younger than I am. She stayed at home with the kids for a number of years and her work record is not robust. After doing some research I decided to wait until 70 to get my benefit in order to insure my wife’s retirement years. I recently signed up for Medicare. I have about five years to go.
The problem I see with all the videos, articles and calculators for Social Security is that they ignore the time value of money. You need to factor in the fact that a sum of money is worth more now than the same sum will be at a future date due to its earnings potential in the interim. If you delay taking Social Security and you need to draw from your IRA for living expenses, You need to calculate your break even age based on the amount you withdraw and the compounded returns you would have earned.
Great advice. I view Social Security as longevity insurance and not a game I hope to win by dying early.
lol! I forgot I said that. Thank you.
Agree with last comment. Retired at 62. Lower benefit started immediately higher benefit waiting until 70.
Thanks for the comment!
Good video. Good information 🙂
However…..that weird glare on your glasses😂
Thanks for your outstanding content; it is much appreciated!
Much appreciated!
I am 51 I took the estimate SS send out and put that in to excel spreadsheet I figured out I would be about 80 giver or take a year or so you can be to precise a lot of things can happen in the next dozen years or so for better or worse, but here one fact my parents and grandparents didn’t live much past 80 and I am 100 pounds overweight I’m not trying to beat the system I just want to enjoy what years I have. By the way about 20% of people never make it to retirement at all.
I had initially planned to retire at 62, work part-time, and save money, but the impact of high prices on various goods and services has significantly disrupted my retirement plan. I'm worried about whether those who experienced the 2008 financial crisis had it easier than I currently am. The volatility of the stock market is a concern as my income has decreased, and I fear that I won't be able to contribute as much as before, potentially jeopardizing my retirement savings.
Absolutely your last point of maximizing one benefit(almost always the larger) is important. It is true for most couples, especially if both have reasonable earnings records. It also mitigates the effect of waiting, by minimizing income needs when the smaller benefit is started early. My wife took at 63, I’m planning on 70. My benefit will be $4500. That is more than enough to live on.
The other point rarely mentioned when planning to delay, is that you can easily stop delaying at any time should circumstances change! Not true of taking early(only a 12 month window of repaying benefits, or the option of suspending benefits at FRA).
Unless one of the couple is a certified teacher. In most states they cannot claim spousal benefit. It's a "gotcha" for teachers and is completely, outdated , and unfair.
I will have the larger benefit but my wife is 3 yrs older. She'll be 70 when I'm 67. Is there anything gained by me filing at 70rather than 67 in this situation?
Colas are usually eaten up by Medicare increases. The colas are never high enough, unless it's 2023's 8.7%. I'm 65 and have not started my SS. I'm debating on Roth conversions for some of my tax-deferred monies before taking SS.
Agreed! And, COLAs are the only increases most people have on their stable income, other than planned raising of withdrawals.
"You have to die early to win."
Never heard that phrase before but it is correct. I agree with the 2 reasons for taking at 62...if you honestly believe you will not live until 80 or if you absolutely need the money to eat and shelter yourself. Those are my two criteria that have convinced me to wait to FRA.
Why do all these "experts" explain break even with graphs? 12.5 years that's all you need to know. If I delay SS by 1 month it will take 12.5 years to make up for that 1 missed check. If I delay SS by 1 year it will take 12.5 years to make up for those 12 missed checks. Simple and understandable. 12.5 years
@roseanntrotta911
0 seconds ago
Mr. Nick - I think you have articulated a concept very well and that is peace of mind annually especially in a down economy. Maybe it is not so much as winning or breaking even but rather to have peace of mind with future fixed income. We have been thinking of waiting from FRA to 70 to draw SS since we are in good health and could live comfortable off IRA distributions until then. Worst case is we could start drawing SS if we needed too. This helped a lot and keep up the great work and the peace of mind you have left us with!
Spouse already is maxed on benefits on her own(more women now a days), feel more secure taking now knowing SS changes/paper cuts won’t affect you as much vs feeling more secure later with a higher benefit? I retired early and expenses plummeted, can’t imagine at 80+, I will be like a house plant lol