8% per year. Would have beaten the market in the last few, unless you were very astute.
8% growth includes the Social Security income, i.e. the principle amount, which you forgo by not taking early.
FRA varies, mine is 67. Dad's was 65. My older sibs have FRA between 66 and 67. Our FRAs are getting farther away from age 62, while Dad's decisions would have been different based on that fact.apparently more people take social security at the earliest age possible (62) compared to the 'full retirement age" (66)
maybe those people think they will not live longer than average or maybe they think social security will eventually go bankrupt
I never thought of it this way. Sounds like what they are doing is taking the payments you have skipped and giving them back to you in small increments added to your basic Normal Retirement Age Benefit and calling it interest. Am I right about this...
Exactly right!
You can also think of it like any annuity -- the longer it is before you are to start receiving payments, the larger the payment will be.
Not necessarily. If you earn over a 18K you benefits are reduced by a $2 earned/$1 reduction of benefit.
Actually, I think the point of the comment was the other direction. You don't have to collect SS when you retire; you can wait. You can spend down from other sources while getting a guaranteed 8% return on your SS benefit. As an example; pulling money from a regular IRA and/or rolling some over into a Roth allows you to maximize that option which also reduces the amount of your RMD (required min distribution) at age 72. The latter can be a real tax surprise and needs to be part of any retirement planning.
I have a good friend who told me when he reached 62 he had lived longer than either of his parents. He had to quit work before that as he had had 2 heart attacks and a stroke. He did have a teacher's retirement package as well. He just turned 74.
Correct. I should have included the information that in my case I am collecting a deceased spouse's SS while mine grows, which is why waiting makes sense.
It absolutely makes sense in your situation. It is often repeated that SS grows 8% every year and beats the market, hence one should wait until 70 to collect is misleading. Because the forgone principal is added back, the amount is 8% higher each year. Hence taking early vs. taking at 70 has a breakeven point at about 80.