<p>i’d personally wait and take the higher benefit, but that’s just me. in youre example it’s 600 a month more to do that… 600 a month more (to start) over the rest of your life, is probably far more then you would get in investing some money for those extra 4 years.</p>
<p>i did have similar thoughts though in regards to my pension. You can either collect it in monthly installments or a lump sum. I’m obviously far away from this but it almost seems like if you just took the lump sum and put it somewhere, the interest earned would probably be equivalent to what the monthly installments would have been, and then you still have the whole principle stashed away somewhere. Anyone have any input on that as well?</p>
<p>That’s why if you work enough quarters you pay nothing for medicare part A, because you’ve paid into it your whole working career. it’s just the part B and D that have premiums. (Unless you didn’t work your 40 quarters, then you pay a considerable amount for the part A should you decide to purchase it).</p>
<p>I’ve analyzed this to death … (well OK, what else was I supposed to do in a hospital waiting room???) … and it largely boils down to what’s on your Form 1040. The wage income thresholds for benefit reduction are quite low … it’s hard to come out ahead when you’re surrendering $1 of SS benefit for every $2 of earnings over the threshold. And DW will work longer than me, which means a good piece of my SS payment will be taxed.</p>
<p>That said, if family DNA doesn’t predict long life, taking SS early may make sense.</p>
<p>Thanks, fendergirl and newhope. I hadn’t factored the tax implication into the equation, newhope-- thats a good point. But looking at it the other way, if one waits 4 years til 66 to collect $600/mo more, they’d have missed collecting almost $80K over those 4 years (from ages 62-66) and it would take 11 years of collecting the $600 more to catch up (not counting any interest earned on the $80K).</p>
<p>jym, i was assuming you’d continue working those 4 years. Wouldn’t you make more then 80k over that period if you decided to do that? Or is the goal to stop working by then regardless of if you are collecting or not?</p>
<p>We played the waiting game with each of my parents with their long term care insurance, and lost bigtime on my mom. She had parkinsons and we could have accessed her LTC benefits for all the time she had an aide to help her, but we thought it was better to hold onto the LTC as she might have possibly been in a long term care facility. She passed away without our ever accessign her LTC benefit. With my dad, he had a caregiver and case manager for many years before I applied to access the benefit. In part we had a misunderstanding of how the benefit worked, as we thought it only lasted 3 years (when in fact it was 3 years if they spent the maximum allowable every day). So for dad, after he spent a fortune out of pocket for care, we applied for and accessed his LTC benefit about 2 years ago (after the waiting period was satisfied) and they paid out over $90K. Of course we left over $120K of benefit money left on the table when he passed away last month, but I had anticipated that he might end up in a LTC facility if I could have convinced him to move closer to me, so I wanted the $$ available to pay for it. Its all a gamble…</p>
<p>***ETA fendergirl,
I was thinking about the scenario where a person woud not be working or not making enough to defray the cost of using the SS benefit. The tax implication in that case, as newhope said, would eat the advantage of accessing the $$. That said, a good friend of mine has gotten royally screwed in a divorce and then lost her job. She is working, but making not enough to live on with her current expenses (and she has already sold her house and moved into an apartment). So for her, she needed to start collecting SS when she turned 62 last month even though she is working (now in retail sales) just to make ends meet.</p>
<p>You also have to factor in what the surviving spouse would have if they are going to receive the spousal benefits instead of collecting on their own. My father took SS at 62. He lived until 77. When he died, his small pension stopped and mom lost his social security. She receives about $1000 a month. It would have been more if he had worked a couple of years longer. However, he had contributed to a 401k, so she is fine. However, the nursing home is eating it up rather quickly. She is 90, and is in good health, but she has Alzheimer’s, so her mind is gone. I think that she has money for about 4 more years of care in the nursing home.</p>
<p>My DMIL is almost 87. She became a widow at 55. She received great benefits from the company that FIL worked for. She has worked off and on over the 30+ years that he has been gone. 10 years ago she got a job at Wal-mart as a greeter. She is now an overnight stocker because she wants to do it. We have all begged her to cut back, but she is afraid of her mind slipping if she doesn’t have something like that to do. She works full time because she likes the benefits–dental insurance, which she doesn’t have from her other benefits. She is one of 6 children, all of whom are still alive. She is the second oldest. They have great genes!!!</p>
<p>^^^ The “all things being equal” age crossover point is 83. But here’s the thing … each person’s situation is different. I have a friend with an unfavorable family history of dying younger. He retired early and began taking SS early specifically because of that (even though he didn’t really need the money).</p>
<p>If your wage income is low and your federal income tax liability is near nil … and you don’t need you SS benefit for living expenses … then an excellent case can be made to take SS early and invest wisely. Unfortunately, VERY few people are in this situation. And if you live in a state (like CT) where state income tax is based on AGI alone, you’d have to clear the state income tax rate before your investment income was positive.</p>
<p>Who knows how many changes there might be in the tax laws betwen now and then, or if SS will be bankrupt by then! Then again… it isnt all that far down the road that I am able to consider the first oppty to collect :eek:</p>
<p>H has 3 years left to work, I 3.5 (June 2011). We will be 60. He has a crappy defined pension, I a decent one. He has been doing tough, dangerous work his entire adult life and no way could do it in his 60s or 70s. In addition to the pensions, we have socked away in several other plans. If our $2.5 M in those +pension+SS won’t let us live an OK life, it will just have to do. We will not be living in the US.</p>
<p>dstark-- you said that not everyone lives near fishing waters. But of course I didn’t ever say anyone could/would live on what we can/will. I said what *we *think is do-able, and you jumped on it as being unreasonable. I can only go by my own circumstances; you need to work with yours. I don’t expect everyone to fish and garden; I appreciate these as options for us. But I do agree with UCLari–you can definitely get decent fish for less than 20–even my Shop Rite has deals more similar to what he describes, without even going into the great fish stores down the Shore.</p>
<p>Garland…I never said the way you live is unreasonable for you…</p>
<p>There is no way in hell I can live on 30,000 a year…even if my food costs match yours…</p>
<p>And I know people do live on 30,000…</p>
<p>But my situation is very different than theirs or yours…</p>
<p>I like reading about situations different than mine…</p>
<p>Reading that people can live on less than I spend makes me happy. For
selfish reasons. Who knows what the future holds? I may have to cut back some day. I am glad it is doable. </p>
<p>We can get fish for less than $20 for 3 people…That is a choice…</p>
<p>Well, basically you questioned the number,and when i explained it, you said, “but not everyone…” implying I’d been prescriptive, rather than descriptive. </p>
<p>So that was how i heard it. But I agree, i’m always curious about how other people do things…I am over-fascinated by what choices people make and why they make them.</p>
<p>I’m sure anyone could live on 30k a year. People just choose not to. I mean, the person may not be able to live in Manhattan but elsewhere they could make it work if they wanted to. I’m only one person but I know if I made 30k a year I probably wouldn’t be able to own this house. Not to say I couldn’t own a different house, but this one would be out of my reach. I’d have to make some sacrifices but it could work. I don’t mean to sound rude but I can’t even imagine spending 50 dollars a day on food. That figure blows my mind. I know everyone lives differently but wow that is eye opening!:)</p>
<p>There’s the kicker, right? It depends largely on where you live. As an individual, I could probably make do on $30K in parts of NYC (Queens, Brooklyn), but would be totally SOL in most of the livable parts of Manhattan. </p>
<p>But I don’t know how anyone would raise a child in NYC on that income. Granted, people are doing it, so it must be doable. </p>
<p>The question then becomes what kind of food can you eat? The problem with income in America is that as you get poorer, food gets more calorie rich. You start eating processed junk.</p>
<p>jym626,</p>
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<p>I think 10% as a rule is too little. I would prefer it to be 15% at least. Even with my income, around 10% means that after 30 years of savings (assuming no increase in income), my savings is around $800,000 at retirement. This might sound okay, but then consider inflation, and the real value is only about $300,000. Yikes!</p>
<p>Given how much I know about my lifestyle, and my wants (travel, lots of it), I definitely need to save more than 10%. The 10% rule is nice as a baseline, sure, but you need more than that IMO if you plan on doing more in retirement than just… retiring.</p>
Back in 2003/2004 timeframe. My family of 4 spent $22K per year including health insurance premium which was $250/month excluding mortgage payment. We did eat a lot of wild and fresh salmon from Half moon bay. We travelled to Las Vegas and San Diego for fun. Kids had dancing, swimming, and piano lessons. We shopped a lot at Food 4 Less so I know it’s doable even including inflation.</p>