Here’s How Early Retirement Hurts Your Social Security
HTML-код
- Опубликовано: 4 фев 2025
- If you're wondering what happens to your Social Security payment if you stop working (and paying FICA) before a "standard" retirement age, or even if you want to take Social Security as early as possible, this video is a must watch for you.
Get Our FREE Social Security Quick Guide:
HolySchmidt.co...
Our Three Most Popular RUclips Videos of 2024:
10 CHEAP Purchases That Make Retirement SO Much Better:
• 10 CHEAP Purchases Tha...
7 Things a Retiree Should NEVER Disclose:
• 7 Things a Retiree Sho...
8 Ways You Can LOSE Your Social Security Payment:
• 8 Ways You Can LOSE Yo...
Other Important Links
FREE Retirement Ready Checklist:
HolySchmidt.co...
Follow Me on Instagram:
/ the_schmidtlist
Geoff's Facebook Page
/ geoffreymschmidt
Federal Reserve Board Survey of Consumer Finances:
www.federalres...
Social Security Administration Application for Benefits
secure.ssa.gov...
Current Social Security Cost of Living Adjustment
www.ssa.gov/cola/
Social Security Payment Estimator
www.ssa.gov/be...
Disclaimer: this video is for educational and entertainment purposes only and is not meant to be a substitute for legal, accounting, tax, or professional advice. If you have any specific questions about any legal, accounting, tax or other professional service matter you should consult the appropriate professional services provider.
You are right that this is often more complicated than a first glance approach. When I first looked at this, I did the straight math of each value (age 62 vs 70) x years to age 93 (my estimated lifespan). It was a no brainer to delay. And that is not even calculating COLA, which can be significant as you showed clearly.
Then some smart guy introduced the consideration of compounded interest. This flipped the numbers for me and assuming a decent return meant taking early would compound to a significantly greater value. I'll be 62 in a couple months and still undecided on which math formula is going to win.
Although I was swayed by the math guys like Ramsey (take it and compound it) I think instead that I will take the KISS approach. Take it when you need it. And I don't need it for an estimated 5 years as I have the cash on hand and can live well off of this without starting SS or my 401 withdraw strategy. I'm sure KISS is how the majority of Americans, who frankly, like me, don't have the Holy Schmidt brain power to approach SS any other way. Take it when you need it.
It's not just math. It's personal circumstances which dictate when SS is needed. Most people do not have the luxury of waiting to maximize the SS benefit.
I knew retiring at 53 would have a big impact on my SS. I also knew working many more years would have a big impact on my longevity. 😂
In that case, the choice is clear.
Amen, retired at 53 too back in 2020. Planning on starting SS at 62, can’t see leaving money on the table when tomorrow is promised to no one.
@ Same, except my reasoning is that we prefer to leave more of our savings to grow and take SS early. More of our own money means less concern about whatever happens to SS in the future. And we can pass our money on to beneficiaries whereas SS just goes away.
Who cares of your SS is max payout and you only live a few years !! Time is money people cant grasp that for some reason ! 62 and out not a day more
I had 5 years of lower wage work from age 18 through 22. From 23 on I made between 60k and 160k every year from age 23 through 55. I can retire now, but I plan to work to until I have 35 years of work as a professional which will be age 59. My employer offers a retirement package which is them paying half the cost of health insurance at age 60 to 65 so that will be my "one more year."
that is great to have that health insurance
It's fun to look back on your work history. I have some fond memories come popping as I look at my early work.
what's not fun is doing the math. when I looked at my "best 35" I was surprised by another complication to the calculations of SS benefits. I had a decade of very high CA wages and yet a significant portion of those wages did not get tallied to my benefit. The gov't caps contributions.
I was upset at first (hey, that's unfair) but shrugged my shoulders because it did give me a significant 401 contribution, as well, allow for some real estate investments, and so as I near retirement that is worth way more than what I'll get from SS.
Could you do a video about the new SS Fairness Act just signed into Law? How is impacts us with pensions that have paid into SS and how it impacts our spouses?
James, I am also in this boat and just applied. Municipal firefighter noncovered for 29 years but had a side business paying social security as well as prior covered earnings before the FD job so I have about 35 years of paying into the system even though my FD job didnt. I recently received my FULL earnings which is what the bill was for. Im not sure if you are looking for info but there is a bunch out there about this now. If not I agree that he should do a video. I cant tell you how amazed I was that this passed right when I needed it.
What's wrong with pumping gas as a teenage job?
Nothing. It teaches you how to survive on low pay, and makes you think about how hard you worked for every penny of it. I applied for a job at a gas station, and the owner asked how much pay I wanted. I said "Minimum wage is $2.35". He said "You're not getting that much!". Those were the days. You'd pull in for gas and get your windshield cleaned, oil checked and tire pressure as well.
IDK . . . fumes ?
Been there, done that. Pumped gas p/t in HS.
Nothing
Pumped gas for a few years I liked it easy job and made good money
My first job as a 13-year-old was at a shooting range. Sometimes I sat in a trap house loading clay pigeons onto the mechanical arm that was trigged by someone standing outside with the shooters. Somehow, I still have all my fingers!
That’s a plus!
Great point about the effect of the COLA based on what age you take you SS. I don't see that one mentioned very often...
TY!
You can wait for that larger check amount but it will only be more money for the assisted living facility or nursing home to take if you live long. Retire as early as possible and enjoy your life. I wouldn’t go past 65 to claim as this is the age you are eligible for Medicare. Of course it depends on your individual financial situation and some people also have a pension while others do not.
You’re right for some people but I know a lot of people that are very active past 70 that are doing a lot more than they would have at 62 because they get the bigger payout to spend instead of smaller payout going to bills. It all depends how you take care of yourself. Some people sit around all day and some are active. Age is viewed differently then it used to be
@@johnurban7333 This is a valid point, however, the "age is just a number" active people are still human. I watched my parents retire and even for healthy people there is no denying the three phases of our last decades: Go-go, slow-so, and no-go.
Delaying those 8 years is a likely to be a significant reality for every 70yo that is happy about his or her decision and then asked again about it at the age of 80yo..
@@MichaelPrudhomme-u7x I went from slo-go to go-go when I retired, so far still in go-go mode
"Ole Jeff Schmidt worked pumpin' gas; made $2.54 an hour. Had rhythm in his hands as he tapped on the cans. Sings rock and roll in the shower". Sorry; I just had to post this classic music lyric. LOL
Thanks for discussing another great topic. Looking to retire in 2026, so this info should help us in our financial planning.
Gold!
Just $2/month more in benefits for working 1 more year based on my data:
I logged into my SS last week. 22 years of earnings, 54 years of age. 2024 earnings were not in the system yet. If I stopped working now, my estimated SS benefits at 62 is $2246. Logged in again yesterday, 2024 is now included. So with 23 years of earnings, my estimates benefit is now $2248 if I had no future earnings.
So I will get an additional $2/month for working this additional year and contributing $10,453.2 (x2 since my employer also pays) into the system.
Minus $200/mo for Medicare.
Are you greedy, making $164k a year and you’re worried about that measly $10k contribution that your government will redistribute to someone more deserving. Next you’ll be denying white privilege got you that cushy job.
@@stoveguy2133 I'd like to learn more about Medicare, as I've heard that $200 figure before and yet my dad told me recently that they pay zero. I think it's income based but I don't know?
But for everyone, I don't think Medicare is mandated until you reach age 65. I'm going to be retired overseas and I don't want to go into that system until I am much older (since I'll be on international insurance).
Correct - as long as you have at least 35 years in, you should be relatively ok. I'm retiring from f/t work at the end of this year and will have over 35 years paid in. My recent earning years will replace my early low earning years. If I don't get a p/t job, I'll take SS at 62, otherwise, I'll take SS when my p/t job ends.
I like that plan. Should I retir3 at 62, tap my money market for a couple years while working part time, then when part time work ends, start claiming ss. The question is will the low part time income reduce my ss check.
@@paliacho9 In your case, the SS earnings test limit is $23,400 for 2025 wages for folks under FRA. By the time you turn 62, it will be higher so you should be fine if you want to draw SS while working p/t.
SS, one of the few retirement income source that is adjusted for inflation. Therefore, it's good to make that payment as big as you can.
Well if you were drawing it from the end of 2022 to the beginning of 2025 you would have had a 53% return over that time span. Taking SS early over that time span and leaving your money in the market would have put you way ahead in this snap shot in time. 👍
Please do a video about if you retire at 62, but don’t claim SS until 70. What would happen to what you’d expect to get at age 70? Thanks!
He talked about the best 35 years of income. If you could make more from 62 on, you'd cancel out some years of lower income. But I don't know how to reassess those low years to today's values.
@@maryclare2968Yes, I agree, that’s common sense. I want to know, if I stop working altogether at 62 and live off of my investments (no more earned income), what might happen to my projected SS when I finally claim it at age 70. SS assumes that the age 70 amount they predict includes working until age 70. So many RUclips channels do not address this very common situation.
It'll take 7+ or so years - you'll be 77 - - - to break even...
@@ckle2685To break even with what?
bob: you can go on the SSA website and model that.
I was a janitor over the summers at 16. My friends all had such jobs including gas station attendant. How was that not PC? Thanks for the vids!
What I was thinking too.
Exactly. So many wimpy men these days. Really sad.
He was under the age of 16.
@@DavidSmith-ee2yfbingo!
Comrades, all jobs must be Party approved for Correct Working.
Was that a smirk I saw when you said earnings were divided by 420? 😂
😊
I receive $4,000 month
Retired at 69.5
nice
I’m right behind you. Started collecting at FRA 66 1/2. I was $5 a month short of the max. $3800 a month. Good luck. Collect for a long time👍
@@Aldo-d6z longevity runs in my family.
With COLA I won't quite get that much - about $4,200 in 4 years. For me, it's worth delaying a bit.
Nice!!! I retired at 64.7 and although it was much lower than my own SS benefit I opted being a widow to 1st claim my SS survivor's benefit which I did until I reached my FRA of 66.6 which my FRA benefit is $3118/month. I also receive a FERS pension of $2500/month which is nice living in Florida where I don't have to pay state taxes on either of these income streams. No regrets for delaying taking my SS benefit at my FRA because I pay $185/month for Medicare Part B, and I kept my FEHB BCBS standard which acts as my Part B supplement which now costs me with a 2025 $52/month premium increase $378/month and I also have dental coverage at $42/month and vision at $12/month. Those costs plus some out of pocket costs for OTC meds and other health related expenses are covered by nearly the difference between my age 62 and FRA SS benefit. The anticipated costs of one's health insurance/s in retirement should be a major consideration in deciding when to claim your SS especially if SS is a main or the only source of your retirement income.
I receive 3554 retired at 67,
Wow. Nice check!
I'd be a little less, but won't wait that long because I want to enjoy life earlier. And as has obviously has been said over and over - divide out the money left on the table over those 5 years 62-66 you did not collect. I hope you live well into your mid 70's otherwise you've lost.
Social security is insurance against living too long. I can make up earnings shortfalls in my 60s but I cant in my 70s and 80s if I live long enough
And you may not be here to worry about it.
You have to live into your 80s before the difference in higher payments even starts becoming a factor.
@@ItsEverythingElse The breakeven between starting at age 62 vs 67 is 78 1/2
They also index yoir earlier earnings for inflation into todays dollars which helps. If you work 1 or 2 more years, will it be worth it for an extra 100 a month. It would not be worth it to me.
Can I retire at 62 and still get Medicare at 65?
Yes
Yes 👍
Is it worth it to wait one more year till 70 if you can afford to, or take it at 69 and start putting it in CD’s and Money Markets?
Great sense of humor; dry, like a great martini.
Ha!
I have been watching many retirement educational videos in preparation to retire. A few focus on social security, wills and trusts, and Medicare. I have not found any with good information concerning long term care options, pros cons other options. Is this something you can cover?
Choices are to fund with a large portfolio, buy LTC insurance, life insurance with an income rider, or use your home for LTC funding.
We bought LTC insurance and took out a Reverse Mortgage line of credit. We are not planning on using the portfolio, as it is not an efficient way to fund LTC.
Plan on having no assets the government can seize and long term care is free. Big brother got your back as long as you’re broke as a joke.
Does the same apply for correction officers who are eligible for retirement in 20yrs
What a gummint racket...20 years...
Yes, same exact rules, SS payment is determined by best 35 years of income. Retired PO here.
It’s hard to decide should you take SS early as opposed to withdrawals from investments.
Is there a government web site that will tell you how much you’ll earn?
yes
You can get an estimate by setting up an account with SSA. You can also make an appointment with your local Social Security office. I recently went in and they gave me a printout of my possible monthly pay out for each month all the way through to age 70 (based on my current earnings). It was well worth my time to go and helped me in my decision making as to when to start receiving.
Can you max out your work credits for SS? I log into my SS account and it says I have enough credits to pull SS, I have been retired for 12 years now and have not pulled SS (and I don't plan on it until 65).
Pulling SS can increase your taxable income if you have passive income like rental properties which in turn can affect any insurance benefits you get from Obama care. So you need to weigh the benefit / cost of adding the additional income and how it affects your health insurance eligibility.
A couple of years ago the SS admin sent me a letter informing me that if I worked just another 3 years I would add $300 to my monthly SS amount... no thanks, I will live on less and enjoy my time on this planet.
Hey. I was also pumping gas at 15. Small world!
Hi Geoff! I’ve just recently found your channel and I’m hooked. I’m subscribed, I “Like”, I’ve hit the bell… I just have one question, and please know that I’m asking this with the deepest respect: What is the story with the very worn-looking cabinets that can be seen in the background of your office? I can’t help but imagine their might be a great story attached to them. Thanks, both for the amazing information you share, and for taking some time to read my comment. All the best to you and yours!
lol. You’re not the first to ask! I bought them that way because of the color (they are made from old refurbished ship wood and remade into cabinets).
@ Ah! Thanks, for replying.
There is a lot missing in this analysis. If your situation is to keep working or collect SS early the analysis given makes sense. If it is draw down your 401k/IRA and wait then maybe not so much. For example taking SS at 62 means you're paying somewhat or a lot less in Fed taxes and likely none in state taxes (most states don't tax SS). Of course if your portfolio grows a lot (by not drawing down) you could end up with high RMD's and possibly IRMAA (those are not really bad problems to have). And, of course some states don't tax any retirement income so that may change the picture as well.
That is a lot to cover in a 15-minute video.
@@Jamie-dz8dg Good point--that no one should make long term retirement decisions based on a 15 minute video.
Great video! My husband just started his payout at 62. I am going to wait until full retirement. If i pass away would he get my full benefit as a survivor, or would he get a small amount since he claimed his at 62? Thank you for all your wonderful content!
He gets a portion of your benefit. He will get approximately 70 % of your benefit as a penalty for claiming early
It all depends on when you die. If he is 67 when you die, then he would get your full check.
It would probably benefit him to wait till 67, then switch to survivor’s benefit. There’s no increase for waiting after age 67.
Thank you for your response. I thought he could get 100% of mine if he waited until his full retirement age.
@@JeannineSiess As long as he is over full retirement age when you pass away he will get 100% of your benefits.
If you've been a max-FICA wage earner from your mid-to late 20's (not uncommon in engineering and other fields), you'll reach the 2nd bend point of the AIME calculation by age 45 or so. There you'll get 77% of the maximum monthly Social Security benefit while paying about half the lifetime FICA taxes. I quit my engineering job in the oil and gas industry way back in 1994 at age 38 once I'd accumulated enough capital to live off the "4% rule". I had about 13 years of max-FICA earnings by age 38, and lower amounts before that. I have decades years of zeros in my Earnings Record. I'm astonished at the size of the SS check I'll be collecting in 12 months at age 70. My first 12 months of benefits is equal to about 86% of my lifetime FICA payments (43% if you include the employer's match.)
There really isn't a lot of benefit to working beyond the 2nd bend point You're paying a lot of FICA taxes with very little return.
agreed ... people always talk about "make sure you work at least 35 years" ... your salary being 100K instead of 50K means you only need to work half as many years ... years worked do not matter as long as you have at least 10 to qualify ... after that its just your total career earnings divided by 420
Another way of thinking about the endpoints is payback time. Ignoring spousal or survivor benefits, income under the first bend point has about a 5 year payback. Between the first and second is around 15 years. After the second it’s 30.
So yeah, once you max out the middle segment it’s unlikely you recover the taxes you’re now paying. And once you have 35 years in the system the paybacks are even worse going forward.
As he says, its all about the math, or one size doesnt fit all. I am almost 65, retired , single and using cash now, before turning on the ss spigot. I am also doing roth conversionsand taking advantage of lower taxes now. I have been using the Boldin software for about a year, its excellent for a diy planner. Currently, based on my numbers and assumptions the difference when I take ss at anywhere between 66 and 70 is almost the same, if of course I liveto my life expectancy. I still question, what if I take some retirement income early to push back ss, but the math does it make it a sure smart thing. There are alot of variables we can only guess at, rate assumptions, health, longetivity, etc. Boldin is great on helping you understand the range of possibilities, check it out.
Taking mine as soon as I hit my fra birthday at 66. How much of a hit if it's 6 months early of exact fra 66 and 10 months?
Circa 5%
That's not bad. Didn't want to lose almost another year of benefits waiting an additional 10 months. Thanks
If people find working at a gas station at 15 not PC that is a major problem with people's mind set, and it needs to change back to something closer to intelligent.
@Geoff, my understanding is that it is no longer possible to undo the decision to take Social Security, partly due to people using their payments to invest - then repay SSA for the received benefits and pocketing the remainder of the profits. In essence, for those who could afford it, it was an "easy" way to increase the amount of funds they had available to invest. Am I completely wrong? Is it still possible to undo a decision in terms of Social Security and do the repay?
As alway, thank you for a really good video - it is ALWAYS worth the time to watch your productions!
? I follow various SS vlogs on YT pretty faithfully & I have not heard that. As far as I know it is still possible to stop benefits in the first 12 mo's. & repay.
@@penelope5500 thanks so much for clarifying! I hopped on to the SSA website, and you're right: the 12-month rule is what counts. I didn't have my facts straight - now I do. Thanks, and have a great day!
You can also suspend benefits after FRA up until age 70 to get the 8% yearly increase from 67 till 70.
Do to my social security payments are going to be so small it's not a factor on when I collect it. Medicare has a far more factor than social security will ever have on when I will retire.
I also pumped gas at 15 in ‘83. I believe federal minimum wage was $3.35 /hr
Ah! I think you are right. Every penny counted!
You never get back the early years when u can do things instead of slaving for a bunch of incompetent administrators.
The whole "work 35 years" thing is overblown. It's more about how much you make in the years you did work. The bend points are so ridiculously progressive that for most people working 35 years won't get them much marginal gain over working 25 or maybe even 15. If you were a very low earner then yes working 35 years probably matters. To exhaust the 90% bend point one only needs to earn around 500k in lifetime indexed earnings to get a benefit over $1k/month. Now they are in the 32% range, which means they need to earn quite a bit more to get to a 2k benefit. After they exhaust the 32% bend point they drop to the absurd 15% bend point, which basically means you get very little gain anymore. It does not take people 35 years to exhaust the 90% bend point (the most efficient ROI), nor does it take that long to exhaust the 32%. If you're a maid working at a motel part time? Yes, working 35 years probably gets you a more commensurate benefit. For anyone with a career...you don't need to work 35 years or even close to it.
I was forced to retire early due to medical condition
Sorry to hear
I took mine early because I needed the money. No work for several years, depression and health issues.
How is my payment at 70 affected by retiring at 66 and discontinuing any new earnings but living off of my IRA rather than activating social security? The estimated payment at 70 says if you continue to earn at your current rate.
Does income from a pension count as income against your SSA benefit?
I can't really address a WEP subjected pension b/c that is in such a state of flux, but just a regular pension...no, no effect on SS.
No, only FICA taxed income counts.
I’m really confused why a young person pumping gas would ever be a problem.
If I take Soc Sec before full retirement year (67) and make say $60,000 I understand the 1 for 2 take back for the amount that exceeds the yearly limit. What I don't know is when and how that money would come back to me? Does it happen at age 67? Spread over what time period? Lump sum payout? I've never heard an explanation for this.
They basically reset your clock as if you had claimed later. You get a larger monthly check after FRA, so it will take many years to get the money back
It gets recalculated into your monthly amount. Not a lump sum.
I will be 70 in 9 months and will get $4200 a month SS will take it but I make 6 figures and will continue to work from home for another year or 2 extra.
A six-figure income is pretty standard these days, but for me personally? More to life than work. 65 is right for me. Perfect balance of not leaving SSN on the table and enjoying more than work. But what makes you happy is what makes you happy - to each his own. Hopefully you'll be healthy to 100 and beyond. Best of luck to you!!
I won’t have 35 years of work until I turn 60, which is 8 years from now.
Depends on so many things tho. Are you happy and like your job? Do you make enough for it to even matter? Health and aging. Some of us didn’t make that much and wouldn’t make that much now anyways. So it’s kind of a no brainer to just get a long overdue check even if it’s piddly. I made arrangements for that anyways. I’m taking the downsizing, simple life route. Got one “camper” renter for now covering my low utilities and overhead. There will be a small rental or guest house soon also. You only need what you need so make yourself not “need” to get a huge check in the first place. No debt (other than a smallish dental bill) and no mortgage. I guess my point of view is more or less act like there is no reliable “system” and see what you can do if you had no benefits. Then you can drop the stress of “omg what’s the psycho government gonna do NOW?”
Tell me my expiration date and I will then know my optimal filing age, LOL. Seriously, filing age is a Vegas worthy dice roll to me. Family history doesn’t help much; one parent gone at 55 and the other still kicking at 86. Grandparents: 69, 73, 84 and 94. One sibling is 64 and the other passed at 49. Break even is between 79 and 81, depending on scenario; have my 35 years with no 0, including those low earning way back in high school and starving college years.
After retiring at 53 with a modest pension, I plan on filing at 62 shortly. I have a part-time job under the clawback threshold and plan to keep working the part-time job after filing, body willing. Already putting some of my pension money and nearly half my part-time wage into my 401k, CD ladder and T-bills; plan on doing more of the same with the SS. Wife, although younger, will base her SS on her history, which payout will be about 3/4 of mine at 65. Two HSA, her 401k, small Roth, paid off home, frugal lifestyle. We should be alright with our SS claiming strategy.
Can you explain taking social security off of your ex husband’s after a divorce? 😊
I'm confused by your statements starting around 8 minutes in. I understand that if I take my SS early but continue to work I will need to give back money over certain thresholds. How do I give that money back? You stated that they will "add that to your payment?" That's where I'm confused. Did you mean that they would subtract those amounts from future payments?
I believe you will get all of it back when you hit full retirement age. It will not be a lump sum, it will be factored in to your monthly payments.
Assuming that your earned income is $23,400 or less, then if you take SS at 62 and invest it at 7% or better, it will grow to a larger
nest egg than waiting to FRA or even age 70.
You might want to get 70% of your full benefit now, before the fund runs short and 100% becomes 70% anyway.
You don't think your original 70% will then become 50%?
they will never cut SS monthly benefits , because the oldest and poorest in the country depend on them just to survive ... theyll do what they have multiple other times for the last 90 years when it ran low , raise the payroll tax and salary cap ... it started as a 1% payroll tax and now its at 6.2% , because this has been done multiple times ... we've been here before ... the govt. is just starting chatter about it early so workers will complain less about higher taxes after hearing their parents and grandparents cry in fear for 5-10 years about possible cuts to their SS ... same as every other time
@@70qqnot really talking about it early in that this has been a known problem for a decade or so and they just keep kicking the can down the road. I’m thinking if they finally take action it will be a combo of actions to spread the “pain” small increase in SS tax and increase in age till full retirement. When they set the original target of 65 for full retirement average lifespan was ~65. Average lifespan went up but it was years before they took action. Another issue was that the number of workers to cover payout has decreased. Would have been much better if they had sucked up payments to those that had never paid in at the beginning and created individual accounts.
I have just retired at age 62 and have applied for social security benefits. My concern was mainly to get in and have my name in there before it basically runs out of funding. That is a real concern for me with current politics. I'm still relatively young, and have a good chance of getting another job if I want.
Why do you think it's going to run out of money? It's projected to need some cuts around 2034 if nothing is done to shore it up.
@@fvvfvbbbb ...and why do people think that if they somehow start drawing & are "in" that that will make any difference? The people who really understand SS & vlog about it aren't making that assumption. They are saying that across the board cuts could affect people already on the program too.
Just because you are healthy as a horse that does not mean you wont get killed by a drunk driver next week. Also just because you do everything your doctor tell you not to do that does not mean you wont live a very long life. I knew a guy who lived nearly a decade after becoming bedridden only wating to eat hamburgers.
The video is looping back to the beginning after it’s been playing for about 15 seconds.
and ... here is how NOT retiring early hurts the remaining time you have in life...your dead.
😀
Would love to see a video where you factor in the inevitable Social Security cuts in 2033. I turn 62 this year and thinking I might be better off drawing early before the cuts start? We are about to lose $200+ Billion in social security funds to pay for the "Social Security Fairness act". That just pushes us closer to the insolvency date. Anyway its something to consider for those of us in our late 50's and early 60's.
In truth, the insolvency date is where it is because for 40 years the SSA withheld benefits from 3 million workers who earned them. The insolvency date would have already arrived, or nearly so, had these workers been fairly treated. The restoration of these justly earned benefits is therefore not the first cause of early insolvency.
Nothing is inevitable. Life expectancy is going down in America and payroll tax cap could be raised or lifted. Future retirement age or benefits could change too.
I’m 65, no concern about cuts in the future for me. For younger workers there will be cuts and increased taxes and claiming age. The government will print the money. The current generation of Boomers is huge, and they won’t tolerate cuts. I can see more taxes on benefits for the wealthy on their SS payments.
Wish it would go insolvent now, I'm tired of slaving away just to be robbed to give other people money.
they will never cut SS monthly benefits , because the oldest and poorest in the country depend on them just to survive ... theyll do what they have multiple other times for the last 90 years when it ran low , raise the payroll tax and salary cap ... it started as a 1% payroll tax and now its at 6.2% , because this has been done multiple times ... we've been here before ... the govt. is just starting chatter about it early so workers will complain less about higher taxes after hearing their parents and grandparents cry in fear for 5-10 years about possible cuts to their SS ... same as every other time
I maximize the effect of taking early Social Security by giving it monthly after taxes to my son to upgrade my grandchildren's life right now when it counts the most. There simply is no possible better investment.
That’s a wonderful thing to do for your grandchildren. Just watch those darned Gift Tax rules. They can bite. 😮
@@tharrigan5661I doubt there’s any records, would you give your child money and then report it to the g-man so they get hit with a tax bill? As your former president used to say, “come on man”.
Medicare A/B payments increase if you are working while receiving SS payments is a factor too I think?
❤
Is it your best 35 years, or your best 35 *consecutive* years? (For many of us, the two will be one-and-the-same, but not all of us.)
It’s best 35 years. He said it at 1:49 in the video. If you have down years you will have to work more than 35 years. It’s not 35 consecutive but 35 total.
@ hmmm, I don’t particularly doubt what you’re saying, but I’d think that your first-ever job being not-so-lucrative wouldn’t say much about “consecutive or not.” I’d think that a temporary dip in the lucrativeness of your employment would be more telling.
@@mr88cet say you work 40 years. They would take your 35 highest working years regardless what order they were in. My first couple of years and middle years I didn’t make much money so I worked longer than 35 years. If it had to be consecutive most people wouldn’t qualify for Social Security and they would be plenty of it
@, or they might not get much (back) from Social Security…
Give me a HS!
Gummint SS is a racket biased toward the gummint
Alot of people have unrealistic expectations about their lifespans if they are taking late retirement.
Life expectancy at age 65 is 84.7
@@richardjohnson8114 I don't think that is right. Looked it up and it is 78.4 and falling.
@@FDR_progressive_liberal That is average life expectancy for all people. Your life expectancy at every age changes. For a male, at age 65, your life expectancy is actually 82. For a female it is 84.75.
I am taking mine at 62 in 2 months. I don't think I will be alive at age 70.
@markthomas2436: What the mine says the body will follow.
My wife and I took SS at age 62 and I don't regret it a bit. It is still with me at 74, but my wife died at 68, without warning. The government is hoping you will put it off. Don't wait for something that you will possibly never see. I don't trust anything about this "system." Just find other ways to handle your hopes and finances if you can. Clarity? The system is hoping you will put if off, banking on your greed. There's a really good chance your greed will backfire, considering how many ways you may pass before your time. And starting at 62, you will have reliable money supplementing your current income.
No one is promised tomorrow !
By the time in turn 67, i will have deposited over $120k into investments, that should be worth about $150k. All because I took SS at 62. It was a no brainer for me to take it early.
jon: And what if those investments had lost money or were up just 1%, 2%? Hindsight is always 20/20.
@ I would still be ahead. If I break even, I have $120k in the bank. If I hadn’t done this, there would be zero. If I were to die at age 66, 364 days, my spouse will,have $120k in the bank. Otherwise she will just get a portion of my SS as well as hers. There has only been a handful of 5 year periods since the beginning of public trading that have had a decrease in value. There have been zero ten year time periods where the stock market decreased in value. Just for reference, it went into my long term investments that made 17% last year.
@@howardfriedman7077 That increase sounds like the money's been put into pretty safe investments. But you do have to watch market conditions for sure. Still better than money left on the table to my way of thinking.
@@jonkrispeterson6678 S&P was negative in the 2000s. There have been several 5 year declines, even since 1997. The point being, you are trading a certain return in SS for a very uncertain return in stocks.
No, you would not still be ahead if your investments lose money or return less than SS.
You misspoke about how Social Security is figured up. You said it’s based on how much you contribute but it’s not. It’s based on the amount of covered earnings that you have.
john: It is based on contributions. The contributions are based on earnings.
@@howardfriedman7077 No it’s not. Your benefits are based solely on the covered earnings you have. While it’s true that the amount that you are taxed is based on those earnings, those taxes do not determine your benefit except in a superficial way. If one person pays twice as much as another person their check isn’t twice as large. How much you pay in is not used to figure up your benefit at all.
@@johnscott2746 So, if my FICA is $60 from my paycheck and your FICA is $120, your earnings aren't double mine?
@@howardfriedman7077it tops out at a certain threshold. He may have mentioned it but not everyone hears everything he says or watches the whole video. Someone on here asked a question he had talked about at 1:49 in the video. He says a lot in one video so you really have to pay attention
Title is backwards , should be the harsh effect of social security and its impact on your early retirement. Social security needs to go away, let people have their money and stop stealing it for pennies on the dollar returns.
Hey guys, it's your last 35 years. so if you retire but don't collect any retirement money for a few years....they count those two years as 0. shocked the crap out of us. We had plenty saved in the bank that we didn't feel the need to draw yet.
First reply was blocked - either from the link to the SSA web site or my attempt to bold text. This is directly from the SSA web site and contradicts what you claim.
"Up to 35 years of earnings are needed to compute average indexed monthly earnings. After we determine the number of years, we choose those years with the highest indexed earnings, sum such indexed earnings, and divide the total amount by the total number of months in those years. We then round the resulting average amount down to the next lower dollar amount. The result is the AIME."
If you had at least 35 years of earnings, you won’t have any zero years. If you have only 32 years of earnings, you’d have 3 zero years.
@@bobhoran9778 So what counts as "years" of earnings? 40 hours a week for 52 weeks a year? How about if someone in their youth only worked for a few months for the first few years of their working career? I began working as a teenager in 1977 doing a couple of summer jobs then college then full time 12 months of work. So, I began in 1977 and retired in 2013 and that comes to 36 different year numbers, not all of which were complete 12 months of work.
Simply...if one WAITS 'till full retirement age to take SS, it'll take about 7 years of the higher amount of benefit to "break even" - to fully recoup.
ckle: Try the math again.
@howardfriedman7077 did the math Howie - do YOUR math and be sure to show your work.
@@ckle2685 Okay. Let's say FRA at age 67 is $2000/month. That means age 62 benefit is $1400/month. Five years of benefits from 62 to 67 is $84,000. B/E is 84,000/600 or, 140 months. So, it takes 140 months (11 years, 8 months) from age 67 to b/e. Of course that does not include any COLA calculations which would make the b/e slightly shorter.
Now it is your turn to show your math.
ckle: Yeah, that's what I thought.