Another Reason Why to Wait on Social Security

The more questions we ask the more we learn about Social Security to help us with our Retirement Projections. My Dad and myself got talking about what happens when once spouse dies how much the other spouse gets then from Social Security for monthly payments if they are both retired.

We hope we never will need Social Security to get by on but it looks like for our situation that it will be part of the money we will need to keep our current lifestyle. We hope to live long healthy lives so we will be able to keep golfing and traveling when we both are retired.

My Dad thought the living spouse got the whole Social Security amount each month of the spouse that died and I was thinking it was half of what the spouse was getting.

So, I called Social Security Office and was put on hold for over 30 minutes. Ughhhh Once someone came on the line, I asked them what happens when one spouse dies and you both are retired. She said the living spouse gets what ever spouses monthly check amount was the highest. So that confirmed with me that we were making the right decision for us to wait till I am age 70 to start Social Security. We still are deciding on what age Darlene will take hers. We will keep reviewing our Retirement Projection each year to decide what is best for our situation.

As always, I am not giving you any Financial Advice and you should seek advice from your Professional Advisors to see what is best for your situation. See my Disclaimer at MillsWay.com. This is for entertainment only.

Let’s also review how Social Security is figured before talking more about why we like waiting till age 70 to start my Social Security.

I do suggest that you go talk to the Social Security local office in their town to get the facts or wait on the phone for a long time. Both waits will probably be a while. I also suggest that you review your yearly recap we get from the Social Security Administration to make sure your income they have down is correct for each past year. If you don’t get one each year just sign up on their website or go to your local Social Security Office.

Here is a link to go see your Social Security Statement – https://www.ssa.gov/myaccount/statement.html

On average, Social Security will replace about

40 percent of your annual pre-retirement earnings. You will need other savings, investments, pensions, or retirement accounts to live comfortably when you retire. To see your Statement online anytime, create a my Social Security account at myaccount.socialsecurity.gov.”

The Motley Fool website said – “The amount of Social Security benefits you receive is based on your work history, both years and earnings.

The SSA considers your wages over the 35 years during which you earned the most money, up to the annual payroll tax cap. There’s a tax cap because there’s also a limit on how much you can receive in benefits.

Your wages over your 35 most profitable years are adjusted for inflation, added together and then divided by 420 months (the number of months in 35 years). This calculation gives you a figure called average indexed monthly earnings, or AIME.  Then, the SSA uses a formula to determine your primary insurance amount, based on your AIME. For 2019, your primary insurance amount equals 90% of the first $926 of AIME, plus 32% of AIME above $926 and below $5,583, plus 15% of your AIME above $5,583.

The income threshold at which you get a smaller percentage of AIME is called the “bend point.” Bend points change annually, but the bend points that determine your benefits are those in effect when you turn 62, regardless of how old you are when you retire. 

Understanding this formula is important for one big reason: The SSA considers the most profitable 35 years of your life, based on your earnings. So, if you worked fewer than 35 years, the SSA will still look at 35 years’ worth of work history — and factor in $0 annual earnings for the years you didn’t work. These zeroes can significantly reduce your AIME, which in turn substantially drags down your benefit amount. 

For this reason, you might consider working a few more years if you don’t have 35 work years on your record. Or, if you’re earning much more now than you were at the start of your career, you may decide to stay on for a few extra years so your early lower earning years are replaced your later high-earning years, when you were in the prime of your career.”

I have made my own spreadsheet that has my top 35 years income and then play with if I would go back to work and replace some of the lower years how much would it effect my monthly benefit. For me it hardly makes a difference.

Mrs. RE and myself both still want to wait till we are age 70 to claim our Social Security Benefits. I know we can’t predict the future but in a perfect world that is our plan. I always suggest for yourself and other people to also see your own financial planner and financial team to see what is best for you situation.

Since my earnings has been much higher than Darlene’s and that I am older we will for sure try to wait till I am age 70 to start taking out my Social Security.

Lets talk about how it can be beneficial to wait till age 70 depending on your situation.

The Social Security website said the following – “If you were born between 1943 and 1954 your full retirement age is 66. If you start receiving benefits at age 66 you get 100 percent of your monthly benefit. If you delay receiving retirement benefits until after your full retirement age, your monthly benefit continues to increase.

The chart below explains how delayed retirement affects your benefit. The increase is based on your date of birth and the number of months you delay the start of your retirement benefits. If you start receiving retirement benefits at age:

  • 67, you’ll get 108 percent of the monthly benefit because you delayed getting benefits for 12 months.
  • 70, you’ll get 132 percent of the monthly benefit because you delayed getting benefits for 48 months.

When you reach age 70, your monthly benefit stops increasing even if you continue to delay taking benefits.” See the link in the below show notes.

We print off our Social Security statement each year to check and make sure they have our correct past years income. Plus, it is fun to see what the projected benefit amount is at different ages. Hopefully our elected officials don’t take away from Social Security and help protect it for future generations.

Here are some reasons that people I have talked with decided to start taking Social Security payments early;

  • My Dad had been laid off from his Factory job and had found a job that paid half of what he made at the Factory. He had no savings but was debt free. So, he decided to start at age 62.
  • A friend that was a School Teacher from up north started at age 62 because most of his family members never made it to see age 70. He felt he wouldn’t live long enough to have it be more beneficial to wait. He had enough savings to wait but wanted to start early so he could save more money up to pass on to his kids someday.
  • A guy I met on the driving range started at age 62 because of his wife’s health condition. She was in bad shape and they didn’t have any savings. He felt they needed some income coming in to help put food on the table. He couldn’t work much because he was taking care of her or running her to doctor appointments.

As you can see it isn’t an easy black and white decision for everyone to choose what age to start taking Social Security payments. It is good to work with someone on figuring out when to start. Make a list of the Pros and Cons of waiting until age 70 to start. You can also do some math to figure out what age you would have to live to before waiting till age 70 to start was beneficial.

CNBC said that the break-even can range from age 77 to age 83. Go see their examples from the link in the show notes. One example they showed was for the Top Wage owner waiting from age 62 to age 70 had a break-even age of 80 and 81.

Darlene is younger than I am and she will long out live me I would bet. This is the reason I want to delay till age 70 so she has the most possible money to live on once I go to heaven to be with my folks.

What age did you start taking Social Security? If you haven’t started yet then what age do you plan on starting at? Why did you choose that age?

My perfect world would be to never have to count on Social Security or our Retirement funds to live on and just live off our Dividend Stocks and other forms of Passive income. But not everyone has multiple forms of Passive Income. We want our boys to have many forms of passive income.

We teach the boys to live debt free and especially at Retirement time. We want them to work with a Financial Planner if they don’t feel they have the education to take care of their Retirement Funds. We really hope they will consistently keep educating themselves on Personal Finances and Investing.

We want to give our boys the best chance to have their money last them thru their retirement years and have them reach their Financial Freedom goals..

What age did you start taking Social Security? If you haven’t started yet then what age do you plan on starting at? Why did you choose that age?

Here are some positive quotes I like;

“Get your Money to Work for You… As hard as You Work for it.” By Napoleon Hill

“1. Make Money. 2. Use the Money to Make More Money. 3. Repeat the Process.” By Warren Buffett

“There is no way to happiness; happiness is the Path.” By Buddha

“Change Your Thoughts – Change Your Life” by Wayne W. Dyer

Let me know your thoughts about this blog and let me know of others you would like me to do in the future. I feel we can all learn from each other. That is why I am in the helping people retire early, enjoy life more and be more successful. Also, please see my Disclaimer page.

Don’t give up on your dreams; don’t let others talk you out of your dreams. Make your dreams happen. Make it happen today.

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Sources and Resources from Podcast (Available in Show Notes)

  1. Social Security Stats from https://www.ssa.gov/planners/retire/1943-delay.html
  2. Social Security Break-even Points https://www.cnbc.com/2018/08/13/those-social-security-break-even-calculations-can-be-misleading.html
  3. Here is a link to go see your Social Security Statement – https://www.ssa.gov/myaccount/statement.html

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