In terms of Social Security benefits, is it better to retire at 62 or 70?

Question

I am only 33. I am investing in my 401K and estimate I will have about 900K in my account when I am 60.

Thinking ahead, I wanted to see how much I could collect from social security depending on when I retire. At 62, I would be eligible for an estimated 46K/year and 70 if I held out til 70

My family does not have a very long life expectancy (72-75), but you never know - 35 years from now alot can change for better or for worse

Answer 1

Depends on how long you expect to live. (as you said)

Do you expect Social Security to be solvent by then?

You are 40 years away. Ignore social security (0 income). Do your own planning and see if it is available when it comes closer and more relevant (if you get it, treat it as mad money).

Answer 2

Full benefits will be paid at age 67, reduced benefits will be paid if you retire earlier, and higher monthly benefits will be received if you wait until 70. But the government has already calculated how much to raise or lower benefits based on actuarial tables (life expectancy), so statistically any benefit or detriment has already been removed - they've done the calculation for you already, and will pay you higher or lower based on your life expectancy.

One more thing to consider, though, is that by the time you're 67 (about 2041), the government will not be taking in enough to pay out the amount promised - there will only be enough to pay out about 70% of what they're supposed to. Most likely, they'll just raise the retirement age to about 70 from 67. Or just reduce the payout. Or print more money, which would reduce the actual value of a dollar (inflation).

So maybe you should start taking the money as soon as you can. But even if you want to wait a little past 62 because you don't need the money, I'd probably recommend at least not waiting all the way until you're 70 - you might end up being penalized for being patient.

Answer 3

First, don't count on receiving anything from social security. If you plan to pay for your own retirement and social security pays you something, you are better of than if you plan on receiving something that is not there.

Given the life expectancy you list the 'missed' payments from age 62 to age 70 will not be recovered by the larger payments for retiring later. As you said, you could live significantly longer. Your 'break even' point is age 85.

Edit: I just noticed you expect to have $900,000 in your 401(k) at age 60. If you ear 12% (the long term average for the US stock market) and draw 8% (leaving 4% to cover inflation, you have $72,000/yr forever. That could influence your decision.

Answer 4

You're right ...a lot can change in the next 30 years. I suggest you just concentrate on putting as much as possible into a Roth (my favorite for the long run) or 401k plan. Both if you can swing it. By the time you are 55 you will have a lot better idea what your situation is. Maybe you'll win the lottery and retire at 34. Have a great week-end

Answer 5

Assuming your comprehensive retirement age is sixty six or sixty seven your partial retirement income will continually be paid at age sixty two. in case you do no longer take social risk-free practices you are able to artwork till age 70 and build up credit to get an greater income. Your income relies upon on how many contributions you made once you labored. you're able to under no circumstances get an entire retirement at sixty two till you took Social risk-free practices disability. I even have under no circumstances heard something or everyone point out the $13,560 volume.

Answer 6

Are you married? That can change the decision. Also, consider that in 27 years (at age 60) $900,000 may be worth $312,000 in terms of today's dollars (if inflation is 4% per year) or $405,000 (if inflation is 3% per year).

I think the best decision will be clearer when you are 62.

Answer 7

With $900,000 saved...why are you so worried about social security?
The people that should worry are the majority that only saved $25,000-$50,000 & can't get a job!

Answer 8

You already answered your own question: it depends on when you die. If you wait until 70 and die at 69, you're screwed.