Working past 67 and collecting SS

[sleepr0]

Hello all, 

I reached full retirement age in March, but continue to work. I was planning on waiting until 70 before collecting to maximize benefits, but was advised by a friend that I could collect, work and would still reach maximum benefits at 70  as long as I contribute to SS. 

I make about $70k per year and my current benefit would be about $33k. I have no other pension income - just savings and maybe some investment income. 

Should I start collecting now or wait until 70?

Any advice would be welcome. 

Thanks. 

[Tonster521]

@sleepr0 The SSA advises that starting SS benefits early, at full retirement, or delayed are actuarial equivalents of each other based on average life expectancy. Both Gail and Wilful have provided pertinent information that you should consider. First, many folks use the words, "maximum benefits" to define only one's monthly amount of SS benefits. On the other hand, maximum benefits may be defined to include all the SS Benefits you may receive over your lifetime. And, if you have a spouse, maximum benefits may include any Survivor Benefits that may be payable upon your earlier death. It should be clear that your monthly amount of SS Benefit will increase if you delay to age 70. However, you need to account for the loss of SS Benefits for the period you delay. For example, you indicated that your current SS Benefit is about $33,000 per year or about $2,750 per month. Using this amount as your SS Primary Amount at Full Retirement Age (FRA), you will forgo about $99,000 in SS Benefits for the 3 year period from age 67 to age 70 for an additional $660 per month beginning at age 70. On a cash basis without considering the time value of money, you will recoup the $99,000 loss of SS Benefits in 150 months or about 12.5 years ($99,000 divided by $660.00) or age 82.5. Simply, if you live beyond age 82.5, you will begin to start receiving more SS Benefits. If you do not live to age 82.5, you will receive less SS Benefits even though you received a greater monthly SS Benefit due to delayed retirement credits. Moreover, if you were to begin your SS Benefits at age 67 and earn 3% to 4% on those monthly SS Benefits, you will accumulate about $103,000 to $105,000 over the three (3) year period. Depending on your return, your break even point is 13 years to 13.25 years or ages 83 to 83.25 if you elected to delay. Obviously, if you earn greater than 4%, your break even point continues beyond age 83.25. So, life expectancy is an important factor to consider. Because no one knows how long one will live, I suggest taking a look at the SS Actuarial Life Table https://www.ssa.gov/oact/STATS/table4c6.html and assess probabilities to various life expectancy. About 65% of males and 50% of females have deceased by age 85. IMO, if you are male and somewhat savvy with savings and investments, you will maximize your retirement income (including SS Benefits) by starting SS Benefits at age 67. I have not factored in any spousal, dependent, or survivor benefits that may be payable. Hope this helps.

[wilful]

It depends on how long you plan to live.  If all available research indicates you will be gone shortly after 70 - then you better start drawing it now.  If indications are that you are good for 95 plus - then wait til 70.  Had I done proper research back when I was only 65 - I definitely would not have signed up that soon.  As things have turned out - here I am at 87 and still going real strong.

Do your research.

[GailL1]

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@sleepr0 wrote:

I reached full retirement age in March, but continue to work. I was planning on waiting until 70 before collecting to maximize benefits, but was advised by a friend that I could collect, work and would still reach maximum benefits at 70  as long as I contribute to SS. 

You cannot collect benefits and still get the delayed retirement benefits but . . . . 

After you have reached FRA, you can work and earn all you want and your SS benefit will not be affected.  In fact, if you keep earning and paying into the SS system, your benefit will keep getting bigger until you stop working.  I believe an adjustment is made every year for new earnings. 

The only thing you will be missing is the Delayed Retirement Credits which your benefits will earn from FRA to 70 by waiting to file until 70.  That's about 8% per year.

To MAXIMIZE, you would have to continue to work til 70 and then file for benefits - this will cause your benefit to get bigger with work and also get the delayed retirement benefits.

Can't tell you what to do - your decision.  

[sleepr0]

Thanks so much, Gail. That is exactly the concise answer I was seeking.