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using savings for a year to increase social security?

Hello,

I'm recently retired, 63, healthy, and have not received SS yet though I have applied.  I read that the average SS check increases about 7 to 8% for every year of delay.  I have a defined pension benefit that I think with some effort I can live on.  I have a savings account that is earning 2.2% annualy.  My question: in this case is it worth waiting on receiving SS for a year or 2 and in effect receive a much higher return on my regular savings (what seems to be a 4.8 to 5.8% increased return) even if I need to draw off of my regular savings account from time to time.  Does this make some sense or am I just spinning in circles?

Social Butterfly

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Social Butterfly

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Bronze Conversationalist

After rreading your post  I am in the same boat. I retired at age 55 and have been living off my pension  for the last 8 years. At age 65 when i need to apply for medicare  I will draw 12 mos. off my deferred comp to pay for health insurance, and to keep my quality of life the same. At age 66 and 2 mos. I will draw my social security and that will cover the amount I need for my medical insurance and even a few dollars more then my pension. My advice to you is if  your feeling comfortable in your finicial situation then wait until your retiment age and get all the benefits your entitled to. No your not spinning your wheels its a big decision to make and its only a year of savings that is what they are there for     good luck hope this helps

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Social Butterfly

Get it as soon as you can or you may not get it at all.  A bird in the hand is worth two in the bush!

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Super Contributor

30,000 ft view.  The average person isn't really gaining anything by waiting until 70 to claim.  Yes, your monthly benefit is more but you forgo 4-8 years of benefits in doing so.  The benefit is actualrially calculated to be the same over time if you die at an average age.  If you think you may die before the average lifespan, then taking your benefit early will net you more money.  If you think you will outlive the average age, then delayinying claiming will net you more money.

 

Delaying benefits can also be viewed as an insurance policy against longevity.

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Periodic Contributor

It sounds like you're not sure if you made the right decision to file for SSA Benefits early? And, it sounds like you're basing your decision on the potential amount of interest earnings on the SSA Benefits if you were to put it into savings?

The SSA Benefit amount you lose by filing early is way more than any interest you might earn [2.2% APR] on the reduced Benefit amount. So, this is not a good measure to base your decision on. It's more financial advantageous if you can wait longer to file for SSA Benefits.

Most people file early because of a shortage of funds and need to boost retirement income to meet monthly expenses.

I understand that the 8% increase in SSA Benefits is after your Full Retirement AGE [age 66] up to when you reach age 70. So, its for 4 years. You probably know that you can withdraw your SSA application for up to 12 months after filing, the caveat is that you have to pay back the SSA benefits you received [up to 12 months of benefits]. If I'm wrong, I apologize.

 

 

 

Periodic Contributor

but I'm not applying early by the time I start receiving benefits I will be 66 and that is my social security full retirement age. I'm just not waiting till 70. also I will be collecting my paycheck till I retire in april of 2020.along with ss.
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Periodic Contributor

I'M RETIRING IN APRIL OF 2020. I ALREADY SIGNED UP CAUSE I AM HITTING 66 [FRA] THIS YEAR AND FOUND OUT I CAN COLLECT AND EARN MY PAYCHECK [YES IT WILL UP MY TAX BRACKET BUT NO STATE AND CITY ON SOC SEC JUST FEDERAL TAx. I WILL BE IN GREAT SHAPE WITH MY SAVINGS. ONCE MY SS CHECKS STARET IN DEC I WILL BE 66 IN NOV.  SO I HAVE NO NEED TO DELAY SS FOR A YEAR.

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Periodic Contributor

My situation was a little different. I remember around 62 looking at what I'd get right then, and what I'd get at 70. Pretty big difference, more than $1000/month. But the real decider was, since I was still getting a Salary from my Business, and getting SS early AND still working would lower what I was getting from the goverment, I decided to wait. Turned 70 last year, still have my business, and now getting SS was like a $30k yearly raise.

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Regular Contributor

That is why it is so important for each of us to consider our own circumstances.  "One size does NOT fit all".  My goal is to have the highest SS income once I turn 70 which for me is a difference of $1,000 per month compared to what I would have received at age 66. I still have the option of working some if I want but so far I haven't wanted to.

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Periodic Contributor

You also have to factor in your health.  Due to health issues I have, I started taking my SS at 62 even though I may very well make it into my 70s,  I retired at 54 and my children are all successful but I do need my savings for my healthcare expenses.  It's nice having that little extra every month rather than depleting my savings at a faster rate.

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Regular Contributor

Thank goodness we have options - sounds like you picked the best for your situation.
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Regular Contributor

When I was several months from retiring, I sat down and looked at the difference between what I would receive at age 66 if I drew SS then or waited until age 70.  I was fortunate to be able to draw 50% of my ex-husband's SS between 66 and 70 (married 20 years) and also had enough savings to make up the difference I'd need to still live a comfortable life.  After I figured out what I thought was the best plan i.e. not collecting my personal SS until age 70, I met with my certified planner and asked his advice.  In my case, what I planned was exactly what he recommended.  I'm 2 years into the process and all is working well.  It is very important that each person consider their own circumstances before making these decisions.  My sister started collecting at 62 and wishes she had been able to wait BUT at the time her decision made sense for her circumstances.

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Honored Social Butterfly

Have to agree with Gail. It's not possible to give you any sound financial advice without knowing specific numbers and amounts which you're not going to post on a public forum. Since you mentioned increases in your retirement income, factor in the increases in SS income by delaying benefits.

 

All I can advise is that you track your expenses for the last couple of years as down to the penny as you can get. Then, extrapolate for the future. Will you need a new car payment, or expensive maintenance to an older car? If you're in a house, will it need a $10,000 roof soon. Do you want to travel? Indulge in some hobby?  (you get the idea --- you have to run 'the numbers').


"...Why is everyone a victim? Take personal responsibility for your life..."
Honored Social Butterfly

You can start your Social Security old age benefit anytime between age 62 and 70.  A reduction in your benefit occurs if you begin the benefit at age 62 up to whatever your full retirement age might be (66 and whatever # of months).  The longer you wait - the higher the benefit - up to age 70 when the delayed retirement credits actually stop accruing.

 

This Social Security.gov link will give you all the info and the % of increases for each year that you wait.

Social Security.gov - How benefits increase if you wait

 

Now figuring out if you can wait - is up to you and your finances.

I did it. 

If you have already filed for benefits - you might need to make up your mind real soon or you will be paying money back if you decide to wait -

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