delaying claiming SS from age 64 to 70 while not working

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ByThePond
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delaying claiming SS from age 64 to 70 while not working

Post by ByThePond » Sun Sep 16, 2018 11:45 am

Hi all,
I'll be retiring this year at age 64, two years before FRA of 66. I have calculated my possible benefits at 64, but can't pin down what they would be if I didn't claim until age 70.

I have tried the SSA online benefits calculator, but still don't know something.

My question is, will the 8% annual benefit to delaying build upon my PIA (age 66), for a total of 32% above PIA, or 32% above my age 64 number. It seems to me that there should be some reward to delaying for 6 years rather than 4. I'm pretty sure it wouldn't be 48% above the age 64 number, as the early claiming penalty is less than 8% annually.

Thanks.


ByThePond
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Re: delaying claiming SS from age 64 to 70 while not working

Post by ByThePond » Sun Sep 16, 2018 12:09 pm

Thanks, but the link goes to a logged out site, and it appears that the main site requires an account.

AlphaLess
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Re: delaying claiming SS from age 64 to 70 while not working

Post by AlphaLess » Sun Sep 16, 2018 12:12 pm

I think we need more precise terminology:
- stop working,
- claiming social security.

Those two are completely orthogonal (although inter-related).

Too many people think that retirement means:
- stop working,
- immediately claim ss.
"You can get more with a kind word and a gun than with just a kind word." George Washington

AlphaLess
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Re: delaying claiming SS from age 64 to 70 while not working

Post by AlphaLess » Sun Sep 16, 2018 12:15 pm

ByThePond wrote:
Sun Sep 16, 2018 11:45 am
Hi all,
I'll be retiring this year at age 64, two years before FRA of 66. I have calculated my possible benefits at 64, but can't pin down what they would be if I didn't claim until age 70.

I have tried the SSA online benefits calculator, but still don't know something.

My question is, will the 8% annual benefit to delaying build upon my PIA (age 66), for a total of 32% above PIA, or 32% above my age 64 number. It seems to me that there should be some reward to delaying for 6 years rather than 4. I'm pretty sure it wouldn't be 48% above the age 64 number, as the early claiming penalty is less than 8% annually.

Thanks.
PIA (Primary Insurance Amount) is a reference number that would be your SS payout if you claim at FRA (Full Retirement Age).
Everything else is RELATIVE to PIA.

At your age, your FRA is likely to be 66.x, where x is a couple of months or so.
There is a lookup table, converting your PIA to payout depending on when you apply and claim.
From FRA onwards, it is ROUGHLY, but not exactly, 8% a year.

If you wait until 70, you will roughly get 32% above your PIA.

You are not delaying 6 years. You are delaying 4 years.
"You can get more with a kind word and a gun than with just a kind word." George Washington

AlphaLess
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Re: delaying claiming SS from age 64 to 70 while not working

Post by AlphaLess » Sun Sep 16, 2018 12:16 pm

ByThePond wrote:
Sun Sep 16, 2018 11:45 am
I'll be retiring this year at age 64, two years before FRA of 66. I have calculated my possible benefits at 64, but can't pin down what they would be if I didn't claim until age 70.
Get a https://www.ssa.gov/myaccount/ account, and find out EXACT numbers.
No need to calculate yourself.
"You can get more with a kind word and a gun than with just a kind word." George Washington

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FiveK
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Re: delaying claiming SS from age 64 to 70 while not working

Post by FiveK » Sun Sep 16, 2018 12:18 pm

A couple of spreadsheets that work well:
- The 'SocialSecurity' tab of the personal finance toolbox spreadsheet.
- The Downloadable Social Security Benefit Estimator (repost) - Bogleheads.org.

ByThePond
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Re: delaying claiming SS from age 64 to 70 while not working

Post by ByThePond » Sun Sep 16, 2018 12:21 pm

AlphaLess,

Thanks. That's exactly what I needed to know. :beer
Thanks also to FiveK.

And, yes, my FRA is _exactly_ 66.

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oldcomputerguy
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Re: delaying claiming SS from age 64 to 70 while not working

Post by oldcomputerguy » Sun Sep 16, 2018 12:21 pm

ByThePond wrote:
Sun Sep 16, 2018 11:45 am
My question is, will the 8% annual benefit to delaying build upon my PIA (age 66), for a total of 32% above PIA, or 32% above my age 64 number. It seems to me that there should be some reward to delaying for 6 years rather than 4.
In a manner of speaking, there is.

If you claim at age 64 (two years before FRA), your benefit will be reduced by 5/9 of 1% per month for each month before FRA; in the case of two years, that works out to a decrease of 13.33% from your FRA amount. Your "reward" for not claiming early is that you don't get that reduction in your benefit.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

AlphaLess
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Re: delaying claiming SS from age 64 to 70 while not working

Post by AlphaLess » Sun Sep 16, 2018 12:23 pm

ByThePond wrote:
Sun Sep 16, 2018 11:45 am
Hi all,
I'll be retiring this year at age 64, two years before FRA of 66. I have calculated my possible benefits at 64, but can't pin down what they would be if I didn't claim until age 70.

I have tried the SSA online benefits calculator, but still don't know something.

My question is, will the 8% annual benefit to delaying build upon my PIA (age 66), for a total of 32% above PIA, or 32% above my age 64 number. It seems to me that there should be some reward to delaying for 6 years rather than 4. I'm pretty sure it wouldn't be 48% above the age 64 number, as the early claiming penalty is less than 8% annually.

Thanks.
The discount applied (relative to PIA) when you claim early, is NOT 8% a year. It is roughly 5-6% a year:

https://www.ssa.gov/planners/retire/retirechart.html

If you start your retirement benefits at age 62, your monthly benefit amount is reduced by about 30 percent. The reduction for starting benefits at age
63 is about 25 percent;
64 is about 20 percent;
65 is about 13.3 percent; and
66 is about 6.7 percent.
"You can get more with a kind word and a gun than with just a kind word." George Washington

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#Cruncher
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Re: delaying claiming SS from age 64 to 70 while not working

Post by #Cruncher » Sun Sep 16, 2018 12:37 pm

ByThePond wrote:
Sun Sep 16, 2018 11:45 am
I'll be retiring this year at age 64, two years before FRA of 66. I have calculated my possible benefits at 64, but can't pin down what they would be if I didn't claim until age 70.
You were born in 1954 so your Normal Retirement Age (aka Full Retirement Age) is 66. According to SSA's Effect of Early or Delayed Retirement on Retirement Benefits your benefit at age 64 is 86.667% of your PIA. At age 70 your benefit would be 132% of your PIA. So your benefit at age 70 would be 52.3% higher (132 / 86.667 - 1). Inflation adjustments would be on top of this.

seychellois_lib
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Re: delaying claiming SS from age 64 to 70 while not working

Post by seychellois_lib » Sun Sep 16, 2018 2:01 pm

deleted

seychellois_lib
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Re: delaying claiming SS from age 64 to 70 while not working

Post by seychellois_lib » Sun Sep 16, 2018 2:13 pm

I am in the same boat as OP and have a related question. Does the benefit increase occur only after 12 months of delay from FRA (ie anually) or does it accrue on a monthly basis?

GeoffD
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Re: delaying claiming SS from age 64 to 70 while not working

Post by GeoffD » Sun Sep 16, 2018 2:17 pm

seychellois_lib wrote:
Sun Sep 16, 2018 2:13 pm
I am in the same boat as OP and have a related question. Does the benefit increase occur only after 12 months of delay from FRA (ie anually) or does it accrue on a monthly basis?
Monthly.

seychellois_lib
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Re: delaying claiming SS from age 64 to 70 while not working

Post by seychellois_lib » Sun Sep 16, 2018 2:54 pm

GeoffD wrote:
Sun Sep 16, 2018 2:17 pm
seychellois_lib wrote:
Sun Sep 16, 2018 2:13 pm
I am in the same boat as OP and have a related question. Does the benefit increase occur only after 12 months of delay from FRA (ie anually) or does it accrue on a monthly basis?
Monthly.
Thanks for the response. It would be nice is SS benefit estimator tool reflected this.

ByThePond
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Re: delaying claiming SS from age 64 to 70 while not working

Post by ByThePond » Sun Sep 16, 2018 3:06 pm

Thanks to all who replied with helpful answers.
I was pretty sure such was the case, but didn't want to leave it to guesswork, and finding a definitive answer puts my mind at ease.

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Mlm
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Re: delaying claiming SS from age 64 to 70 while not working

Post by Mlm » Sun Sep 16, 2018 3:11 pm

seychellois_lib wrote:
Sun Sep 16, 2018 2:54 pm
GeoffD wrote:
Sun Sep 16, 2018 2:17 pm
seychellois_lib wrote:
Sun Sep 16, 2018 2:13 pm
I am in the same boat as OP and have a related question. Does the benefit increase occur only after 12 months of delay from FRA (ie anually) or does it accrue on a monthly basis?
Monthly.
Thanks for the response. It would be nice is SS benefit estimator tool reflected this.
The Social Security website can give you all the information you need https://www.ssa.gov/planners/retire/1943-delay.html

Austintatious
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Re: delaying claiming SS from age 64 to 70 while not working

Post by Austintatious » Sun Sep 16, 2018 3:27 pm

Besides running your numbers on a calculator, you can set up your mySocialSecurity account via the SS website. Once accomplished, I think it will include a statement of your benefits including a projection for the benefit amount at age 70. Also, you can call SS and ask them to give you your age 70 projection. I've found our local SS office to be very helpful in providing information like that.

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Re: delaying claiming SS from age 64 to 70 while not working

Post by montanagirl » Sun Sep 16, 2018 3:56 pm

Mlm wrote:
Sun Sep 16, 2018 3:11 pm


The Social Security website can give you all the information you need https://www.ssa.gov/planners/retire/1943-delay.html

It doesn't say what the treatment is if you get an extra few months of delay credit. I filed 6 mo short of age 70, but right now receive the amount I would have gotten had I filed when I turned 69.

I *assume* I will get a bump up next year...SSA told me that on the phone once three years ago. :wink:

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Mlm
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Re: delaying claiming SS from age 64 to 70 while not working

Post by Mlm » Sun Sep 16, 2018 4:22 pm

montanagirl wrote:
Sun Sep 16, 2018 3:56 pm
Mlm wrote:
Sun Sep 16, 2018 3:11 pm


The Social Security website can give you all the information you need https://www.ssa.gov/planners/retire/1943-delay.html

It doesn't say what the treatment is if you get an extra few months of delay credit. I filed 6 mo short of age 70, but right now receive the amount I would have gotten had I filed when I turned 69.

I *assume* I will get a bump up next year...SSA told me that on the phone once three years ago. :wink:
https://www.ssa.gov/OP_Home/cfr20/404/404-0313.htm
(c) When is the increase because of delayed retirement credits effective?—(1) Credits earned after entitlement and before the year of attainment of age 70. If you are entitled to benefits, we examine our records after the end of each calendar year to determine whether you have earned delayed retirement credits during the previous year for months when you were at or over full retirement age and you were fully insured and eligible for benefits but did not receive them. Any increase in your benefit amount is effective beginning with January of the year after the year the credits were earned.

montanagirl
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Re: delaying claiming SS from age 64 to 70 while not working

Post by montanagirl » Sun Sep 16, 2018 7:42 pm

Mlm wrote:
Sun Sep 16, 2018 4:22 pm
montanagirl wrote:
Sun Sep 16, 2018 3:56 pm


It doesn't say what the treatment is if you get an extra few months of delay credit. I filed 6 mo short of age 70, but right now receive the amount I would have gotten had I filed when I turned 69.

I *assume* I will get a bump up next year...SSA told me that on the phone once three years ago. :wink:
https://www.ssa.gov/OP_Home/cfr20/404/404-0313.htm
(c) When is the increase because of delayed retirement credits effective?—(1) Credits earned after entitlement and before the year of attainment of age 70. If you are entitled to benefits, we examine our records after the end of each calendar year to determine whether you have earned delayed retirement credits during the previous year for months when you were at or over full retirement age and you were fully insured and eligible for benefits but did not receive them. Any increase in your benefit amount is effective beginning with January of the year after the year the credits were earned.

Ah, thank you!

jimishooch
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Re: delaying claiming SS from age 64 to 70 while not working

Post by jimishooch » Tue Sep 18, 2018 2:09 pm

ByThePond wrote:
Sun Sep 16, 2018 12:09 pm
Thanks, but the link goes to a logged out site, and it appears that the main site requires an account.
you can scroll down to the calculators...

https://www.marketwatch.com/story/i-tes ... 2018-06-26

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