Every 65 year old must consider the impact of when to take social security benefits based on their personal situation.
Here is one basic scenario: A 65 Year old with a retirement age is 66 may collect $2,280 at 65, $2,359 at 66, $3,118 at 70. The person is in the 25% tax rate and plans to continue working. Has other investments and retirement income.
To accurately quantify the benefit a cash flow analysis comparing the after tax collection of benefits with an anticipated 2.5% annual increase in benefits took until 85 to break even. When you factor in a 5% return on the excess cash the break even extends to 99.
I plan on living to 99 but I do not think I want to place all my eggs in the government basket. The $117,549 collected in the 4 years before 70 can go a long way to paying off debt at a guaranteed rate of return or invested to provide a market rate of return. This amount if used wisely can build to generate investment income greater than the entire Social Security Benefit.
Using 5% as the average rate of return cumulative investment income rises from $196,743 over 14 years, $694,641 over 24 years and, yes if you hit 100, $1,772,506 in total investment earnings.
Using 10% as the average rate of return cumulative investment income rises from $508,103 over 14 years, $2,243,755 over 24 years and, yes if you hit 100, $7,415,559 in total investment earnings.
Get your Social Security Statement at http://SSA.gov
There are many other factors that should be considered when making any financial decision This post is for information only and may not apply to your situations. Every individuals should consult an expert before making a decision.