Let the mud-throwing begin!!!
Anytime I write or do a video on taking Social Security at your FRA or better yet 70, I get tons of naysayers. They have comments like:
“Social Security is bankrupt… I better get it while I can.”
“Better get it while I can because they’re gonna reduce benefits anyway.”
“Pretty soon, NO ONE Is getting Social Security. Better get it while it’s there.”
“I’ve known people who’ve died BEFORE getting ANY Social Security. No way that’s gonna happen to me…”
Sometimes comments are more conspiratorial. If they despise the Trumpster, they’ll say how Trump and McConnell are stealing their money to give to rich people. If they despise Obama they’ll say how he’s stealing their money to give to illegal immigrants.
I’ve heard it all before. So, throw the mud at me, if you must.
Unfortunately, because of misinformation, almost 2/3rds of Americans take their benefit before their FRA!
I believe this is because many Americans miscalculate their life expectancy. They think it is 78 years old. Thus, they figure if they are 62, there is a good chance they’ll only live to 78 and so they may as well collect benefits early.
The problem with this is that the life expectancy for an American BORN TODAY is 78. But according to the Social Security Administration’s OWN Life Expectancy Calculator a male who turned 62 today has a life expectancy as shown below:
Let’s say Jane was born in 1960 and has a PIA of $2,881. Trick question, what is Jane’s FRA???
Did you say 67? You win the grandprize!!!
If Jane were under the FALSE BELIEF her life expectancy was 78 and was crunching the numbers of when she should file for Social Security, her benefit choices would look like this:
File at 62 and get $24k a year for 14 years = $336,000
File at 67 and get $35k a year for 12 years = $420,000
File at 70 and get $42k a year for 8 years = $336,000
In this case, if she can’t wait until she is 67 it makes sense for her to file at 62 as she isn’t really losing much by doing so.
But, again, this assumption is WRONG!
Using the life expectancy tables from the SSA and her payouts are actually:
File at 62, she receives $576,000 of total benefits
File at 67, she receives $735,000
File at 70, she receives $756,000
And you can’t forget the inflation adjustments either. I won’t get into that here but that does add up.
As you can see, get your life expectancy wrong and you could be making a HUGE mistake!
Using her real world life expectancy, if Jane files at 62 she will be leaving $177k on the table! That’s a LOT OF MONEY, my friends.
So, think hard and long before you make this most common mistake.
P.S. Portions of this email comes from chapter 4 of my upcoming book, “YOU CAN RETIRE ON SOCIAL SECURITY!”
I’m polishing it up right now. Have some graphic designers sending me ideas for the cover and will hopefully have this puppy out by the end of next week.
Here is the Table Of Contents by the way. Tons and tons of footnotes too. Can’t wait to get it out. I’ll certainly send an email when it’s ready for you to purchase.
Chapter 1 – The Indexing Factor
Chapter 2 – Average Indexed Monthly Earnings (AIME)
Chapter 3 – Primary Insurance Amount (PIA)
Chapter 4 – What Your Actual Social Security Benefit Will Be
Chapter 5 – Julie’s Real World Social Security Statement
Chapter 6 – How Julie’s Social Security Benefit is Calculated
Chapter 7 – Julie Gets a HUGE Raise, How Will That Affect Her Social Security?
Chapter 8 – How Much Income Will You ACTUALLY Need in Retirement?
Chapter 9 – How Much Social Security Pays for the Median Income
Chapter 10 – Increase Your Social Security Benefit – Easy
Chapter 11 – Even MORE Reasons to be Optimistic About Retirement
Chapter 12 – What Savings Crisis?
Chapter 13 – “Medical Bankruptcy Is Killing The American Middle Class!” – Really???
Chapter 14 – The Truth About Medical Costs in Retirement