Thinking About the Future

I just got my notice from the Social Security Administration that I should review my info. So I decided to take a look.

The site shows me my history of income since I first started filing tax returns. It was interesting to see how my income has grown over the years. But I'm thinking more about retirement now and how that will look.

The report gives me three options of my estimated social security payments based on when I retire. There's the early retirement, which is 62, full retirement at 67 and at age 70, which is when I think you have to start collecting social security. So you get the least amount of money per month if you start collecting starting at age 62, more at 67 and the most at 70. I did a quick calculation and found that the amount at 67 is 46% more than the amount at 62. And the amount at 70 is 84% more than the amount at 62.

My question is, when should I plan on collecting? I'd like to maximize this, but it all depends on how long I live. So all of my ideas here are just guesses, as I really don't know when that would be. My Dad passed away at 62, so he didn't collect anything for himself. My Mom though is still looking good at 80, so she's getting my Dad's survivor's benefits.

If I knew I was going to die at 63, I'd maximize things by starting to collect at 62 as I'd get nothing from the 67 or 70 option. I created a spreadsheet calculating the overall amounts I'd collect based on different ages that I'd live to. These numbers aren't exactly right, but they'll work for helping me plan for the future.

This is interesting. There is just a four-year window of death where I'd maximize my amount if I start collecting at age 67. If I think I'm going to die before age 78, I should definitely start collecting at 62. And if I'm going to live past 82, I should not start collecting until 70.

Why did I do this? I'm thinking about retirement...when I can start and how much I should have saved. I was curious as to when I could start collecting social security. And basically, this has helped me decide. If, in the years until I turn 62, I get a fatal disease or some other major health issue where I won't live long, I should probably start collecting social security at 62. If I stay pretty healthy, which is my plan, I should not start collecting social security until I turn 70.

Why do I want to know this? Again, I'm seriously considering retirement. I need to know how much money I have to have saved to live on, until I can start collecting my limited pension and social security. My grand plan is to be financially independent so that I don't care at all about social security or my pension. This requires me to do some major savings now and cut back on a lot of my spending. I'm pretty much already doing that, but this just helps with the overall picture.