Retirement is a journey. Getting where you want to go requires a plan.
A Look at the Numbers
Primary Insurance AmountLet’s take the case of the maximum earner who is 62 years old. The PIA formula shows his PIA to be about $2,800. There are three scenarios to look at:
- If he were to take his benefit when he is 62, he would receive about 74% of $2,800, or $2,072 per month.
- If he waits until full retirement age (66 and two months) he’ll receive the full $2,800.
- If he delays to age 70, the benefit will increase by 8% annual delayed credits between full retirement age and 70, giving him a benefit of about 131% of $2,800, or $3,668.
- If he files at 62 he will have received a total of $696,192.
- If he files at 70 he will have received at total of $880,320.
If We Consider COLAsIf you add in COLAs, and assume an increase of 2.6% per year:
- If he claims at age 62, by age 90 he will have received $1,056,819 with a monthly benefit at age 90 of $4,251.
- If he claims at age 70, by age 90 he will have received $1,870,855 with a monthly benefit at age 90 of $7,526.
If We Add in Additional EarningsFor this calculation, we’ll want to be a little more precise, and use an estimate of $2,888, which assumes our boomer earned the Social Security maximum his whole career and stopped working at age 62.
- If he stops work at age 62 his PIA will be $2,888.
- If he keeps working at maximum salary until age 66, his PIA goes up to $2,917.
- If he keeps working until age 70, it rises to $2,970.
What if We Delay Claiming?When we factor in conservative estimated 2% cost-of-living adjustments and 8% annual Delayed Retirement Credits:
- If he stops working at 62 and delays benefits until 70, his cumulative benefits by age 90 will reach $1,381,950 with a monthly income of $6,637.
- If he keeps working until 70 and delays claiming benefits until age 70, his cumulative benefits by age 90 will reach $1,478,003 with a monthly income of $7,098.
The RecommendationSo, if you are a 62-year-old maximum earner and you want to get the absolute maximum Social Security benefit, you might:
- Keep working at maximum salary to age 70.
- Claim your Social Security benefit at age 70.
Mark Singer, CFPⓇ, President of Safe Harbor Retirement Planning, has been recognized for his vision and creativity within the world of financial planning. He has been in the industry for over three decades, is the author of three books, and is a frequent speaker. Request a free copy of the 2019 Social Security Quick Reference Guide, which gives you key Social Security numbers to help you in planning, here. Get in touch with Mark at 781.599.2660, firstname.lastname@example.org, and 55retire.com. This content was developed in conjunction with Elaine Floyd, CFP®.