Social Security Calcs

My friend Jim and I have discussed when to start collecting social security. I can start collecting at a reduced rate at age 62 plus one month. I can get full benefits if I don’t start collecting until 66 and I can get even more benefits if I put it off until 70.

At age 62 I can collect about $1,567 a month. At age 66 I can collect $2,135. $2,883 at age 70. So you see, if I can put things off, I can collect more. The gotcha is that when I die the benefits stop, so that the later I start the fewer years I will collect. I come from a long lived family on my mother’s side – well over 90. The average age of death is about 83 on my Father’s side.

The calculations don’t show the interest lost on the money that I could have had by collecting it early. I decided to see where the break even points are.

If I don’t calculate the interest, I break even at 76 when comparing 62 and 66. Comparing starting at 66 and 70 breaks even at 81.

I calculated the break even again using a generous 4% interest rate, which is what I get on my PayPal account. At 4% interest the break even is around 81 for all three starting points.

I hope that I’ll live to be more than 81. At the MSN Life expectancy calculator, I am told I will live to be 97, even more if I can lose 40 pounds. I find this possible, but doubtful. In the cemetery next to my house there are the graves of many of my ancestors and several of them lived to be over 100 in the early 1800s. That’s without modern medicine! Most died in their 70s and 80s.

The question now is: will I enjoy the extra money more when I am over 81, or when I am 62?

The link below is to the spreadsheet I created using Google docs. You can see my calculations. I am moving over all of my personal spreadsheets, including my submissions master list, to Google docs. I find it is very well done. The online version of Word is not as as feature rich as the Microsoft one, but I have been using it for notes, outlines and drafts. I still prefer MS Word for serious writing.

social security spreadsheet

2 Comments

  1. J Erwine wrote:

    I can’t start collecting for almost 30 years, so I guess it doesn’t matter to me, since there isn’t likely to be anything left by that time…

    Friday, June 22, 2007 at 6:35 pm | Permalink
  2. Jim Shannon wrote:

    If you know where to go the Feds can give you a break down of how much you’d collect through the Canada Pension Plan fund.

    The last one I had said that if I turned 60 at that time, I’d get something like $350/month and at the reduced rate, that’s cut in half.

    The good news is that I can continue in the work force and still draw CPP and collect anything over and above that. It’s “free money.” At the age of 65 every one gets the “Old age” Pension. But since were living longer these days 60 is the new 40 if you know what I’m saying.

    Despite my baby boomer appearance I still look like I’m in my 30’s. This could be really problematic when I qualify for a seniors ETS bus pass. Especially when the LRT ticket police come along and ask for a bus pass proof of purchase.

    “Your 60? Yeah right.” If there’s any problem they pull you off the train and require your ID. If you don’t have it handy it’s a $110 fine. This could mean that instead of getting home at 10pm after a n 8 hr day I get home at 10:30

    Thanks for nothing ETS.

    Saturday, June 23, 2007 at 6:40 pm | Permalink