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    catonsville's Avatar
    catonsville Posts: 894, Reputation: 91
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    #1

    Dec 13, 2015, 11:11 AM
    Social Security Question
    If a person retires at 62 and starts collecting SS at what point does that person at least get back what he or she and the employer put into the fund?
    joypulv's Avatar
    joypulv Posts: 21,593, Reputation: 2941
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    #2

    Dec 13, 2015, 11:18 AM
    "It's complicated." Try this, and ask if there's more you need to know.
    The biggie of course is when we will die...

    https://www.ssa.gov/pubs/EN-05-10070.pdf

    You can get Medicare without SS and vice versa.

    There's something called Extra Help. It pays my Medicare premium now. It never occurred to me that I might be eligible so didn't apply til recently, and I'm 69. Oh well.
    catonsville's Avatar
    catonsville Posts: 894, Reputation: 91
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    #3

    Dec 13, 2015, 11:27 AM
    Quote Originally Posted by joypulv View Post
    "It's complicated." Try this, and ask if there's more you need to know.
    The biggie of course is when we will die...

    https://www.ssa.gov/pubs/EN-05-10070.pdf

    You can get Medicare without SS and vice versa.

    There's something called Extra Help. It pays my Medicare premium now. It never occurred to me that I might be eligible so didn't apply til recently, and I'm 69. Oh well.
    Thanks Joy, what is that old saying "If you snooze, you lose"? You seem to be on top of the situation though. The main reason I asked my question is I wonder how many people die before even collecting what was put in the fund. Like the final 255 dollars they send you most definitely could come up short of what you put in.
    joypulv's Avatar
    joypulv Posts: 21,593, Reputation: 2941
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    #4

    Dec 13, 2015, 02:16 PM
    Not enough people die, which is why all the funds are in trouble. Actually the first one to be depleted is SSDI, disability, which gets handed out to far too many parents for their ADHD and autistic children now, which is one reason why there is such a huge increase in all conditions under that spectrum. Not much concern about death there. The adults with schizophrenia and COPD and kidney failure and serious injuries will be left out in the cold. EVERYBODY wants disability. Applications go way up in times of high unemployment.

    Plain old medical costs are too high and are used too much. I watched each parent's doctors throw care at them like it was pinatas full of drugs and care of every ridiculous kind. Both threw up their hands and decided to die at home, drugless and no nurses.

    Keep in mind that it isn't a trust fund; it's insurance. That's how insurance works - some use too much and some don't use any. I used more than I put in, and am trying not to use it at all now.
    ma0641's Avatar
    ma0641 Posts: 15,681, Reputation: 1012
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    #5

    Dec 13, 2015, 08:40 PM
    It's not too hard but it takes some work. SS will tell you your base amount available which is 2X what you paid in. Then take your monthly payout and divide it into that number. That is = to the number of months. Forgetting any taxes you may have to pay and COI increases gives you a pretty good idea. If I live another 10 years, to 85, I will probably collect about $500K at that point, 21 years of retirement. People of a couple of generations back could never hope to see that amount. With some long term IRA investments and your RMD + SS, you can do quite well in a relatively low taxed state. In GA, for example, over 65, NO income tax on SS or ANY retirement monies, IRA, Pensions , Annuities, Etc. The county I live in excludes all school taxes too.
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,292, Reputation: 7691
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    #6

    Dec 13, 2015, 09:23 PM
    That will depend on how much you paid in, people pay in different amounts.
    The issue is not really paid back, Since this is not an investment, it is a tax,

    The retirement issue is how long you will live, (since if you die early you collect more money by taking it at 62,) if you live longer, you are better off waiting to collect.
    ebaines's Avatar
    ebaines Posts: 12,130, Reputation: 1307
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    #7

    Dec 14, 2015, 09:32 AM
    I ran some numbers using the data from the PDF that joypulv cited. Of course everyone's position is different, but...

    1. If you maxed out your social security contributions every year for 35 years from 1980 to 2015 and then retire, you and your employer together would have paid in $295,382 over those 35 years.

    2. If you retire at age 62 your monthly benefit would be $2014, so it would take 12 years and 2 months to get that amount back.

    3. If you started work before 1980, and hence contributed for more than 35 years, it could take additional time to get back those earlier contributions - it could take up to an extra 9 months to earn it all back, depending on what year you started contributing.

    4. If instead you retire at full retirement age of 66, your monthly benefit would be 33% higher - $2685/month - and it would take 9 years and 1 month to get it all back in SS payouts (if you started work in 1980) or up to 9 years and 8 months if you started work before then.

    Again, all this assumes that you maxed out SS contributions every year from 1980 to 2015, and does not take into account payouts for disability or survivors' benefits, nor any increases in monthly benefits that are likely to come due to inflation.
    catonsville's Avatar
    catonsville Posts: 894, Reputation: 91
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    #8

    Dec 14, 2015, 09:53 AM
    Quote Originally Posted by ebaines View Post
    I ran some numbers using the data from the PDF that joypulv cited. Of course everyone's position is different, but...

    1. If you maxed out your social security contributions every year for 35 years from 1980 to 2015 and then retire, you and your employer together would have paid in $295,382 over those 35 years.

    2. If you retire at age 62 your monthly benefit would be $2014, so it would take 12 years and 2 months to get that amount back.

    3. If you started work before 1980, and hence contributed for more than 35 years, it could take additional time to get back those earlier contributions - it could take up to an extra 9 months to earn it all back, depending on what year you started contributing.

    4. If instead you retire at full retirement age of 66, your monthly benefit would be 33% higher - $2685/month - and it would take 9 years and 1 month to get it all back in SS payouts (if you started work in 1980) or up to 9 years and 8 months if you started work before then.

    Again, all this assumes that you maxed out SS contributions every year from 1980 to 2015, and does not take into account payouts for disability of survivors benefits, nor any increases in monthly benefits that are likely to come due to inflation.
    Very interesting information. It is a shame people do not get to see a breakout like this before they decide to retire. They might make a different choice. Good job there ebaines. I will give you a star for that one.
    ebaines's Avatar
    ebaines Posts: 12,130, Reputation: 1307
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    #9

    Dec 14, 2015, 10:43 AM
    Quote Originally Posted by catonsville View Post
    Very interesting information. It is a shame people do not get to see a breakout like this before they decide to retire. They might make a different choice. Good job there ebaines. I will give you a star for that one.
    Thanks cantonsville. I think more important than worrying about payback period is the expected lifetime benefits that you can accrue based on when you plan to start collecting benefits. It's well known that the longer you wait to collect the greater your monthly payout is, and hence the greater your lifetime benefits will be - assuming you live long enough. Delaying benefits to age 66 (or even later) can result in much higher lifetime payout than starting SS benefits early at age 62. So if you retire before age 66 but can afford to wait starting SS payouts - perhaps by taking from an IRA or 401(k) prior to age 66, then at age 66 starting SS and reducing your IRA/401(k) withdrawals accordingly - you will be in much better position when you get to be age 75 and older.
    ScottGem's Avatar
    ScottGem Posts: 64,970, Reputation: 6056
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    #10

    Dec 14, 2015, 11:51 AM
    Quote Originally Posted by catonsville View Post
    Very interesting information. It is a shame people do not get to see a breakout like this before they decide to retire. They might make a different choice. Good job there ebaines. I will give you a star for that one.
    I'm not sure I understand that. Frankly, I really don't think it matters what the break even point is. It may matter if you are ill and have a lower life expectancy. So it makes more sense to start earlier with a lower benefit then to wait for a higher amount. But otherwise I think decisions about when to apply are more based on what the person needs. For example, I had my wife file a claim at 63 on her SS. We needed that money. When I retire, we can switch her to spousal benefits based on my account which will be higher.
    catonsville's Avatar
    catonsville Posts: 894, Reputation: 91
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    #11

    Dec 14, 2015, 12:10 PM
    Quote Originally Posted by ScottGem View Post
    I'm not sure I understand that. Frankly, I really don't think it matters what the break even point is. It may matter if you are ill and have a lower life expectancy. So it makes more sense to start earlier with a lower benefit then to wait for a higher amount. But otherwise I think decisions about when to apply are more based on what the person needs. For example, I had my wife file a claim at 63 on her SS. We needed that money. When I retire, we can switch her to spousal benefits based on my account which will be higher.
    Frankly, I guess I am too deep for you. LOL My question was more about a better understanding of SS. I have long since taken my SS at 62 as did my wife who has since passed at age 75. I just thought that ebaines gave good information that would be helpful to take into consideration when thinking of taking SS.
    ScottGem's Avatar
    ScottGem Posts: 64,970, Reputation: 6056
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    #12

    Dec 14, 2015, 12:52 PM
    That's my point. I really don't think the information is that helpful. Maybe if the recipient had paid in their own money (like an independent contractor) they would be more interested in breaking even. But, as ebaines pointed out, by taking your benefit at 62, you reduced your monthly stipend by a third. If you have enough retirement income that it wouldn't matter then fine. But would it have really changed your mind about when to start collecting if you knew what your break even point was?
    catonsville's Avatar
    catonsville Posts: 894, Reputation: 91
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    #13

    Dec 14, 2015, 01:17 PM
    I found the break even point interesting. It was information you do not get from the government before you take out your SS. But that is just me. Yes, I may have changed my mind based the longevity of my parents.
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    pudelmama812 Posts: 3, Reputation: 1
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    #14

    Mar 3, 2016, 04:11 PM
    Just a comment, I agree with all that was said... BUT, my husband did the how long will it take to make that break even point... and in doing so thought it was too long to wait before collecting as he could pass away before then and against my advice, he took it at 66 due to the numbers, but continued to work... Be sure you are really going to retire and not work at all or you wind up paying even more in taxes and the whole thing can be a huge pain. It would've been better if he had waited till he finished working, some people consider taking a lesser paying or less hours as retiring and I suggest you run the numbers on that as well before making any decisions.

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