Monday, November 7, 2011

Just Take the Money and Run

There is an age old adage that says......Figures don't lie, but liars figure. So, where is the benefit and to whom does it go to if I keep working until I'm 70? Do I really lose $1,184 a month?

Last question first seems to be true at first blush. But have you read the fine print?

From the Social Security site;

Assumptions: We estimate your benefits using your average earnings over your working lifetime.  If you worked last year, we will assume that you will continue to work and make about the same amount as you entered for last year's earnings.

You see, you have to keep working for those eight years to get that higher amount.  If you quit working and just delay collecting it counts against you and you get less than you thought you would get.  Also, I remember older folks preparing to retire claim they had to work all the overtime possible the last three years they worked because Social Security was based only on the last three years.  As stated above that isn't true today, it is your entire lifetime of working.  Does that mean you had better start working overtime now?  If you do I have a little surprise for you;

From an article on keeping with the original intent behind Social Security -- a way to lift seniors out of poverty -- lower wage earners get a higher proportion of their earnings than higher wage earners.  The maximum monthly benefit that can be received in 2010 is $2,346.

There was a surprise for me in that article in the last sentence.  Max payment of $2,346?  The Social Security Administration official web site benefit calculator claims I will receive $2,650 a month if I wait until 70.  Looks like I already lost $304 a month and I haven’t done anything except not understood the disclaimer about these numbers just being an estimate.  That age old adage is coming back to me now.

So, who really benefits if I keep working?  The Social Security Administration gets additional payments from my employer and me to the tune of $8,320 a year.  True!  Look at your pay stub.  Whatever you pay your employer pays the same amount. So, if I work an extra 8 years I, and my employer, kick in another $66,560 into the kitty. Oh, and don’t forget we are currently underpaying our share of SS tax by 2% of our gross income because some guy wants to get reelected.

We also have to look at what average is.  Average is fifty percent. Half of anything is average.  Here that means every other person in line will die before reaching that magical age when they screwed the system and won the life lottery.  Don’t want to pop the bubble here, but have you heard about the consideration to make SS Means Tested?  The implication is if you saved for your retirement, have a pension, and paid into SS there will be a formula that says you don’t need SS income. So, sorry for you, but you don’t get any. 

With only three and a half years to R-day I have been looking hard at what is best to do. The conclusion I draw is it is all a gamble until you ask the most important questions; How much more will I be able to enjoy my retirement at age 62 than 70?  Am I willing to put in 8 extra years of the stress of working when it will take until I’m 80, 18 years, to break even?  Is there going to be a freshly out of college grad that is still idealistic that wants my job? 

Personally, I'm gonna climb on board with the get out early crowd and spend some quality time doing nothing that isn't fun.  I think I would rather not have to be anywhere at a specific time during those years and if doesn’t work out I can go take some 90 year olds Greeter job at Walmart.


  1. Thank you for posting your thoughts and analysis as I have been thinking about retirement a lot these days and your last couple of posts have given me even more to consider. I like your conclusion.

    Thanks again

  2. im with you azhd. my tio is my personal example. he worked his ass off in military/private ind/edu as you, and positioned himself to retire early, which i think was fair trade for living breathing sleeping for work AND for our country for yrs. well, he has only had a few yrs to enjoy stress free. health probs have arose much earlier than anyone would have ever expected. :(

    personally, i say work hard (and yes mean hard, not whatever that anon person may consider to be hard) and get out early! im with you.

    thank you for fabulous info btw! great insightful posts!

  3. Thank you A.H.D. I've been trying to find a good excuse not to keep working until they carry me out boots first. I think you have tipped the boat for me towards getting the hell out of Dodge early. Thanks and enjoy your pending retirement.

    Keep the rubber side down.

    George from Okla.

  4. "Quality time doing nothing that isn't fun." That made me laugh for some reason.

    Nice figures here...almost as nice as my wife's figure. You didn't come up with the system and you have done your part.

    For a percentage, I'll help keep you from getting does that grab yah! No need to thank me..just doin' my part. I'll keep working too just to make sure the payments keep coming in.

    I vote "hellyeah"

  5. As my grandfather responded when faced with options to deal with prostrate cancer, "I'll take Quality of life over quantity."

    Likewise, I think I agree with your conclusion. I'd rather get out early and enjoy life, even if it it means a few dollars less than working another 8 years. You have worked enough. Time to do what you want and what you consider important.