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Question
Hello:

I am having difficulty understanding the following answers in regards to the questions. (See below.)
Can you look at these questions and answers and interrupt what the answer indicates in relation to the questions?  In other words, can you read the questions and then re-answer so that I can understand better?

I thank you for whatever help you can offer.
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Question
If someone receives Social Security at 62 and another person at 65, do you know how to determine how long it will take the person who delayed Social Security payments until 65 to break even with the person who started taking Social Security payments at 62?

ANSWER:
Total the monthly benefits from age 62 to age 65 that you would leave on the table.  Divide that amount by the difference between the age 62 benefit amount and the age 65 benefit amount.  Divide that answer by 12 to get the number of years it will take to break even.

Question
I need some clarification. Can you provide an example by just typing out some amounts and performing the calculations as you indicated in your first reply?

ANSWER:
Example: Date of Birth May 1951 - Full age retirement benefit amount is $1,500; age 65 benefit amount is $1,400; age 62 benefit amount is $1,125.

If this person delayed filing for benefits until age 65, they would give up $39,375 ($1,125 x 35 months for period June 2013 through April 2016) to receive $275 more per month at age 65.

$39,375 / $275= 143.2 months / 12 months = 11.9 years or until age 76.9 (11.9 + 65)

Question
In your reply, you used the amount of $1,400 but in the calculation and example, I do not understand its purpose. Can you explain why this amount is used?

ANSWER:
That is a hypothetical benefit amount at age 65 for the example to show the break even calculation for a person who gives up benefits at age 62 to get more at age 65.

Answer
I answer so many questions that I'm not sure if I was the one who answered this before.

On generally retiring at 62 versus 65, that's the way to do it.


Full benefit %1,500; age 65 benefit $1,400; age 62 benefit $1,125
What age is the full benefit per month obtained at if it's not 65?

Retire at 62, $1,125 received for 35 months, giving 35*1,125 = 39,375.
Retired at 65, -39,375 + 275n, where n is the months past 65.
The number of months is then -39,375 / 275 is over 144 months, so profit is obtained on the 145th month.  Dividing by 12 gives just over 12 years.

This results in them being roughly 77 years old.


Example: Date of Birth May 1951 - Full age retirement benefit amount is $1,500; age 65 benefit amount is $1,400; age 62 benefit amount is $1,125.

If this person delayed filing for benefits until age 65, they would give up $39,375 ($1,125 x 35 months for period June 2013 through April 2016) to receive $275 more per month at age 65.

$39,375 / $275= 143.2 months / 12 months = 11.9 years or until age 76.9 (11.9 + 65)

It gives $1,400 as the amount obtained in the retirement fund if the retire at 65.  
It doesn't give the age they need to retire at to get the full $1,500.

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