Any experts on Social Security early retirement?

[y4m]

Yay another ILs question!

For those who haven't followed, they haven't been good with money, have no retirement, we bought a house they live in and they pay below market rent into an account we hold for them for later.

They are coming up on 62 and trying to convince us FIL should retire now and work part time. They have supposedly done the math and with SS making up his decrease in earnings they will be ok.

Obviously that's typical of their magical thinking about money because they haven't considered whether they will be ok on *just* the reduced SS money later. Or healthcare or anything else.

Frankly my biggest concern knowing how much MIL hates working is that there's no way she'll happily work her 40 hours for long if he doesn't also work full time.

That said, FIL has a fairly physical job for his age, so I don't want to dismiss the question completely.

Can you guys help me make sure I am considering everything? On my list:

-what is the early retirement reduction (from quick googling it seems like about 20%). What does a retired budget on that money look like?

-how will they handle healthcare (Medicare can't start until 65 right?)

-what else?

[moolarkey]

Do they have other debt, if so, how will the retire it?
Will they need to replace one or both cars and how will they pay for it and maintenance, insurance.

[y4m]

Apr 17, 2017 9:56:47 GMT -5 moolarkey said:

Do they have other debt, if so, how will the retire it?
Will they need to replace one or both cars and how will they pay for it and maintenance, insurance.

No other debt right now--we had them declare bankruptcy a few years ago and destroying their credit was one of the main reasons it made sense.

We just replaced one of their cars out of a combination of the rent account and our savings.

I need to have them make a realistic budget out of just social security to sell us on this I think. One that includes healthcare spending. They need to have a better answer on paper than the y4ms covering the difference.

[puppylove64]

Once he starts receiving ss, he can't make over a certain $$ amount or he has to pay ss payments back.

[moolarkey]

Apr 17, 2017 10:21:20 GMT -5 puppylove64 said:

Once he starts receiving ss, he can't make over a certain $$ amount or he has to pay ss payments back.

The amount he can make does increase at various ages.

Also, their income tax rate, I would think, would drop due to reduced income? 

[mcsangel2]

Right, they can't get medicare until they're 65, so they will need to get insurance through your MIL's job. Or pay OOP for policies on the exchange, rates will vary by state/insurance co.

[niq]

For retirement at 62, for someone retiring today, the reduction is 25%. This page has a calculator: www.ssa.gov/oact/quickcalc/early_late.html

There's a formula for how much your SS check is reduced if you work while getting retirement benefits. Working while getting a check is really discouraged from 62-66, there's more leeway after that: faq.ssa.gov/link/portal/34011/34019/article/3739/what-happens-if-i-work-and-get-social-security-retirement-benefits

When we did the math for mom, the break-even point was 9 years; a retiree who lives to age 75 gets more money by waiting until full retirement than retiring at 62. But if you need the money you need the money.

Here's a subsidy calculator for ACA premiums. Unfortunately the silver plans are not very good, if they have any health issues I would consider a gold plan if it's at all affordable: kff.org/interactive/subsidy-calculator/

So is their "rent" basically the Bank of Vanillacourage? They pay you money, which you hold and give back to them for emergency expenses?

*poof financial details*

[y4m]

That budget is super helpful niq. Thank you.