social security benefits

fuzzyappleAugust 13, 2014

I just reached age 62 and will continue to work full time.
Am I better off not trying to collect for a reduced benefit? I plan to work until age 66 so I can keep our insurance. Still have a college student to insure for a time yet. Would appreciate any experience someone has had with this. I am a single mom.

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You are better off to not collect, because your benefit amount will continue to get larger every year. Full benefits are at 66, and you can even get more if you wait until 70.

There are lots of reasons why someone would take benefits early, say, ill health. But if you plan on working, remember that you'll also be paying income taxes on the SS income, and your salary, which might change your tax rate.

Google 'should I take social security at 62?' and you'll get alot more information.

Here is a link that might be useful: should you claim your benefits at 62?

    Bookmark   August 13, 2014 at 7:47PM
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My first suggestion would be to go to the SS website. They have some excellent online tools, calculators and a wealth of Q&A. Please take any info you get on this forum (including mine) with a grain of salt. There are so many ins and outs of SS depending on one's own circumstances. For example: You say you are a single mom. Were you ever married?

You said you already plan to work til 66. Is that your full retirement age? It varies depending on your year of birth. With the little info you provided, my initial response would be I can't imagine why you would want to start collecting SS now.

    Bookmark   August 13, 2014 at 7:49PM
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A reason to start sooner is if the income is needed.

The trade-off is less sooner versus more later. I forget the numbers, but a person needs to live at least into the late 70s to make up for waiting to take a larger benefit. It does depend on your circumstances. The difference isn't all that humongous.

The attached link does more for a married couple than a single person, but the calcs are pretty straight forward. Start at the Social Security website to get an estimate of your max benefit.

If you wait past 66 until age 70, the benefit is increased by 8% per year. It's then 32% higher, but think of how many extra years you need to live to recoup 4 years of the 100% benefit you didn't receive.

If longevity is a familial trait and you can afford to wait, then do so. The thing is, you're not ahead but rather behind until you've recouped the amount representing the payments you chose to defer. The payoff comes is in the later years of life when, for many, your spending needs may decrease.

Good luck.

Here is a link that might be useful: SS calculations

    Bookmark   August 13, 2014 at 10:49PM
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One thing to remember is that your SS will be reduced by what you earn over a certain amount.

    Bookmark   August 13, 2014 at 11:32PM
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I would need to be age 66 before I receive the full benefit. I was married for 9 years, so I missed out on that as the husband was in the medical field and would have been paying more into SS then I was. the new wife will benefit from that. I have had people tell me to start collecting as it wouldn't be reduced by that much. But I think it is if they also withhold $1 for every $2 that you make over a certain amt. I don't want to do something stupid and spoil it for myself. I think I will wait until I actually retire. I've been working 26 years on my last job and I'm making more now every year as I do get overtime and that changes my yearly salary.
Has anyone out there ever regretted taking it early?

    Bookmark   August 14, 2014 at 1:36PM
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When I turned 62 I called the SS office and asked about when to start drawing, she said do the math. She gave me both figures and I did the math. It would have taken me 10 years to get back what I lost by waiting until I was 65. I signed up at 62.

    Bookmark   August 14, 2014 at 3:53PM
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I took mine at 65 while I was at the SS office signing up for Medicare. Saw no compelling reason to either take it at 62 or to wait for 66 and just took care of two transactions in one trip. So I'll get a little less for what will hopefully be a longer time.

What to do when is an individual personal decision - no two of us have the same dynamic. But, as said above, there is information as well as calculating tools available to help with decision making. I found the face to face appointment with a very competent SS person a more than satisfactory experience.

    Bookmark   August 14, 2014 at 6:00PM
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I know the popular belief is that you should hold off as long as possible to maximize the size of your payment, but I think that is bad advice for most people. I did the math and I took mine at 62 even though I didn't actually need the money (I have a pension). All the people who are holding off so they'll get a larger monthly payment in the future are ignoring the fact that they are passing up a monthly "paycheck" in the meantime. For most people, if you defer on collecting, you will be about 78 before the larger check allows you to break even with what you lost all the years you held off. The government is not giving you some big financial benefit if you wait. They use actuarial tables to determine average lifespan and what to pay people of different ages so that everyone has -- on average -- collected about the same amount when they die. I plan to live a long time, but if I get hit by a beer truck or get some deadly disease, I'd rather have been getting something out of my Social Security, rather than just the thanks of a grateful nation for having held off. If you don't need the money at 62, there's nothing that says you can't collect it and invest it. I don't know about you, but I want to live and travel and enjoy myself now while I am able. If you hold off on collecting Social Security until you are older, you might not have the good health to do things like travel when you do finally get your payments.

I agree, though, that -- particularly if you are going to continue to work -- you need to do the math, and see what you would be penalized if you are working and collecting Social Security, and how that factors into your overall scheme. Look up what the life expectancy is for a woman of your age and then look at total benefits over time using various scenarios and thinking about when you will have the most need for money. Good luck.

This post was edited by kudzu9 on Thu, Aug 14, 14 at 18:29

    Bookmark   August 14, 2014 at 6:21PM
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I collect it and spend it. I am not squirreling away my money for an heir to spend.

    Bookmark   August 14, 2014 at 10:10PM
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My coworker is retiring this month and she said between 62 and 65 if you are working and collecting SS you can only make around $16,000 a year with your job. In the year you turn 66, you can make around $40,000 and after that your income from your job can be unlimited.

A good friend was a pension fund administrator...he says that if you are not working, you should take SS, even if you don't need it. Doesn't make sense to hold off until 66 or 70 for the bigger benefit because it takes too long to make up the difference if you wait...and you may not be around that long!

I will be 62 in the fall and hope to retire by next June. The only thing that will keep me working longer is health insurance which is currently through me. We are in the process of investigating the cost with DH's company and will flip over to his...then go back to mine when he retires which is through the school system and more reasonable.

    Bookmark   August 15, 2014 at 11:53AM
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I was very lucky because my husband's company added dependents to the insurance before I was 62 so I was covered until I turned 65.

This post was edited by EmmaR on Sun, Aug 17, 14 at 10:22

    Bookmark   August 15, 2014 at 8:50PM
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For most people, if you defer on collecting, you will be about 78 before the larger check allows you to break even with what you lost all the years you held off.

My SO just did the calculations ... he's collecting SS and letting his pensions and 401K alone because he'll more than break even if he holds off on cashing them out. His rising investments are NOT subject to any SS limits on earning like his salary would be.
If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit.

For 2014, that limit is $15,480.

    Bookmark   August 17, 2014 at 10:37AM
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The average 65 year old will live for 19 more years. A male will live about a year less and a female about a year more. In other words, the average age of death for a 65 year old man will be around 84 and for a woman around 86. That's a full 6-8 years beyond the break even point of 78. So, statistically, you'd be considerably better off waiting to collect SS until you stop working at age 66 (unless you're in bad health or have some other reason to think you'll have a shorter than average lifespan) because you'll be very likely to come out ahead moneywise. This is especially true for anyone like you who will be working during those years because of the additional income tax you'd pay on any SS benefits you collect.

Despite the numbers telling us this is a no brainer, people will continue to tell you to collect it ASAP, They offer all kinds of justifications for this advice, none of which really hold water. The plain truth is that they collect SS the minute they turn 62 because they can't wait to get money from the government, even if they don't really need it. It's a matter of deferred gratification -- can I hold off getting something for nothing right now because I'll be better off in the long run or should I just grab everything I can right now because it's there?

    Bookmark   September 7, 2014 at 2:58PM
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I think you could use a bit more information. I'll assume the ages you have listed for expected mortality and break even are correct, but for what I have to say, it doesn't matter.

These are simple present value calculations of future streams, layered onto mortality assumptions. For those who will die before the break even point, it's better to have chosen the early start to payments. For those living longer, it's better to have waited.

Many will make the wrong decision because there is frankly no way to know which is the right decision. It's not a "no brainer", it's simply a guess and nothing more.

    Bookmark   September 7, 2014 at 6:18PM
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I agree with snidely. The government is not making you a gift by providing a bigger benefit the longer you hold off. When you consider the time value of money and the fact that you don't know what your individual mortality will be it's a crap shoot. I didn't retire until I knew I would be financially secure, even without Social Security. But I decided to take mine at 62...not because I needed the money but because I wanted to start reinvesting my Social Security payments as soon as I could, and because even though I plan to live past the breakeven point, one never knows. I've found in retirement that I need a lot less money than when I was working and providing for a family; and I suspect that when I am well into my 80's I will be needing even less. The point is that there is no substitute for examining your own circumstances, your projected financial needs, the options you have whether you take Social Security at 62 or not, and your thoughts about your own life expectancy. I'm not trying to convince everyone to take Social Security as early as they can, but I am trying to make people realize what they give up in not getting payments for several years so they can get a somewhat bigger one later on...if they live to collect it.

    Bookmark   September 7, 2014 at 10:13PM
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Suggestions work for those that are no longer working but the OP states that will continue to work full time. Depending on how much current income they have taking SS while working they lose.

    Bookmark   September 7, 2014 at 10:34PM
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Sorry kudzu, but your are wrong when you keep repeating the claim that the government will wind up paying out the same total amount whether you take a smaller amount earlier or a larger amount later. Most people live several years past the 78 year old break even point, and you and snidely can check the actuarial tables if you don't believe me. It's YOU who very likely did the government a favor by collecting at 62.

Of course no one knows when they will die. That's why I posted the average life expectancy for a 65 year old. -- almost 20 years. You are considerably more likely to live past 78 than die earlier. It truly is a "no brainer" because anyone who lives past 78 will get eventually get more in SS benefits than someone who takes it as early as possible, and it's more than a small difference. And as for taking SS early so that you can "reinvest" it, there is no risk-free investment you can currently make that will return anything remotely close to the 7 or 8% annual increase your benefit would have automatically accrued had you held off on collecting it.

The situation is even clearer if you have a spouse who has an earning record lower than yours, which is most often the case for the wife in a married couple. Most wives are some years younger than their spouses and can look forward to living an average of about two years longer. So in most cases, the wife will have several years or more of widowhood. If her husband takes his benefit at 62, it will mean a greatly reduced survivor's benefit for her during the last several years of her life. the very time she's most likely to face higher, maybe MUCH higher, medical expenses.

    Bookmark   September 12, 2014 at 3:41PM
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Sorry're misinterpreting my point. I didn't say people die at the breakeven point. I simply said the breakeven point was about 78 (using simple math, and the breakeven point is later if you count the time value of money). I am fully aware that people on average live past 78, but that doesn't mean you are money ahead if you live past that point. The actual math is much more complicated than either of us can present here. All I was saying was: Realize what you are giving up when you hold out for additional years to get a somewhat bigger payment, and decide what decision is best for your situation.

What your selective examples show is what has been pointed out several times in this thread: everybody's situation is different and each person has to balance a number of issues, including probabilities for things they can't predict. Your examples are right for some people, but there are dozens of other scenarios. You should do what you think makes sense for you, as I did.

However, if I were to accept your argument, it would mean I have to believe that this cash-strapped, perennially in-debt government is encouraging people to wait so they can pay them even more tax dollars that they don't have. I'm not ready to buy that.

This post was edited by kudzu9 on Fri, Sep 12, 14 at 17:07

    Bookmark   September 12, 2014 at 4:56PM
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That's exactly what I thought, kudzu. You refuse to accept the math simply because you don't trust the government. That's fine if it makes you feel good because, you think, you've managed to outsmart those sneaky old federal bureaucrats. I sincerely hope you're enjoying your retirement and the SS checks you've been receiving for these past years .

What bothers me is that you're misleading others with bad advice about something that's very important for their futures. For example, you claim that the math is so complicated that neither you nor I can figure it out and that the breakeven point may somehow really be later than 78 because of "the time value of money" -- the fact that a dollar today is worth more than a dollar some years down the road. That's certainly true but a deferred SS benefit grows at the guaranteed rate of 7% interest each year for four years -- the rate is 8% for those who hold off four more years until they're 70 -- PLUS whatever rate the COLA is for that year. COLAS have averaged 2.5% for the last 10 years, BTW. Since the deferred benefits is larger each year, the COLA on the growing benefit will also be larger than the COLA for the static early benefit. Considering that, the real breakeven point is probably somewhat less than 78 years not more.

The real truth is that the government knows that, no matter what it tells people about waiting to take SS, most (about two-thirds) will take it as soon as they can. Many of them have no choice because they truly need the money. Others may have serious medical problems that are likely to shorten their lives. But many just can't wait to finally get something back from SS after paying in for so many years. Or they're afraid SS will run out of money. Or, like you, they refuse to believe that the government's advice to wait could possibly be true.

Of course, each one of the 66% who start taking at 62 costs the government less in lifetime benefits than any and all of those who hold off. The relatively few who hold off until 66 will cost it more and the even fewer (like me) who hold off until 70 will cost it the most. That's why the breakeven point can be set at a lower age than actual life expectancy. The majority who take early collectively create a large enough surplus to fund those of us who hold off taking until later. So I thank you for the contribution, however tiny, you will likely make to help fund the later stages of my retirement.

    Bookmark   September 20, 2014 at 11:55AM
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Believe whatever you want, but stop misinterpreting what I wrote to try to make your argument. For example, I didn't say we couldn't understand the math; I just said it's too complicated to present all the details here. And I'm not going to spend any more time dealing with your less-than-rigorous math arguments.

This post was edited by kudzu9 on Sat, Sep 20, 14 at 14:53

    Bookmark   September 20, 2014 at 2:40PM
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A woman I worked with just passed away at the age of 73. She worked until age 70 because she wanted to increase her pension and social security benefits. She worked for 45 years but was only retired for 3 years. Her mother lived until she was 96 years old and I always thought that my co-worker would have a long life, too. Sadly, it didn't happen for her.

    Bookmark   September 20, 2014 at 6:21PM
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Lucy that is too bad. It's hard to see those you know and love die before their time. While we all try to plan as best we can, there are no guarantees when it comes to how long we may live.

It's no doubt true that most people either can't or don't want to work until age 70. Therefore, they really can't wait until 70 to collect SS because they need the money to live on. But remember the original poster is planning to work until 66. Her question was whether she should wait until 66 to collect SS or start taking it as early as possible at age 62. As some of us on here have pointed out, she will collect more in total SS benefits by waiting, assuming she lives past age 78, which the average 62 year old will most likely do. No one is suggesting she wait until 70.

Speaking personally, I'm waiting until 70 for two reasons. One is that we don't currently need the money to live on. The second is that I've been collecting a spousal benefit on my husband's record since he reached his full retirement age of 66. My spousal benefit is one half of what he would have gotten had he started collecting SS back then. When I start next year to collect my own benefit at age 70, it will be considerably larger than the spousal benefit I now receive. Nevertheless, my spousal benefit somehat offsets the money I've left on the table by waiting until 70 to collect on my own record.

As for you, kudzu, it apears the math IS too complicated for you to explain on here because you haven't even tried. What are people supposed to do? Just take your word for it? Not buyin' it.

1 Like    Bookmark   September 28, 2014 at 11:58AM
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I doubt there is anything I could provide by way of explanation that would satisfy you. I'm glad you've worked out something that you think is the best choice for you. Others do the math for their own situations and make different choices.

    Bookmark   September 28, 2014 at 1:57PM
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