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social security benefits

Posted by fuzzyapple (My Page) on
Wed, Aug 13, 14 at 18:26

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.


Follow-Up Postings:

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RE: social security benefits

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?


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RE: social security benefits

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.


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RE: social security benefits

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


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RE: social security benefits

One thing to remember is that your SS will be reduced by what you earn over a certain amount.


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RE: social security benefits

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?


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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.


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RE: social security benefits

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.


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RE: social security benefits

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


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RE: social security benefits

I collect it and spend it. I am not squirreling away my money for an heir to spend.


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RE: social security benefits

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.


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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


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RE: social security benefits

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.

http://www.ssa.gov/retire2/whileworking.htm


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.


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RE: social security benefits

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?


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RE: social security benefits

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.


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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.


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RE: social security benefits

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.


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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.


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Sorry feedingfrenzy...you'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


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