Posted on 04/24/2008 8:08:44 AM PDT by fortress
This is a from column called Taking Stock by Malcolm Berko where he responds to questions concerning finances:
Dear Mr. Berko: I began taking Social Security at 62 and will be 70 in a few months. I wish I had waited until age 70 to collect my benefits, which would have been almost twice as much as I’m getting now. Several years ago I heard, and I can’t recall where, that I can reapply to the Social Security Administration and get higher benefits as if I had waited until I was 70. Can you verify this, and if this is true, can you tell me what I have to do to do this? I called my Social Security office here, but they don’t know anything about it. I could really use the extra money because prices are really rising and the economy seems to be going to hell in a hand basket. Don’t you think we should bring back Alan Greenspan, whose proven knowledge and experience saved us from disaster and a depression five or six years ago?
C.P.
Elgin, Ill.
Dear C.P.: My accountant wears baggy khakis, wrinkled shirts and deck shoes, without socks. He owns a large, drab gray office building that’s not in a nice part of town and his furniture is probably World War II surplus.
He doesn’t look like a CPA. He has the physique of a linebacker, a resolute handshake and seems to have enough power in his arms and chest to bench press Cincinnati. When he was younger, he would spend weeks traipsing through the jungles of Peru, Ecuador and Bolivia chasing Inca artifacts. He’s intense as gravity near a black hole but kind, understanding and a Harvard graduate. He’s also the most brilliant and creative accountant I’ve ever known.
He answered your question when we had breakfast several days ago. If you retired at 62 and accepted the lower benefits, all you have to do is reapply to Social Security, complete Form 521 and you’ll be entitled to receive the benefits you would have received as if you had waited until you were 70. But there’s a caveat.
Now I had to make some assumptions because you didn’t give me enough personal data on your current finances and benefits.
Let’s assume, when you retired at 62, that Social Security was paying you $17,000 a year. Let’s move ahead eight years. If you waited to file for benefits at age 70, you would have received $29,000 yearly, which is a difference in your favor of $12,000.
To receive that $29,000, you must return to Social Security all the benefits you received, which according to their formula is about $118,000. Now that’s a colossal chunk of change to increase your annual income by $12,000. However, you’d have to invest about $145,000 in an annuity to be guaranteed $12,000 extra dollars a year.
Please be mindful that these numbers were computed on a breakfast napkin at a greasy spoon. While not precise, they are close enough to help you make a decision. And they’re compelling if you plan to live long enough to collect the difference in added benefits.
Before you run out to apply, I strongly urge you to counsel with your CPA or financial planner and work out the numbers to the nearest decimal point. The application process takes about nine weeks; be prepared for the normal government glitches, twitches and hitches.
Federal Reserve Chairman Ben S. Bernanke is doing a fine job of managing this mess created by Greenspan, who gets $100,000 a pop for speaking engagements to brag about how brilliantly he ran the economy. Most Americans have been duped by a sycophantic press and fawning broadcast media, many of whom have the economic IQ of a dairy cow.
Greenspan, a charming and engaging fellow, mesmerized the ignorant media and awed Congress with his gravitas and droll econobabble. You, and a credulous public, fell for his mumblings, hook, line and “stinker” – but I believe history will note Greenspan as the worst Fed chairman since the Banking Act of 1935.
Inarguably, his decisions laid the foundations that created our housing bubble as well as the easy money that caused the mortgage market to melt. Bringing Greenspan back would probably turn our economy into an ice age. I suggest that you read “Greenspan’s Bubbles,” a recent book by William Fleckenstein. It’ll knock your socks off.
Address your financial questions to Malcolm Berko, c/o The Daily Journal of Commerce, P.O. Box 1416, Boca Raton, FL 33429, or e-mail him at malber@comcast.net.
© Copley News Service
I thought this might be of interest to some of you concerning social security.
I also found Mr Berko’s comments on Greenspan enlighting and gives him instant credibility.
If you’re gonna give them money back (cash)...Then you have to live about 10 years to recoup the $118,000.
Atleast he collects his social security - it will be long gone before me or my kids see any of it! Why isn’t this issue on the top of the presidential election. What will our politicians do, if anything, to prevent the system from going broke? I haven’t heard a thing.
What about collecting payments at 62 and investing the money. By the time you reach 70, you’ll have quite a bit of money just in the investment accounts funded by your Social Security benefits. If you start withdrawing from your investment funds at 70 but die at 72, you still have the $170,000 plus yields, whereas you’d only get $58,000 if you start withdrawing at 70 and die two years later.
Oh please...no more GreenSpam
I’d love to find an annuity that let me invest $145K and gives me back $12K a year. Anyone know of one?
Ever seen a canned question before? Go back and take a look.
“I’d love to find an annuity that let me invest $145K and gives me back $12K a year. Anyone know of one?”
That caught my eye too.
As I posted earlier, this is a canned question, designed to fill a column.
Some may not be aware how the Clinton “redistribution of wealth” principle applies to SS. A married couple, both receiving Social Security payments, and fortunate enough to have anything over $44,000 per year income, finds that every additional dollar they receive looks like $1.50 to the IRS. This is due to the increase in taxable SS payments. This is applied until the portion of taxed SS reaches 85% of the total. The formula for calculation of “taxable social security” is so fiendishly complex that it fills a whole page of the Form 1040 handbook. When Clinton got this passed in 1993 he said that it would affect only the wealthiest 2 percent of Americans. Each year I get a real ego boost finding out once again that I am in that elevated bracket.
It seems pretty obvious what they will do - raise the the FICA tax. They may try and means test it but that would be extremely unpopular as would benefit cuts. Seniors vote. Foolish 20-somethings don't... they should have been all over private accounts but because Bush proposed it, in their minds it had to be bad. If nothing could be done with a Republican President and a Republican Congress, it seems obvious that the Gov will just raise the tax and stick it to people who are too young to notice or care... the path of least resistance (once again).
I fail to see how.
In the last umpteen years, the interest earned has hovered at or below 2%.
On the other hand, the bureaucrats' salary, welfare, and everything else have grown like Topsy...
(No, I'm not that old, but I read a lot)
Obviously, you have never attempted it. It starts as one page, but the see table X references expands that to the equivalent of several pages, and the process is essential the old vaudeville joke: "add you shoe size, subtract your hat size, turn around three times and whistle dixie while facing mecca, unless..."
It is so bad that I can't stop laughing about it, and I suggested that that one tiny item in the tax forms be used as a qualification to serve in Congress. Failure would make 20 years in jail mandatory.
bttt
bookmark
Anyone going for that “deal” deserves the fleecing. With 3% inflation you would have to live 14-15 years to recoup the “investment”
I think you have to be 70 years old.
$44,000? Looks to me like the limit is $32,000 for married couples before SS benefits become 85% taxable. Since the income limit for a single person is $25,000 many couples might be better off divorcing and filing separately.
Another way the government discourages family cohesion.
Well, that might be true. But consider someone who started getting benefits only 16 months ago and it becomes an entirely different problem.
Context is everything. Hi Frank.
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