Skip to comments.Why Is Everyone Filing for Social Security Early?
Posted on 07/25/2012 2:59:16 PM PDT by SeekAndFind
I'll be 62 next month. All my friends seem to be taking Social Security on their birthday. I've heard this may not be the wisest choice. What do you think? --A Reader
Turning 62 seems to be one of those magic milestones -- and more and more people seem to be celebrating by filing for Social Security benefits the first chance they get. According to the Stanford Center on Longevity, the majority of retirees choose to begin receiving Social Security payouts within a few months after age 62 or immediately after they stop working, regardless of economic or educational status.
The reasons for taking benefits early appears to be primarily emotional -- fear that Social Security will disappear or just because it's possible to do it -- rather than considering if it makes long-term financial sense. In fact, a new study by economists John B. Shoven and Sita Nataraj Slavov indicates that rather than putting extra money in your pocket, taking Social Security benefits early may likely leave a fair amount of money on the table.
But studies aside, deciding the best time to take your benefits is a personal decision, based on your individual situation. So before you join your friends at the benefits table, I'd check your own financial reality.
DO YOU NEED THE MONEY?
The ongoing recession has made this a serious question for a lot of people. For those who have lost their jobs and are having trouble finding other employment, taking Social Security benefits early may be essential to stay afloat.
On the other hand, if you're still working and you file at 62, not only will your benefits be permanently reduced by about 25 percent, $1 will be deducted for every $2 you make above the annual limit, which is currently $14,640. While you will get the money back in the form of a recalculated benefit when you turn 66, the temporary reduction minimizes the economic value of filing early. Plus, if you make over a certain amount each year (between $25,000 and $34,000 for single filers; between $32,000 and $44,000 for married filing jointly), you will likely have to pay income taxes on a percentage of your benefits.
DO THE MATH
There's also another way to look at the numbers. The study I mentioned earlier makes a strong economic case for delaying benefits, especially in a low-interest environment like the one we're in now. First, if you delay taking your Social Security benefits from age 62 to your full retirement age (66 for those born between 1943 and 1954), you'll increase your payout by 25 percent. And if you continue to delay taking your benefits until age 70, your payout increases by 8 percent each year. That's equivalent to an 8 percent raise! The study suggests that when interest rates are 3.5 percent or below, the gains from delaying are especially significant. In a close to zero-interest world like ours, the numbers speak for themselves.
LOOK AT THE PERSONAL SIDE
Of course numbers are only one side of the story. You also need to consider your health and your family history of longevity. The average life expectancy for American women turning 62 this year is 85 1/2, for men it is 83. If you have a serious illness or there are other factors affecting your life expectancy, you might be wise to take your benefits early. However, if you are healthy and come from a family of centenarians, you should definitely consider waiting until 70 to collect to give yourself a financial boost in your later years.
COORDINATE WITH YOUR SPOUSE
If you are married, it also makes sense to coordinate the timing of your Social Security benefits with your spouse. Even if one spouse has never worked, he or she is often still eligible to collect a benefit based on their spouse's work record. If either spouse begins to collect early, their benefit will be reduced. However, for two-earner couples, and especially if there is a large discrepancy in incomes, it may make sense for the lower earner to take a spousal benefit at age 66, while the higher earner waits until age 70. The lower earner can either continue receiving spousal benefits or switch to their own benefit when they turn 70. As you can see, this type of calculation can get extremely complex. I strongly advise couples to get some help from a qualified financial advisor or Social Security expert before filing.
MAKE SOCIAL SECURITY PART OF A BIGGER PLAN
While it is often wise to delay taking Social Security benefits, your decision should always be part of a larger retirement plan. I would start by estimating what your yearly expenses will be in retirement. Calculate how much you can realistically draw from your portfolio and how significant Social Security will be to your overall financial picture. And then coordinate with your spouse. Just because the government allows you to draw your benefits at 62 -- or even at 66 -- doesn't mean you should. Your retirement plan is unique. What someone else considers a wise decision may not be the best move for you.
-- Carrie Schwab-Pomerantz, CERTIFIED FINANCIAL PLANNER(tm), is president of Charles Schwab Foundation and author of "It Pays to Talk." You can e-mail Carrie at firstname.lastname@example.org. This column is no substitute for an individualized recommendation, tax, legal or personalized investment advice.
Taking SS at 62:
1)I might die tomorrow.
2)”If you are already receiving benefits, the program will not change for you.” All others are screwed.
Yikes 62 doesn’t sound to good if your spouse is still working.
I retired at age 63 and it was one of the best decisions that I have ever made. I ran the numbers and with SS, pensions, 401(k) and no debt it was really a no brainer. No more stress from a long commute and the nightmare of the corporate culture. I was burned out and ready for a change. Now I can live life on my terms. Go for it.
Afraid the program won't last and so they're going for it as soon as possible, for another. It's not as if the government hasn't taken hundreds of thousands of dollars from the average wage earner over their lifetimes under the false pretense that this is some sort of pension in a “lockbox.”. It's been handed out like candy. Noncitizens are drawing SS under someone else’s number, you can't do anything about it and the government certainly won't.
The more rational question would be, why wait?
That will be three years of a monthly nothing check from Social Security.
Good luck in your retirement.
Started receiving benefits at 62 in May.
the reason is not “emotional.” the reason is because these people have been laid off and can’t find a job and have been hanging on by their toenails until the day they can file for social security. I am sure most of them would rather be working, but Obama saw to it that the business environment is freezing
“While you will get the money back in the form of a recalculated benefit when you turn 66...”
I don’t understand. I understood that if you retire at 62 what you are calculated to receive at 62 is the permanent amount you will recieve.
The choice is between normal benefits at 65, or taking an 25% reduction in benefits to get 3 more years of benefits. It will take 12 years (or 15 if you want to count from 62) before the normal benefits catches up to the extra 3 years.
Much is made of the need to have adequate income in the last years of life. But I think it’s easy to overlook the utility of having income while you are still able to enjoy it.
i know for a fact this is true...i recently had my pocket picked and my wallet stolen on the subway in nyc with my medicare card and all id stolen...of course my state DL and credit card providers cared but i called both ssa and medicare and neither one gave a damn....would not post any type of alert nor would they even allow me to give them my ssn...they didn't and don't give a damn if anyone uses my “sh*t”...could it be that we have a president with a fraudulent ssn...can;t even use a birth certificate any longer to get any kind of id state or fed...could that be because the impostor in chief doesn't have one of those either?
You take smaller amount at 62.5 years of age you have to live beyond age 84 before you lose out of the early option of less over a longer period of time.... Sort of a penny a day doubled everyday for thirty days or ya want 3 million dollars now thang ?.
Less is more , Lester Moore shot with a .44 is no more here lies Lester etc...
Good news is the thief will have to file yer tax returns now.... :o)
Sorry for yer troubles. Hope it all gets fixed.
Stay safe !
A bird in the hand is worth 2 in the bush. What one receives at 62 is probably worth more than what one would receive at 65, with the (unreported) inflation eating away at it. $1 at 62 will buy you a small bottle of soda; at 65 it will buy you a styrofoam cup of warm tap water. Naturally, the Dem media organs will be sure to point out how healthy tap water is, and how fortunate we are to have it while so much of the world goes without.
Widows can file for SS at age 60. It’s somewhat reduced, but maybe if you wait, you won’t live that long; or the govt may not live that long; or the horse may talk.
“If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between. However, monthly benefit amounts can differ substantially based on your retirement age. Basically, you can get lower monthly payments for a longer period of time or higher monthly payments over a shorter period of time. The amount you receive when you first get benefits sets the base for the amount you will receive for the rest of your life, though you do receive annual cost-of-living adjustments and, depending on your work history, may receive higher benefits if you continue to work.”
1. Work as long as you can at least until age 66.
2. If you do retire before age 66 delay claiming your benefits as long as possible.
3. However, be prepared to begin taking your benefits if it appears that means testing is about to be implemented.
Only if born 1937 or earlier.
66 for born 1943-1954
That does seem odd. Maybe it involves something like starting benefits, placing them on hold, then restarting. SS regulations are beyond complex.
Otherwise, once you start the payment is set. There may be occasional COLA increases or other family situations that affect the amount.
Up until the end of 2010, they had the “restart” provision where you could pay back everything you had received and start over at any age up to 70.
That was my plan but Baraq killed it off.
You can start receiving at 62 and then when you're 65 or 66 (the age at which you could have received the higher benefit) decide to pay back what SS has paid you and start receiving at the higher amount.
lol...not...but i am sure they will want us both to file and pay!
“You can start receiving at 62 and then when you’re 65 or 66 (the age at which you could have received the higher benefit) decide to pay back what SS has paid you and start receiving at the higher amount.”
Sounds like a plan destined to go awry to me.
Simple. We don't think Social Security will be around much longer and want to get from it as much as we can.
If your spouse is older than you and draws or will draw a bigger SS check than you and will probably die before you, it makes sense to get your Social Security as soon as you can. When one spouse dies and both are on SS, the surviving spouse gets the larger of the two checks.
My father was disabled due to triple bypass in his fifties. He drew a larger check than a regular SS check. (BTW, why does SS disability pay more?) My mother, 8 years younger and healthier than my father, started drawing her Social security at 62. It was a wise decision. When Dad died, Mom got his larger check, so her reduced benefits check no longer mattered.
See my post above.
Obama terminated that end of 2010.
Bump, my situation exactly. Unempolyed at 60, used 401k to stay a float and until 62, and yes I would rather be working. But who is going to hire a 65 year old programmer?
There is, as some have pointed out, a motivation to draw it before one loses it through change of policy, but most of the attendees didn't really seem too strong on that. What we all were volubly concerned about was changes in healthcare costs as a result of 0bamacare, and naturally the people putting on the seminar didn't have any better idea than we did. Signing up for Medicare is still MANDATORY at 65. You don't have to take it but you do have to register. Kind of reminds me of the draft, lo those many years ago...
Thanks for the info.
How does inflation fit into those calculations? I'm told that social security is inflation-adjusted, but the government's inflation figures are usually artificially low.
So wouldn't inflation make it even longer to catch up?
We just did.
Thanks for posting. Good timing. I was at the social security office today. The clerk printed out a spreadsheet with some numbers to digest. I planned to file today, but I’m going to spend a few days looking over the numbers. I want some of the money back the socialists confiscated from me. I turned 62 in May and am still working full time.
Get me out of this effen socialist system forced on me.
(I’ll look forward to reading the comments tomorrow as I am off to bed. I have to get up in 7 hours to get ready for work)
and.....people are tired of working hard......hard work does not pay off anymore....
Get it before it’s gone. The feces is about to hit the oscillating blades.
Same with the increase in “disability” filings.
Frankly, I’m all for crashing the statist’ ponzi systems.
Look at all of their failures...CA, NY, IL, etc. Let them crash. Overload the system to the point of collapse.
You are correct, once taken early, there are no do overs later. What you got is what you will get (except for across the board living expenses for all SS recipients) hence forth.
Take it at age 62+ and draw reduced benefits for three years. Wait until age 65+ and it will take years to equal out for monies in pocket since age 62.
You would not happen to be in the Houston Tx area would you?
“(BTW, why does SS disability pay more?)”
It does not pay more. SS disability pays what one would have received if had drawn benefits at age 65 or 66 based upon what had been paid in at the time.
How many millions will have died, waiting to get to 66 and never getting there, and meanwhile, what they left for the government to use on their behalf, will have gone to others and for wasteful government spending.
The government counts on people waiting to retire at 66, because, it will mean billions that never get collected. If you put money into the system, take it at 62, because, chances are that, you will end up ahead (unless you’re still working). If someone collects, say, $16,000 per year, that would mean $64,000 for 4 years, which could be used to, for example, pay off the mortgage or take a few vacations, and, like Nancy Pelosi likes to say, stimulate the economy. Better in the people’s pockets than to leave it for government to spend wastefully.
I am in Greenville Tx, but I found this one in Houston.
Senior Space Vehicle Flight/Embedded Software Engineer -
L-3 STRATIS is among the largest divisions of global defense leader, L-3. We provide cybersecurity, intelligence, and enterprise information technology services and solutions to the Intelligence Community; the Department of Defense; U.S. federal civilian, state, and local government agencies; and international customers.
L-3 STRATIS is proud of our many long-term partnerships with our customers. We take their missions as our own, always aiming to improve our level of service. Our employees take pride in their consistent application of industry best practices and their ongoing dedication to the highest standards of business ethics - reflected in our motto, Powered by Excellence.
L-3 Communications is looking for a talented Senior Space Vehicle Flight/Embedded Software Engineer with substantial Real Time Operating System (RTOS) experience to support our efforts at the NASA / Johnson Space Center (JSC) in Houston, Texas.
The successful candidate will be an experienced software engineer with a strong background in flight/embedded software engineering in the development of human-rated space vehicle avionics and subsystem software, a great interest in aerospace vehicles and systems, strong interpersonal skills, a desire to work in a very team-oriented environment, have had an outstanding academic career, and most of all, possess a great passion to contribute to our Nation’s exploration of space.
The individual will work with engineering teams at JSC, the International Space Station (ISS) Program, Visiting Vehicle programs, and Space Exploration projects. This work will include software system engineering, prototyping, requirements definition, design, development, test and verification, integration and certification of embedded software for human-rated space flight.
Representative Job Responsibilities include:
- Design and develop embedded software prototype and flight software.
- Perform systems engineering in support of software requirements and interface definitions, design and performance analysis.
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- Collaborate with engineering teams and contractors across multiple NASA programs and projects.
- Ensure adherence to JSC standard software process practices.
This work takes place in a highly stimulating and dynamic environment that is critical in the human space exploration initiative.
Positions require a self-motivated software engineer wanting to work in a very team-oriented, friendly, but demanding organization. The ideal individual will also possess strong verbal and written communication skills, and team-based project experience.
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Must be a U.S. Citizen. B.S/M.S. in Computer Science/Engineering, Software Engineering or related disciplines and 10+ years in embedded software development for human-rated space vehicles. Must have very strong technical skills in Linux, Real-time Operating Systems, i.e., VxWorks, bus communication, e.g., Ethernet, 1553, and C/C++ and OOAD. Significant experience in entire software life cycle. Ability to manage multiple priorities with little supervision. Must be a highly responsible, team-oriented individual with strong communication skills and work ethic.
Experience in Space Shuttle or ISS flight software, CMMI Level 3 Process Areas, and technical leadership.
We offer a competitive benefits package for Full time and Part time employees to include: paid holidays, paid time off, medical, dental, vision, flexible spending account, long and short term disability and company paid life insurance, 401(k) Employee Stock Purchase Plan, referral bonuses and tuition reimbursement.
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US Security Clearance Required
: Day - 1st
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At 54 I’m a decade away, tail end of the baby boom. I have absolutely no notion whatsoever that we can continue to live on a trillion and a half dollars of imaginary money for 10 more years - so I have no expectation of ever getting a thing back out of SS even though I’ve put in since I was 13. My timing just sucked - people born in the late 50’s early 60’s are the one’s who will be on the bubble right when it pops - our checks are going to bounce. C’est la Vie.
With all these many thousands of baby boomer retirements and SSDI being taken, I have a question. If many are being taken by people who were working, are those jobs being filled?
If so,they are not new jobs, just old jobs being refilled by new people and the economy is in hell a lot worse shape than admitted.
Poke around at that link.
I am not sure what all operations we have in Houston.
Bill, I understand you have to accept Medicare if you take SS. The only way out of medicare is to waive SS.
<Those last years may come much sooner what with the death panels
I know you didn’t mean this to be funny, but I did LOL. The sad thing is, I think you’re right. I am doing everything I can in terms of my health now (diabetic) to avoid being in the healthcare system. We can’t tell the future, but to the extent I can avoid needing a death panel to review my need for meds or surgery, the better off I think I will be.
<Take it at age 62+ and draw reduced benefits for three years. Wait until age 65+ and it will take years to equal out for monies in pocket since age 62.
OK, but how does that work if you’re still working and making a good salary? I turn 59 next month, and in a year, will be eligible for my deceased spouse’s SS. But from my understanding, I’ll be taxed on it due to my work income, and so I don’t know if I’d actually get anything at all.
Same thing with retiring at 62 instead of 66. If I stay working after I take the SS (btw, will employers let you do this?), will I have any SS income after taxes?
I should probably go to the SS office...
3) Democrats won't be happy until every person in every inner city neighborhood is on Social Security disability... When that happens - or long before - the system will crash...