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Why Is Everyone Filing for Social Security Early?
Townhall ^ | 07/25/2012 | Carrie Schwab Pomerantz

Posted on 07/25/2012 2:59:16 PM PDT by SeekAndFind

Dear Carrie:

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

Dear 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.


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.


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.


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.


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.


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 This column is no substitute for an individualized recommendation, tax, legal or personalized investment advice.

TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: socialsecurity
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To: sportutegrl

“(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.

41 posted on 07/25/2012 5:00:55 PM PDT by Sea Parrot (Don't ever think that the reason I am peaceful is because I forgot how to be violent)
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To: SeekAndFind

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.

42 posted on 07/25/2012 5:00:54 PM PDT by adorno
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To: jpsb

I am in Greenville Tx, but I found this one in Houston.

Senior Space Vehicle Flight/Embedded Software Engineer -
Requisition ID
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.

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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.

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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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43 posted on 07/25/2012 5:05:48 PM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: cherry

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.

44 posted on 07/25/2012 5:07:39 PM PDT by circlecity
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To: Fledermaus

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.

45 posted on 07/25/2012 5:11:18 PM PDT by Sea Parrot (Don't ever think that the reason I am peaceful is because I forgot how to be violent)
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To: jpsb

Poke around at that link.
I am not sure what all operations we have in Houston.

46 posted on 07/25/2012 5:14:03 PM PDT by mylife (The Roar Of The Masses Could Be Farts)
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To: Billthedrill

Bill, I understand you have to accept Medicare if you take SS. The only way out of medicare is to waive SS.

47 posted on 07/25/2012 5:30:07 PM PDT by Chickensoup (STOP The Great O-ppression)
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To: bgill

<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.

48 posted on 07/25/2012 5:41:26 PM PDT by radiohead (Buy ammo, store food, pray for the Republic.)
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To: Sea Parrot

<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...

49 posted on 07/25/2012 5:45:25 PM PDT by radiohead (Buy ammo, store food, pray for the Republic.)
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To: super7man
2)”If you are already receiving benefits, the program will not change for you.” All others are screwed.

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...

50 posted on 07/25/2012 6:40:11 PM PDT by GOPJ (Political correctness is simply George Orwell's Newspeak by a non-threatening name. FR- Bernard Marx)
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To: SeekAndFind

The expert misses the point.

The fact is, people need the money NOW and they are afraid if they defer their SS payments, the government will change the rules on them and they will get less.

Has nothing to do with shrewd financial calculations to maximizes gain.

People need the money NOW and want to lock benefits in NOW.

51 posted on 07/25/2012 6:51:08 PM PDT by Freedom_Is_Not_Free (REPEAL OBAMACARE. Nothing else matters.)
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To: PGalt

“I want some of the money back the socialists confiscated from me.”

Thanks for stealing from me!

52 posted on 07/25/2012 7:15:34 PM PDT by JCBreckenridge (Texas, Texas, Whisky)
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To: SeekAndFind

Bookmarked! I just turned 61......How is this possible? I used to be so much younger.

53 posted on 07/25/2012 7:19:40 PM PDT by citizen (It's no longer Obamacare. It's Robertscare now. He wanted it, he bought it, he owns it.nn)
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To: DugwayDuke
though you do receive annual cost-of-living adjustments and,


54 posted on 07/25/2012 7:45:10 PM PDT by Irish Eyes
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To: DugwayDuke
though you do receive annual cost-of-living adjustments and,


55 posted on 07/25/2012 7:45:36 PM PDT by Irish Eyes
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To: sportutegrl
Is your spouse older than you? Who do you think will die first? Does/Will your spouse draw more money than you?

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.

I thought that if both husband and wife are collecting SS, that if husband dies earlier, surviving spouse will get her own SS or 1/2 of husbands which ever is larger.

Sorry for verry long sentence (pain meds..knee surgery today)

56 posted on 07/25/2012 7:56:05 PM PDT by Irish Eyes
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To: radiohead

I am not aware of your complete fianacial circumstances and would not proffer advice to be acted upon if I did.

You need to sit down with a professional for professional advice.

Or, get on the web and start throughly studying all the in’s and out’s of SS.

57 posted on 07/25/2012 8:30:49 PM PDT by Sea Parrot (Don't ever think that the reason I am peaceful is because I forgot how to be violent)
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To: Leaning Right; nascarnation

You are correct that the government appears to be systematically under reporting inflation which makes any money you get early even more valuable.

I had not paid too much attention to the changing retirement age — obviously that makes it take correspondingly longer to catch up to the early cashout.

58 posted on 07/25/2012 8:51:33 PM PDT by TennesseeProfessor
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To: p. henry
They will have to try means testing; it's the only way to divide the shrinking pie to prevent civil unrest.

Chances are that if you've provided for yourself, you're the kind of individual that won't take to the streets a la OWS. The "I paid into it and want it back" crowd, not so much.

The other problem is SSDI: with new 'disabilities' being added every day to the list, I don't see how much longer this system can hold on.

The Kenyan must go.

59 posted on 07/26/2012 3:38:51 AM PDT by ex91B10 (We've tried the Soap Box,the Ballot Box and the Jury Box; ONE BOX LEFT!)
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To: Beowulf9

I understood that if you retire at 62 what you are calculated to receive at 62 is the permanent amount you will recieve....That’s true. What she is trying to say is you get, for instance, 1300 a month at 62, they will recalculate to 1452 a month at 66. But, if you make a two column graph on paper showing what you get FROM YOUR MONEY for those 48 months it would take 14 years or so to make up that amount. I haven’t done this computation for a while, but I retired in March, got a part time job ($14,160 max) at 29 hours a week and make out better than working 40 and traveling two hours a day. The government don’t get it.

60 posted on 07/26/2012 4:14:25 AM PDT by Safetgiver ( Islam makes barbarism look genteel.)
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