retirement

The right time to draw Social Security benefits

"If you're going to work full time, the answer is no," says Carney, "because anything you make above the threshold of $12,960, they subtract 50 cents on every dollar. So at some number up in the $20,000 to $30,000 range, you, in essence, lose all of your Social Security benefits."

One popular way some couples have their Social Security cake and eat it, too, is for the lesser-earning spouse to retire at 62, then switch to the higher spousal benefit when their spouse retires at full retirement age. Social Security's electronic booklet, " What Every Woman Should Know," explains how this works in greater detail.

There is another compelling reason that keeps people working between 62 and their full retirement age: health coverage.

"The primary deciding factor for people retiring, or not retiring, is not Social Security, but health care. Basically, the sign is, 'Will work for health insurance,'" says Carney. "Many people who are 62 will gladly work for $10 an hour, say $20,000 a year, and health insurance. If you're paying full-boat health insurance for a couple 62 to 65, it's going to cost you somewhere between $9,000 and $12,000 a year, plus the deductibles and co-pays. If you can get $8,000 or $9,000 of that paid for by an employer, which is paid out of pretax dollars, that can increase by 50 percent or more what you're actually making. The impact of that, so far, outweighs the trade-offs of taxation and compound earnings on the Social Security that it's a no-brainer."

Carney says all the calculators on the Internet can't help you with the two biggest X factors: how long you'll live and how you'll fare in retirement.

"I think a lot of people make the decision based on what is rational for them. They may think, gee, if I quit work, I know I'm going to go downhill and I'll die in two years; that is actually true for many people. So they keep working, and because they keep working, they live another 10 years. But some of those people make a decision that for them is the wrong decision if they really knew how everything would work out. You could really want to quit working, but you're afraid to, so you waste those three years you could have had with family because you do have enough money."

Bottom line: Before retiring, take stock of your health, your investment acumen and your assets. If you can't think of a compelling reason to retire early, Social Security will make it worth your while to keep working.

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