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Social Security: Don’t rush

By Jennie L. Phipps ·
Thursday, August 15, 2013
Posted: 6 pm ET

I wrote recently that I was 62 and old enough to claim Social Security, but my retirement planning didn't include claiming Social Security anytime soon for a variety of reasons. A number of people have responded that they thought my approach was wrong, and they intended to take their Social Security as soon as possible, mostly because they fear that they might not live long enough to get their fair share.

Sourdough2224 put that retirement fear this way: "The math says that if you retire at 66, you have to live until you are at least 80 to break even with what you gave up by not retiring at 62. That's just counting the actual dollars given up and not accounting for any savings you may accumulate and the interest thereon. Average life expectancy of the American male is 76 to 77 years, although the Internal Revenue Service will tell you it is 84 to 85 (which is a farce). So, the question is, as Clint Eastwood would say: 'You feeling lucky?' I don't bet on luck. I began withdrawing at 62 and haven't regretted it a moment."

MyMothersKeeper countered that line of reasoning, saying, "My mother and stepdad both filed for Social Security at 62 even though they were both still working because they wanted a little extra income. Stepdad died last year at 79 and Mom is 76, going strong and will likely see at least 85. She loves living by herself and hates the thought of having to move in with us, but she is burning through the money she got from selling the house and will eventually have to give up her solo living. Another $200 a month right now would kick that can down the road at least five years. That's the flip side of filing early; lack of income in your later years limits your options."

My advice is to do your own math. If you take Social Security at 62, you'll lose at least 25 percent of what you'd get at 66, full retirement age. Every year that you delay past 66, you get an additional 8 percent until you reach age 70, when there is no point in delaying further. For example, based on AARP's easy-to-use Social Security benefit estimator, if you earned an inflation-adjusted average salary of $35,000 for 35 years and you turn 62 this year, you would be entitled to $1,083 a month. If you wait until age 66, you'll get $1,445 a month -- $362 more. If you can delay claiming until age 70, your monthly check will be $1,907, a whopping $824 a month more than you would have gotten at age 62.

By delaying, you'll also receive a cost-of-living adjustment every year there is one. Generally, that's every year. The cost-of-living adjustment is added to your base. Historically, that adds 1.5 to 3 percentage points every year -- another $20 to $40 a month in the example above -- and it's cumulative. By the time you turn 70, that could easily be another 12 percent to 25 percent added to your check. That's real money.

Yes, Sourdough2224 is correct. You could take Social Security at 62 and save it, and you'd get interest, but in today's low-interest environment, there are few investments that would offer you a guaranteed 8 percent a year, plus a COLA.

Social Security is a terrific deal, and rushing to take it early can be a big mistake.

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karl ross
October 19, 2013 at 10:03 pm

i was forced to retire at 66 would have gone to 70 or 72 but had hart problems...i have friends who retired at 62 and the little they get makes it hard to live..i had no money left after the medical problems, like so many..think about it if you don't need the money now you may need it later.

October 17, 2013 at 5:08 pm

I agree with Ruby tomorrow is not promise to us and then they act like it is their money, I don't qualify because I don't have enough quarters but they will give to some other lazy bum who never worked a day in their life.

ruby salter
October 14, 2013 at 10:46 am

Get your money at 62 while the getting is good, because tomorrow is not promise to you

James G. Ryan
October 02, 2013 at 4:20 pm

Anyone who has a good job, good heredity (lots of relatives who lived long lives), and does not smoke would be crazy to start taking the money at 62. There is absolutely nowhere that you can get 8% per year plus a cola. "Sunrise"--do you sell swampland as well as stocks? My stocks make almost nothing--they still are below their 2007 level.

October 02, 2013 at 4:17 pm

Consider this. Retire at 62 and try to do it at the beginning of the year following your birthday. The reason is, IRS will allow you to make up to 15,120 dollars over your SSA retirement without penalty. If you make more than the 15,120 IRS will take 1 dollar for every 2 dollars you earn. For those who didn't save enough for retirement...consider this, if possible. After you retire, start working as a 1099 and incorporate. Open a solo 401K with (Fidelity, Schwab or whomever) and if you earn 36,000 per year you can put up 23,000 in an IRA plus an additional 25% pension amount into the IRA and each one is considered a business expense. Therefore, leaving you your full/SSA retirement to live on plus the balance of your net income from your business and keeping you below the 15,120. Think outside of the box and investigate this idea.

August 21, 2013 at 7:24 am

baloney tired of seeing these speaches by those that want people to work till they drop. You don't really gain anything by waiting. With employers pushing employees today there is no guarantee that you'll live past any age to think so is foolish. Take it at 62 work part time but get it while the getting is good...I wish they would stop putting these ads for trying to convience people to hold off on getting what they worked for. What a country . What happened to the golden years?

August 19, 2013 at 3:04 pm

Sorry, she still has it wrong. File and suspend. You can go back and get what your back pay. Certain things in the stockmarket you can get a 8-20% return on. She is foolish!!!

August 17, 2013 at 6:54 am

Sorry, If it was only money maybe, but my job really sucks and every year I stay takes much more than 1 chronological year from my life. Hi stress, increased workload, office politics etc. etc. etc. Aerospace you know. Perhaps if I only has to write op ed pieces I would gamble but unfortunately not everyone has that option. I will take mine while I can use it. not default it back to the govt.