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Social Security — just say ‘no’

By Jennie L. Phipps ·
Tuesday, August 6, 2013
Posted: 7 pm ET

It's my birthday. I'm 62 and old enough to claim Social Security. But I'm not filing. Here are four reasons why it's not part of my retirement planning.

Claiming early means I'd take a haircut. Taking Social Security before full retirement age -- 66 for people born between 1934 and 1954 -- reduces the monthly benefit by 25 percent.

I don't need it. Seventeen years ago this month, I used my unemployment to keep the family afloat while I started my own business. In the last couple of years, I've been racheting down the amount of time I spend working, but I like what I do and I'm not ready to hang up my work boots.

Working and claiming add up to missing money. If I file for Social Security before my full retirement age of 66 and keep working -- earning more than $15,120 -- Social Security will subtract $1 from my benefit payments for every $2 I earn. Once I reach my full retirement age, Social Security will recalculate my benefit to reflect the earlier payments I didn't get, but I'd rather keep my paycheck, thanks. Plus, once I reach 66, I can work and earn all I want and my Social Security won't be affected at all.

Patience pays off. The magic age is 66. That's when people my age can claim full Social Security and take advantage of claiming choices. Here's the strategy I'm considering. Because I'm married, at 66, I'll be able to restrict my claim to half my spouse's Social Security and let the value of my own grow 8 percent a year, plus cost-of-living adjustments, until I can claim the maximum amount at age 70. Using this strategy increases what I'll get in benefits compared to claiming at 66 or delaying altogether until 70 by more than $70,000 by the time I'm 85 -- more if I live longer than average, according to calculations by Social Security Income Planner, a sophisticated Social Security benefit calculator.

One last thing: I used to think 62 was over the hill, but I was wrong. At 62, I still feel like I'm only halfway up.

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Lynne B
January 10, 2014 at 2:11 pm

traderprofit, that loophole was removed a few years back. And if born in the later 50s your full retirement age is 66 years and some number of months. For me, I was born in '58 and it's 66 years and 8 months.

I say look at your family's tendency to be long-lived (or not) and use that and your financial situation and desired retirement age to make your decision. If your older relatives tend to make it into their 80s, and you personally are healthy, the math works in your favor to wait until FRA. Otherwise take it earlier.

There is also something to be said for taking SS early and using less of your retirement savings, but you have to consider the tax liability of that plan too, because too much withdrawal from tax-deferred accounts like 401Ks and IRAs can trigger taxes on some of your Social Security. If I can swing it I am going to live off my tax-deferred savings first, then take SS at FRA, then at that time reduce what I am pulling from tax-deferred accounts, so as to lessen the tax liability.

Mustang Pilot
January 09, 2014 at 4:39 pm

File for Social Security as soon as you are eligible. My best buddy retired at 65 his full retirement age and had a heart attack 3 weeks later and died. The longer you put off filing the shorter time you are going to live and the less money you will receive from Social Security. How many years longer do people live past 70 years old. Really bad advice to put of filing until you are older.

January 09, 2014 at 4:18 pm

I disagree. Draw @ 62 if you are retired and not working. Losing the money from age 62 to 66 would take to age 80 in my case to recoup. I highly doubt I will live past this age so why not take it now. Odds are I will probably gain by drawing at 62!

January 08, 2014 at 4:40 am

Being some 20+ years away from ocial Security eligible age still, I am not including it at all in my retirement plans. In fact, I wiggle the numbers so I pay as little as legally possible in Social Security taxes, because I don't ever expect to get it back. Chances are it will be completely insolvent by that time anyway.

December 18, 2013 at 1:05 am

Susan what is GPO and WEP

December 04, 2013 at 8:28 am

I've been working since I was 12, and so did my husband who died in 2010. I will never receive a penny from social security because of GPO and WEP-- which is $1800 from my husband and $400 from my social security earnings, because I will retire from the state of Louisiana. If I had never worked I could receive it. This affects 7 states and should be repealed. We give to those who never contribute and take from those who do!!

November 18, 2013 at 4:19 pm

So 17 years ago you were drawing unemployment while you were working in your own business? The statute of limitations have run out by now, but did you offer up that bit of information while you were drawing on your claim?

james gatti
November 15, 2013 at 5:09 pm

You are wrong sir if you put a pencil to it the 4 years you take from 62 until 66, you will never make up,I recieved 81600 from 62 to 66. And why should I wait i paid into social security from the age of 15 its my money they are not giving me anything i paid for socoal security.Oh i must have missed something you are very rich.


Kevin Longmore
November 03, 2013 at 6:09 pm

Americans are such dorks. They have no viable social security system

November 01, 2013 at 9:09 pm

And be careful to not earn too much after 65. Medicare parts B and D can double in cost because you are still working, and paying the tax, as well as paying the penalty.

Never fear. The government wants you to depend on them (and be their slave).

All of these 'give-aways' lead to a form of slavery. Wake up.