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Social Security — just say ‘no’

By Jennie L. Phipps · Bankrate.com
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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129 Comments
Old Ray
September 09, 2013 at 4:25 pm

Take it early if you need it. Don't struggle trying to make it to 66 as you may not live that long.

It's not mooching but a return of money you paid in over the years.

Ray Michael
September 08, 2013 at 10:06 pm

I'm taking mine at 62 in a couple of months. I will still be working but I'll be investing it at 25%. Basically I'll be using it to pay off credit cards with high interest rates. I feel it is well worth it to do this.

Dave X
September 06, 2013 at 3:25 pm

Take it at 62 if you can and aren't going to be working. You will have to live until your 77 before the difference in pay will catch up to you,and even then it will not be as great as you think because you will have been getting increases during that time. I have been collecting since I turned 62.5 and I am glad that I did.

R Kraus
September 05, 2013 at 7:59 pm

I wonder if anyone who got out of Madoff's scam before it blew up feels he should have waited a fe more years.

Mike
September 05, 2013 at 5:34 pm

Well that is all well and good just remember that social security retirement benefits will be reduced by %25 starting in 2033...was 2043 a few years but then taking $200 billion out for stimulus probably did not help...as we get closer to 2033 date will probably advance...and social security disability is slated for %35 cut in 2016...these figures are from general accounting office and were released BEFORE the sequester and none of the financial analyst even mention when they discuss taking early social security...something to think about

MMorningstar
September 05, 2013 at 5:32 pm

This is nuts! I had two financial advisors tell me to take it as soon as possible. In the four years I'd wait, I'd be giving up $73,000. It would take me to age 78 to make up that difference if I'd waited to take the full amount at age 66. If I died before age 66, I never would have collected anything (believe me, it can happen...it did to my own sister). My advice is to "take the money and run!" Save all you can those first four years. Who knows what the future will hold for SS. Lock it in as soon as possible!

T Ben
August 27, 2013 at 7:23 pm

You've gotta be kidding me... "mooching off the taxpayers?" Are you an idiot? Every week for over twenty years, ss and medicare was taken out of my paycheck and for over 40 years of my husband's. And we still pay in over $100 a month for his medicare. "Mooching off the taxpayers?"... go live in Canada! I'm entitled because I've already paid into it, have you? ss and medicare are INSURANCE programs, not give aways. The premiums are already paid and if the govt would quit dipping into it for other stuff - guess what? It would be solvent. HELL YES I"M ENTITLED! And I would retire at 62 anyway. You don't know how long you're going to live. Most people don't reach the ripe old age of 80+. Go sell that tripe to some idiot.

Laura Ross
August 27, 2013 at 11:19 am

awww! I thought it was going to be someone advocating for not mooching off the tax-payers. Instead, he's strategizing how he can milk them for every penny he can. sad!

Woodrow
August 26, 2013 at 5:12 pm

I disagree - and happily began my SS payments at 62. They are an important part of our income profile right now. The Govt is on a huge campaign to get people to delay - but for me, a bird in the hand is worth 2 in the bush. With the political environment as unstable as it is, you would be a fool not to sign up, and get grandfathered in (so to speak) as soon as possible. In my point of view, if Govt wants us to delay payments, they are going to have to do a much, much better job of expressing a commitment to keeping SS alive, from all quarters.

jack smith
August 26, 2013 at 11:50 am

Another consideration (another complication, yes, but a good one) is that if you have young children at the same time as you qualify for one form of SS or another. I took regular SS when I turned 66, and then the agent turned to me, smiled, and said that each of my 13-year old twins would also get "a benefit." It turned that each of them collects around $10,000 per year, totally non-taxable, as a Social Security benefit. I don't quite understand why, but obviously it's related to the fact that I'm old and they are young. This benefit will continue until they are 16 (or is is 18?), at which point it stops. I never looked into it, but maybe I would have been better off taking a reduced benefit for myself at age 62 in return for receiving the children's benefits for an extra four years. It's too late for me, I suppose, but anybody contemplating SS retirement should also factor in payments to dependents at different ages.

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