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Why delay Social Security?

By Jennie L. Phipps ·
Wednesday, March 5, 2014
Posted: 4 pm ET

Lots of people think that delaying when you take Social Security past age 62 is foolish. They adhere to the theory that most people should take Social Security as soon as they can since they don't know how long they'll live.

That point of view probably made sense 20 years ago. But "this is not your parent's Social Security decision," points out Joe Elsasser, a Certified Financial Planner and principal of Social Security Timing, which sells Social Security analytical software.

Elsasser uses this example of someone who retired at 62 in 1980, earning $20,000 a year. The average U.S. wage then was $12,513, and Social Security taxes were imposed on wages up to $25,900. If this relatively well-compensated person had taken his Social Security at 62, he would have received $395 a month. Full retirement age was 65, and delayed retirement credits were smaller. People who took Social Security at 62 received 80 percent of what they would have gotten if they had waited until age 65 to claim. So waiting would only have gotten this person about 20 percent more money -- hardly worth the wait. By delaying until age 70, this person would have received 43 percent more than they would have at age 62.

Today the math is different. People who take benefits at age 62 get 75 percent of what they would get if they waited until age 66. If they delay until age 70, they get 76 percent more than they would have if they had started taking benefits at age 62, according to Elsasser's calculations using Social Security's AnyPIA software.

This boils down to a big bump in benefits for a couple who earns average wages and who utilizes such claiming strategies as "file and suspend" or "filing a restricted claim for spousal benefits ... until age 70," says Elsasser. Joint benefits can increase by as much as $20,000 to $30,000 a year.

"When to take Social Security is a big decision, and it affects every aspect of a retirement plan," Elsasser says.

He argues that in many cases, delaying claiming -- even if doing so means spending down savings -- will pay off big time. He estimates that waiting to take Social Security is a 40 percent cheaper strategy than buying a commercial annuity that would pay the same benefit. Plus, "Social Security is backed by a government promise, is longevity-protected and inflation-adjusted."

To figure out these retirement planning strategies, you'll need to use sophisticated software not available from Social Security. "If you file in the standard way, you'll get the highest benefit that you are eligible for on that day without concern for how it will impact you and your dependents down the road," Elsasser says.

Elsasser's company only sells its software to retirement planners, but you can buy access to competing software packages, including, and

It's money well spent.

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Anna Daniel
October 02, 2014 at 4:55 pm

Out of curiosity, can an individual request their total social

security for whatever duration they are entitled to be paid out

in one lump sum instead of monthly payments???

Just a thought...

September 29, 2014 at 11:17 pm

I am a financial planner, and I partially agrea with taking
the SSI paycheck at age 62. Number one, you are loosing the benefits you would otherwise get at full retirement. Number two, if you don't need the money at age 62 and you take it can be suicidal for the same reason as number one, and secondly if you don't need SSI and you take it but don't invest it wisely, where is the buck going to go. Think twice before taking a early retiremnt. Gives you a break from working, but why not work as long as you can. Stretching your IRA and SSI can go a long way as you should be concerned about living longer and not dying too soon. God loves us all. Thank you for giving me the opportunity to give my opinion.

March 26, 2014 at 9:30 pm

Am turning 66 in May, signed up for full benefits and and was informed if I did not make 40,000 before May, i am eligible to receive benefits from Jan. 1st. That's four months of benefits I did not know I could receive before reaching age 66.

March 12, 2014 at 9:53 pm

I have seen several financial planners suggesting the same - wait. I do not agree with the math when comparing 62 to age 66. I figured my own and asked the Social Security Rep to also figure it. It would take 12 years (or until age 78)for me to break even or get back what I would have forfeited during the 4 year wait. So with the average age of death at about 80 what am I missing? The government inflation adjuster (1.5% for 2014)in my opinion is rock bottom and will continue to be so considering the governments ability to pay long term. Keep in mind that the 25% larger monthly payout is slowly realized over a 12 year period. And what about the lost opportunity of investing 20000 per year for 4 years? If you are single and have other safe resources saved to cover retirement take the money at 62. Who knows what government will do when the digital money spigot eventually breaks?

Bill Scott
March 12, 2014 at 8:49 pm

Tim, once you've reached your "full retirement age" which I'm sure for you would be 66, then the sky is the limit for working. So whether you take it now or wait all the way to age 70, work will not affect your benefit.

Tim McCartney
March 12, 2014 at 4:46 pm

I turned 67 last Xmas and still working full time if I take my SS now how much can I earn with out affecting the SS payment?

Tim Mc

March 07, 2014 at 3:12 pm

If your already retired and drawing a pension as in military, Take the money and run, you can invest it or spend it on yourself life is short enjoy it. Besides your healthcare is covered. Don't wait a single day.

March 06, 2014 at 10:35 pm

The ONLY reasons to not take early retirement at 62 (imho) are:

You really wouldn't be able to exist on that early retirement SS alone and you are healthy and at least as securely as most people can be have job security until your full retirement age

and Medicare ... if you go and look for private health care insurance to cover you between the ages of 62 and 65, you might want to wait. You can't get Medicare if you retire early, you're on your own as even most companies won't let you continue on their plans or if they do, it's via COBRA which would probably take most of your early SS check.