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When Should You Take Social Security? 62 or Full Retirement Age?

Written by Dennis Miller Subject: Casey Research Articles

My wife, Jo, started receiving Social Security as soon as she could. When she wondered aloud how much larger her checks would have been if she'd waited, I said, “It makes no difference! You are already four years ahead of the game.”

When we applied at the local office, the agent kept reminding her of the big raise she would get if she waited until full retirement age, or better yet until she was 70. Stop with the hard sell; she wanted it at 62, period!

Why did she take it early? To illustrate, I did a little investigating on the Social Security Administration's website and used its retirement planner.

First, a person born on January 1, 1951 could begin receiving benefits in January 2013, at age 62.

What if you are 62 years old and still working? The website makes it clear: “If you are younger than full retirement age during all of 2013, we must deduct $1 from all your benefits for each $2 you earned above $15,120.” If you are working full time, that's a good incentive to hold off. If you are not employed, as was the case for my wife, keep investigating.

On the handy retirement planner's calculator, I clicked “Calculate.” and it said, “You choose to receive benefits 47 months before you reach your normal retirement age. Your benefit will be 75.42 % of your primary insurance amount.”

I suppose there are some fancy calculations I could do, but I prefer the common-sense method. To make the example simple, let's assume that Jo's check would be $1,000 at full retirement age. If she chose to start receiving benefits now, it would be $754.20. Over the 47 months between now and her full retirement age, Jo will receive $35,447.40.

Next, let's subtract $754.20 from $1,000—her payment if she waits until age 66. The answer: $245.80; that's how much her payment is reduced if she takes it at age 62.

Now here's the fun part. Divide $35,447.40 by $245.80 per month and you get 144.21 months. That means it would take a little over 144 months, or 12 years before she has made a bad deal. Now I suppose there are some math majors or clever folks who can factor in inflation and other variables; they might tell us that the true break-even point is even further down the road.

If you were born between 1943 and 1954, your full retirement age is 66. Add 12 years to that and you will be 78. If you die before then, you would have been better off taking your money earlier. If you live much longer, then maybe you should have waited. Whatever your decision, you should know what you're getting into and understand the risks and potential rewards.

With that said, there's more to it than math. Here are the real questions we should ask before signing up to receive Social Security:

--Is there any possibility I might work and make over $15,120, thereby reducing my benefit?
--Does my family have a history of longevity?
--Congress is always making a lot of noise about how Social Security is bankrupt and something must be done about it. Might they reduce my benefits before I die? 
--If I don't need the money to live on now, can I invest the checks and earn enough money to push the break-even point beyond my 78th birthday?
--Have I checked the provisions regarding death of a spouse? The website states that the surviving spouse is eligible to receive the highest amount either spouse would be eligible for, but not both. 
--Do I trust Congress to keep its promises? 
--How is my health? 

Basically, you can take the money early and hope you live to realize your mistake somewhere around your 78th birthday. Its money you can choose to spend or invest, knowing that you're ahead of the game for at least 12 years.

Do I trust government promises about Social Security? Every year Social Security recipients get a cost of living adjustment. The last three years we have received 0%, 0%, and 1.7% respectively. I doubt that many readers would take issue with the notion that the government is not holding up its end of the bargain here.

After showing the numbers to my wife, she marked her calendar to bring the subject up again on her 78th birthday. Until then, those checks will be earning interest in our brokerage account.

Whether you started receiving Social Security at 62, 66, 70 or somewhere in between you know that it’s not enough to get by on each month. And every year we fall just a little further behind if we don’t take action now. To help you get started I’ve recently published the Money Forever Retirement Plan to show you how to protect your cash, grow your portfolio, and where to get yield in a near-zero interest rate environment. Click here for the story on how this works and then decide for yourself.

2 Comments in Response to

Comment by Ed Price
Entered on:

This is such a difficult idea to balance properly. RRS is right in the comment below. Yet, if one were to carry that argument to its completion, we wouldn't see any comment on the Internet from that person. The whole money system and values system is so extremely flawed that one would have to leave society and start out anew to avoid the corruption entirely. So, "What to do?" is the question. Where does one draw the line, since there almost isn't anywhere you can go on earth that someone else hasn't claimed as his land? And if you claim it, how did you get title to it? Wasn't it through some of the false dealing that goes on with governments and banks?

Comment by R.R. Schoettker
Entered on:

The illogical origin of “justifications” for the receipt of “government” (sic) money is generally based on either a naïve fallacy or an unethical personal character flaw; or, most usually, a combination of both . The fallacy is the error of believing that money; stolen from an individual and which is justified under the excuse of some subsequent request by that individual to reclaim it; is held in some kind of specific account or “trust fund”. The plain fact is that NO such repository, fund or account of any kind exists or ever existed-PERIOD! The expedient rationalization that one is thus somehow retrieving ones own money is totally false. The thieving State spent the funds stolen from you the instant it was taken. It does NOT hold on account any funds for any later withdrawal. You have nothing but the promise (of a pathological lying pack of criminals) that it “may” if it so chooses, respond to your application to receive these moneys back by then stealing anew a fresh portion of plunder from a subsequent set of victims (you included) in order to give it to you.

 The ethical flaw, and a disgustingly common one, is the belief that having been the victim of a theft in the past somehow excuses and justifies that person becoming a perpetrator of a new theft when instigated by their “claim” submitted to the State. This is the hoary old mistake of believing that “two wrongs make a right”. I might add that both of these errors are compounded by yet another fallacy; that the State has any money that can legitimately be considered its “own”. The only money that the State has is that which it has previously stolen from the rightful owner or fraudulently created out of thin air by its fiat fabrication. It is my tenet that no consistent libertarian can thus maintain that being the “receiver of stolen goods” is ethical behavior. Those who may acknowledge that the money thus received is stolen and do so anyway because it harms and deprives the State of funds that it would spend on even more sordid ends are just indulging in a callous utilitarianism that sees the end as justifying the means. A wrong is a wrong, and no specious sophistical rationalizing can alter that fact.


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