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The case for choosing Social Security benefits at age 62

Many Social Security experts opine that if you don’t need the money now, and you are in good health, then their advice is to wait at least until you are 66 years old, or 70 years old if you can, to receive higher benefits.

The experts say that by waiting, you earn a higher monthly benefit, and that benefit, like all Social Security retirement benefits, is indexed for inflation. So waiting helps ensure you have more money in your later years.

But these experts also stipulate that government studies show that retirees, on average, receive the same amount of money in Social Security benefits, regardless of when they file. So don’t short yourself out now for a possible brass ring sometime in the future.

Do you really want more money in later years versus 75% at 62? At 62, you are still young enough to travel, play a great round of golf, use other savings to live on and in times with normal interest on savings, you would have to live to the ripe old age of 80, before collecting Social Security benefits at a later age, would break even with taking 75% of the benefit at age 62.

And what will most of us be doing at 80; why paying the increased Social Security benefits for home care or nursing homes, medical providers and medication. I’ll take the benefits that I and my company have paid into for 42 years and deal with old age in my eighties.

Who winds up with the higher benefits then – the assisted living facilities, that’s who.

What the experts also leave out is that benefits could change tomorrow with Social Security going bankrupt, the Sequester debt ceiling agreements and the rising national debt, which could reduce Social Security benefits and all your future planning goes right out the nursing home’s windows.

One must also consider that if you are using up savings while waiting for the bigger Social Security benefits, it will drain money from your heirs. Social Security will not exist for them if you die and your savings will, so collect and spend the Social Security instead.

Also, you pay taxes on 100% of IRA or 401K savings withdrawals, but Social Security dollars will be at least 15% tax free and if total income is under a certain amount only 50% of Social Security is taxed. You can pass on IRA’s and 401Ks to your heirs and it can be accomplished to minimize how much the government will eventually get their hands on.

For some retirees, with the Required Minimum Distribution after 70 and 1/2 years of age, it might be better to use some of your IRA earlier, supplementing your Social Security, have a great retirement and reduce your tax burden later.

An important thing to consider is not simply how to maximize your Social Security, but all your retirement dollars throughout your life. You also want to maximize your life decisions, your retirement goals and not just your Social Security benefits.

The main reason to wait to collect your Social Security benefits is if you are still working, and remember to trust your own planning versus the government’s political agenda!

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8 Comments

  1. Adam Faber

    Ted,

    This is as I thought: you’re confusing a personal attack with an attack on your positions and arguments. This is why I have asked you how you define personal attack (though you have not done so). If I said “You’re stupid” or “You’re sick”, that could legitimately be considered a personal attack since it has only to do with you and not the argument. I do not do that and none of the examples that you have cited demonstrate any actual personal attack.

    Given your cited examples, it appears that you’re inferring a personal attack when I challenge your factual basis, analysis and qualifications. Has nobody ever challenged you like this? Have people just accepted your version of the facts and analysis without pressing you to provide supporting evidence or pointing out your fallacious arguments and flaws in reasoning? Have you never engaged in thorough debate?

    I recognize that you have found some of my points hurtful and that’s unfortunate. For example, when I said that you’re unqualified to fact-check anything, I’m only drawing a rational conclusion from a body of evidence that you’re just not very good at that. When I pointed out that you avoided a question about an inappropriately attributed quote, I’m just pointing out that you’re avoiding taking responsibility for what you wrote. These are not attacks on your person but, rather, on your performance. When I ask if you’re aware of the dangers of posting misinformation, that’s a very serious question — not a flippant retort.

    I know that you are not required to respond. Just bear in mind that when a commenter points out a fatal flaw in your argument and you ignore it, you appear to be tacitly acknowledging that flaw in your reasoning. When one does not address a serious factual or logical challenge to their position but only keeps repeating their initial and debunked premise they only look indignant and foolish.

    You must acknowledge, if even just to yourself, that my behavior here has been more respectful than yours. I haven’t called you sick. I haven’t called readers idiots. You have. Repeatedly. I have, however — without engaging in name-calling — destroyed your arguments.

  2. Adam, would you at least make a token effort to comment on the issue at hand?
    If you are going to complain about “posting misinformation”, I suggest that you direct most of your energy towards the sycophants of the Obama regime. Your ad nauseum commentary against TED is beginning to bore me. Make your point, and then move on.

    Retiring at 62 sounds like a good idea. Why put up with feeding Obamunism any more than necessary?

  3. JRM_CommonSense

    Part of the “retire at 62″ plan should be converting your IRA from a mutual fund based investment to an annuity based investment. It should be an annuity that pays you a set percentage of your investment for the rest of your life. As a benchmark to look at, a $300,000 investment into an annuity can pay you about $19,000 a year for the rest of you life, even when the value of your investment reaches zero. It removes the worrys about the mutual funds meeting their projected returns.

    I have been retired for 4 years now, having taken the “retire at 62″ option. The key is to plan carefully and realistically; and then live to the plan. Make sure you plan for the daily living expenses, but don’t forget to plan the play expenses as well.

    It is much easier if you can start this journey without a mortgage and with good health. Remember you will have to pay your own health insurance for at least 3 years, but Cobra could be a good option for the first 18 months. However, who knows what is going to happen to the “entitlements” that you have paid for all your working life.

    Finally, remember the old adages: “You cannot take it with you!” I ain’t never seen a Brinks car following a hearse!”, and “There are no luggage racks on a hearse!”

  4. Adam Faber

    Snuss, I had initially posted that in the appropriate place but Ted deleted it so I reposted it here. I, too, would have preferred for that to appear in the proper thread but Ted had other ideas.

    I generally do make my point and move on, but Ted seems to prefer that I repeatedly post my comments instead of letting them stand as he does yours.

  5. The biggest factor that you should consider when choosing to take SocSec at 62 is not only your health, but your family’s health history. If you parents died in the 60′s, take the money and run. If they lived into their 90′s, deferring SocSec is a good idea if financially feasible.

  6. Greg Myers

    I would add that one of the most overlooked areas is Spousal benefits. A Spouse can claim on her husband (of at least 10 years) for a portion of his at 62 and continue to let hers grow. There are many facets to look at. Each individual has to have their profile set and determine their needs and plans for their overall retirement.

  7. JRM_CommonSense

    Greg, I am not sure that you are correct about the spouse benefits. The law says:

    “If you are under full retirement age and qualify on your own record, we will pay you that amount first. But if you also qualify for a higher amount as a spouse, you’ll get a combination of benefits that equals that higher amount.

    If you begin receiving benefits:

    * between age 62 and your full retirement age, the amount will be permanently reduced by a percentage based on the number of months up to your full retirement age.

    If you are under full retirement age and you continue to work while receiving benefits, your benefits may be affected by the retirement earnings test.

    * at your full retirement age, your benefit can be equal to one-half of your spouse’s full retirement amount.”

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