27 Replies Latest reply on Mar 3, 2013 1:58 PM by crone2

    Social Security at 66

    Don46
      I'm still working but on the advice of my accountant I began receiving my social security payments earlier this year.  Now I'm reading that by waiting the payments will grow by 8% each year. I also understand I can deactivate, that is stop payments and wait, any time within the first 13 months. 
      What is the smart thing to do?  
      I do not need the monthly payments to get by so long as I am working and I realize I am paying taxes on the ss income. 
      thanks
        Don
       
        • Re: Social Security at 66
          JerryD
          Maybe you should have a detailed discussion with your accountant before doing anything. He must have had a good reason for his recommendation.
          • Re: Social Security at 66
            DenverGal54
            Yep, I just read about the 8% increase on the Social Security website. Here is the link:
             
             
            • Re: Social Security at 66
              sschein
              Be sure to calculate how long it will take you to make up the money you did not take. When I checked my "breakeven" point based on waiting until 70, rather than collecting at 66, it was about 14 years before I made up the lost income. Also consider, the Social Security you take now can be invested, and the money you don't make has to be considered. (Of course you can lose too.) Social Security calculates the monthly payments based on actuarial tables so that they estimate you will get the same amount over your lifetime no matter when you start benefits. I.e., start early and get a smaller amount for more years; start later and get a larger amount for more (projected) years. It is not as simple as, "I make 8% per year each year I don't start receiving Social Security.
                • Re: Social Security at 66
                  MAMUMBA
                  Then why not take Social Security @ 62 when we're all younger and healthier and can enjoy ourselves with the extra money?
                    • Re: Social Security at 66
                      sschein
                      MAMUMBA said...
                      Then why not take Social Security @ 62 when we\'re all younger and healthier and can enjoy ourselves with the extra money?
                      I did. The break-even point for the money I would not have received was about 12 years. Note: even if you are still working at 62, and money is deducted from your social security benefits based on your earnings, when you reach "full retirement age," probably 66 for most people on this thread, your benefits are re-calculated to a higher monthly rate to make up for the money that had been deducted. Please check with Social Security about this. It took a lot of research to ferret this out.
                      • Re: Social Security at 66
                        sjake
                        MAMUMBA said...
                        Then why not take Social Security @ 62 when we\'re all younger and healthier and can enjoy ourselves with the extra money?
                        Depends on whether you are still working.  If your income exceeds about $14,000 per year, SS will take back $1 for every $2 of other earnings until full eligibility age (66 for me)
                          • Re: Social Security at 66
                            guapgav50
                            What is the math on the 62 or 66 retirement age.  How long does it take to get back the funds you missed by waiting until 66.
                              • Re: Social Security at 66
                                nicholsr
                                I did a back of the envelope calculation and it seems the breakeven point is age 83. Live longer than 83 I am worse off, pass before 83, you did better. (But, if you live longer than 83 -- why complain ?)
                                • Re: Social Security at 66
                                  lrousos
                                  There's a book that's sold on line -- Social Security Inside Out. I didn't buy it, but I read some sample pages of the book that answer this question w/ examples &  the math. He says it all depends on how long you live. If you take SS at 62 and live until 78 you will come out ahead because you've already collected more than you would have starting at age 66. If you take it at 66 and die at 78, you miss out on the extra $$ you would have gotten from the higher SS payments. You wouldn't have time to catch up with the amt you would have had if you had started at 62.
                                   
                                  Look at sample pages of book -- button on home page menu.
                                    • Re: Social Security at 66
                                      Glicker
                                      Sorry of this is a repeat, but one additional consideration is this: I am a male and older by 2 years than my wife. She will stop work and begin collecting  at 62 and I hope to wait until as close to 70 as I can manage. The goal is to build up my benefit because I am more likely to die first and she will then have my (larger) SS benefit. My benefit will be larger at any age, but will reach its maximum at 70, even if I retire at 65 or 66. And though I'm not certain, I may even be able to draw half her benefit before I apply for mine. As has been mentioned, speak to SSA or a smart financial professional.
                                  • Re: Social Security at 66
                                    sschein
                                    sjake said...
                                    MAMUMBA said...
                                    Then why not take Social Security @ 62 when we\\'re all younger and healthier and can enjoy ourselves with the extra money?
                                    Depends on whether you are still working.  If your income exceeds about $14,000 per year, SS will take back $1 for every $2 of other earnings until full eligibility age (66 for me)
                                    When you reach full retirement age, your benefit is recalculated to MAKEUP for the money that was taken back. I.e. it will be higher per month than if no money had been withheld.
                                    • Re: Social Security at 66
                                      jean
                                      My tax accountant advised me to consider taking Social Security at 66 even though I will continue working. His idea is to use it to pay down principal and pay off my mortgage. It gets complicated when figuring how much interest is saved compared to losing the tax advantage of that amount of interest deduction and also calculating the increased tax burden on greater income. 
                                • Re: Social Security at 66
                                  sschein
                                  I'm sorry, I read and wrote too quickly. I did not take Social Security at 62, but rather at 66. I didn't know all the facts at 62, and also did not need the additional money, still working as professor, and did not want to increase my taxes. But the information about the break-even point is correct, and I suggest everyone do their own calculation and think about the opportunity cost of the money not taken. I think it works out better for everyone to take it at 66 and not wait until 70, but each person must think about how the loss of 48 months of Social Security stacks up against higher payments for a shorter time.  Sorry again about my first response. 
                                  sschein said...
                                  MAMUMBA said...
                                  Then why not take Social Security @ 62 when we\\'re all younger and healthier and can enjoy ourselves with the extra money?
                                  I did. The break-even point for the money I would not have received was about 12 years. Note: even if you are still working at 62, and money is deducted from your social security benefits based on your earnings, when you reach \"full retirement age,\" probably 66 for most people on this thread, your benefits are re-calculated to a higher monthly rate to make up for the money that had been deducted. Please check with Social Security about this. It took a lot of research to ferret this out.
                                  • Re: Social Security at 66
                                    lrousos
                                    lrousos said...
                                    If you take SS at 62 and live until 78 you will come out ahead... 
                                       
                                    (My browser is messing up and I can't navigate out of quote mode.)
                                     
                                    The quote above should say "if you take SS and DIE before 78 you will come out ahead."  sorry, big diff!
                                     
                                    • Re: Social Security at 66
                                      deadhorsejoe
                                      Mike Piper has an excellent book "Social Security:  Retirement Benefits and Related Planning Topics Explained in 100 Pages or Less.  Its on Amazon in book form and also for kindle.  He has several other books of this type.  They are all good.
                                      • Re: Social Security at 66
                                        dmturner
                                        One thing you should probably do is a candid calculation of how long you are likely to live.  My husband, a lifelong smoker who worked around chemicals much of his adult life and drank heavily when he was young, did the calculations and figured out it was better for him to start receiving Social Security at 66.  Although the income is taxable and he's making good money otherwise, It's still income (and going into our money market account). 
                                         
                                        Too, he tends to be cynical about the political climate and would rather have the money now than hope no one will start acting on the idea of reducing/eliminating/controlling Social Security. 
                                        • Re: Social Security at 66
                                          dmturner
                                          dmturner said...
                                          One thing you should probably do is a candid calculation of how long you are likely to live. 
                                          Apropos of that: 
                                           

                                          • Re: Social Security at 66
                                            bentleywarren
                                            I have done spreadsheet calculations for my own situation, and it appears that my breakeven point is about 15 years.  Thus, if I die in less than 15 years after the onset of SS benefits, I would have been better off to start SS as early as possible.  If I live longer than about 15 years, then I would have been better off to have waited.  These calculations assume that I spend the money when I get it, and do not invest it.  The other scenario is to take the money, and invest it rather than spend it.  In this case, the breakeven point is longer.  How much longer just depends on the rate of return that I can get from my investment.  I am now 61 and have just retired, and am living off of a state funded pension.  One of the questions that I am now trying to answer is whether to take the SS money (one year from now), and spend it while I am healthy enough to do so, or wait 5-10 years to start SS, and collect a higher monthly benefit, when my health might not allow me to enjoy the extra income.
                                             
                                            • Re: Social Security at 66
                                              Great post and analysis.  I am 61 and done the same.  I do not plan to retire soon, perhaps in 4 years.  However, I always go for the cash. I plan on drawing at 63 - I do not need the money and will most likely invest it.
                                              • Re: Social Security at 66
                                                dvj
                                                Forgive my confusion: I am still working at 65 at a state job, and plan to continue for a while,especially to pay down debt.  If I take Social Security at  66, then is that amount  NOT TAXED?  The SS I will get will be on my husband's SS, not my own. (In other words, half of his.) However, when I retire, SS will take out an amount based on my state retirement. 

                                                So, if I'm still working, and not getting state retirement, then is all the SS check tax free?

                                                This sure would be great!

                                                Your help is greatly appreciated!
                                                • Re: Social Security at 66
                                                  JerryD
                                                  "So, if I'm still working, and not getting state retirement, then is all the SS check tax free?"

                                                  Don't think so. I believe that it just means that at your full retirement age there is no reduction in the SS benefits that you receive. You probably even continue to earn credits against your SS while you work. Maybe somebody can confirm this part.
                                                    • Re: Social Security at 66
                                                      dvj
                                                      Sorry if I was unclear. 
                                                      In my state job, social security is not paid (just medicare). I will never get more SS than at 66, my full age for a spousal benefit. 

                                                      However, once I retire from the state system, then SS takes money out from that benefit b/c no ss was paid in the state system.


                                                      So, if I take the SS benefit at 66, and am not receiving a state pension, would that benefit be taxed?


                                                      I'm thinking that even if it is partially taxed, I'm better off taking the benefit and getting something, than taking nothing and getting nothing?

                                                        • Re: Social Security at 66
                                                          FrederickMichael
                                                          "Probably" not. How much of SS is taxed is a rather complex formula. It mostly depends on how much other income you have.
                                                          • Re: Social Security at 66
                                                            crone2
                                                            If your work was not covered under Social Security for the last 60 months of your work, there is a "government pension offset" on a spouse or widow pension.   2/3 of your non-SSA-covered government pension amount will be applied as an offset against your spouse benefit. EX: You receive $600 per month government pension for work not covered under SS. You would have a $400 offset against your SS spouse benefit.  So say your spouse benefit was $900 per month, you would only receive $500 after the offset. There are a few oddball exceptions, which would be unlikely if you are still working.  Once you've determined how much Social Security you will receive, the question of whether any of it is subject to federal income tax is a separate question, which revolves around whether your countable income is above the limits ($32,000 for a couple). The amount by which your income exceeds the limit determines how much of the Social Security is taxable. If your SS is taxable, the taxable income can range from 50% to 85% of the total.   You can get a lot more info from www.ssa.gov of course!!