Baby Boomers and Social Security
Baby boomers will soon be turning 62. Is it a wise decision to sign up for Social Security now or wait until age 66 or even 70?
The baby boomers will soon be old enough to draw Social Security. Many will stop working at 62 to get a jump on retirement. But that might not be in their best interest. If a person who started drawing his Social Security at 62 waited until he was 70 he could possibly draw almost twice as much money.
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Only one reason would make it more feasible to start Social Security at 62 and that would be if you have health problems. In that case Social Security could put more money in your pocket in the long run. Your social security grows by 7 percent a year from 62 to 65 and 8 percent from 65 to 70 so if your 401K is making less it would be wiser to draw from that account before signing up for Social Security.
You can work and draw your Social Security at the same time but if you make too much money before age 66 you will have to return some of it to the government. You can earn up to about $14,000 without penalty. For every dollar over that, you will have to pay back .50 on the dollar of your Social Security benefits. After you turn 66 you can earn up to about $37,000 with no penalty.
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Both members of a married couple’s Social Security is based on their own earnings or a spouse’s benefit equal to 50 percent of the highest earner. One partner is entitled to 50 percent of the partners Social Security amount if it is higher than his own. Both of these benefits are reduced if the wage earner retires at 62. A widow or widower is entitled to the spouses full benefit if it is higher than their own.
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Be sure that you want to sign up early for your Social Security because once you do it’s a done deal and there’s no changing your mind. Many people are sorry they didn’t wait until at least age 66. But take into consideration that if you make too much money you will have to pay tax on your Social Security. You can check out what is best for you at www.ssa.gov
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Published in: Personal Finance
Comments: 13 | Post a CommentPost a Comment
Sandra A Flowers | Apr 8, 2009 | Reply
an awesome article, excellent
Evelyn Moore | Apr 8, 2009 | Reply
If we all had a crystal ball it would make these sort of decisions so much easier – some useful advice here.
Kate Smedley | Apr 8, 2009 | Reply
Very good article, some excellent advice as always.
Daisy Peasblossom | Apr 8, 2009 | Reply
Good thoughts, Ruby. And too true on people signing up too soon and then not drawing very much. I already know that I’m waiting at least till the age 66; even though much of my income will be from my teaching retirement fund rather than from SS. I’ve been watching my need to income ratio with intense interest for the last 5 years.
Joe Dorish | Apr 8, 2009 | Reply
If you can survive financially and plan on living for a long time you should wait. My uncle died at 60 and after paying in for 40 years never collected a nickle. I think it\’s wrong for the government to tax 50% of income over a certain amount for those collecting SS.
Betty Carew | Apr 8, 2009 | Reply
Great article Ruby , so much different than Canada. Here hubby gets to file for Old Age Pension at 65 . I then become entitled to Spouse allowance. There is no difference if you wait and I have heard that if you work the year before your Old Age Pension it will be cut in half for the first year you recieve it. After you apply and recieve your first cheque you can return to work again with little penality.
NA Staffieri | Apr 8, 2009 | Reply
Great article, Ruby. I hope social security benefits still exist when I am ready to retire!
Shirley Shuler | Apr 8, 2009 | Reply
Excellent article, Ruby. The question is, if you work to the age of 66 or 70, will your health be as good as it was at age 62, just something to think about!!
Julia Anna Alison | Apr 9, 2009 | Reply
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Christine Ramsay | Apr 9, 2009 | Reply
I am so glad I live in Britain because women taken their pension here at 60. I could never have survived another day at work after I was 60. I was an absolute wreck and now at 62 I have just about recovered and started to enjoy life again.
Christine
Ruby Hawk | Apr 9, 2009 | Reply
Thanks to you all for your time and interest. Social Security is something to think about because we all want to get our money back.It’s a guess how long we will live to draw it but usually if you are in good health at 62 you can expect to live at least 20 years longer. But as Joe said you might die without ever drawing a penny. It is basically a toss up.
Christine how lucky for you to be able to retire at 60. It’s practically unheard of here unless you have made enough money to have stached away a lot.
Yaffel, it looks like in your husbands case you might be better off to retire early.You certainly wouldn’t want to lose half your pension the first year.
Daisy it sounds like you have it made in any case. my sister worked for the state and retired at 62 with her state pension. She will draw her social security at 65.
NA, don’t worry, I’m sure it will still be here.
Melody SJAL | Apr 10, 2009 | Reply
Very useful advice.
CutestPrincess | Apr 11, 2009 | Reply
in my country, both men and women can take their pension at the age of 60…