Too Many Boomers Leave Money on the Social Security Table

Hmm, another article advising people to wait. As to the calculations one must make as to whether to start SS benes 'early', there's an overlaying mistrust of the system I think that induces people to start at their earliest eligibility. I think it's the unfortunate negative propaganda we hear incessently. Also some people,especially in this deep recession, need the money. Thirdly, we've been all admonished since childhood that the "bird-in-hand" is the superior choice.

Cary,

None of us know your specific situation, and a LOT depends upon that. I am 63 and married to a 54-year-old great lady, who has been my wife and life's partner for 36 years. My SS will be larger that her's. I do have health insurance from work; however, if/when I die, her coverage will end (unlike my son's wife since he is career military). Also, if I hold off until age 70, she will be able to choose whether to keep her SS payments or take mine if I die first. There are sooooo many things to consider ... right at the time in all of our lives when we all probably just want to live and enjoy this precious thing called life ... now that we have had years to realize just how miraculous it is. I too see the polls that say that "Babyboomers **WANT** to work forever" ... well, all I know is that they sure as hell haven't polled me! Sure, some have jobs they love (or need for personal fullfilment); however, for many of us, continued employment in these "golden years" is a NECESSITY! And, an uncertain future (inflation, jobs, housing, etc.) make some of us very cautious ... knowing that we may need all of those extra $s (from SS or whatever source) later for assisted living, etc.!

P.S. I apoligize for sounding cynical ... but I guess I am ... and becoming more so. We had several friends over for a campfire cookout and general get together for a friend who would be leaving soon to relocate to Costa Rica. She will be joing a growing expat community there and in various other foreign locations (elewhere in Central and S. America, parts of Italy and France that are still fairly inexpensive, Eastern Europe, Thailand, Philippines, Vietnam, and others). They also are making difficult and very personal choices, but can often find it possible to live outside our country for much less. Please ... I do NOT mean to start a war of patriotism. These people seem to be making their choice for many other reasons ... foremost being that they can live on much less for a suitable quality of life ... even with the sometimes painful compromises (family being a big one) they must make.

Mad Monk,
Thanks for your thoughts.
Unfortunately my earlier spiel was heavily edited by our friend(s) at TopRetirements.
It had to do with the notion that SS payments are/were established as a 'trust fund', the Congress spoiled the fund, and no one dares offer any critical advice to veterans who take a pension at 20 years + 1 day vs waiting for 'enhanced payments' at 25, 30 or even 40 yrs service.
I (& my employers) started contributions to SS fund in 1961 and am only seeking what should be ours as American workers.
Thanks for your thoughts.

The Sad Reality is that a lot of Baby Boomers are just trying to hang on to make it to 62 in their present position. Outsourcing and Government regulations making that Oh so profitable to so called US Corporations to do so have destroyed a lot of peoples retirement plans. Along with the 2008 crashes that cost BB billions in retirement. I have not been faced with Age Discrimination yet, but I am a DBA in the Mainframe world and we are dissapearing from the work force by the thousands. Given that IT does not have a realistic sucession plan for us, I expect to pick up consulting assignments in Retirement.

I like the bird in hand quote. I too will take the money I paid in and run. It seems like a lot of smoke and mirrors coming out of good old Washington. The days of sitting back and hiring a Representative are over. We are getting all our politicians from the parole office. Have to keep an eye on them. Now that we are keeping an eye on them they have legalized and convoluted the language of the bills so we can't understand them. Kind of like the Catholic church and the Latin language. If you control the language you control everything. They are tricky snakes so all I can say is "Take the money and run."

If we all knew how much time we had left - this would be a much easier decision!
Until medical science can answer that question - I guess we put it inline our other assets (spend those first) and when we get to needing it - we file for it.
As long as I can pay my bills with what I have saved so far, I will hold off and use term life insurance as a way to replace tat money for my heirs and commitments.

Here we go again with the experts telling us to wait to collect what we've earned, and nudging us towards annuities. No doubt there are many who can afford to wait until 66 or later to collect Social Security, but the recession, plummeting home values, and lost jobs has put many in the position of having little or no choice.

I've researched annuities and don't find them too complicated to understand at all. However, the administration costs on most are quite high for what one gets in return.

As for social security, I took it early because those funds are needed now, and there is no way around it ... and I know I have lots of company.

I'll take SS the day I quit working. I might not live beyond that. If I don't need the SS to make ends meet, I'll invest it.

Need to be careful with the math. Yes, delaying until 70 increases the payments but as stated: one must live past 79 to 'break even'. However, this assumes no COLA. If COLA is 3% each year (the average), then the break even point moves to 84. Further, if you can wait, one could take the funds at 62 and invest it. Assuming a 4% return on the funds pushes the break even point back even more.

I am in total agreement with NoMoreMrNiceGuy; "Take The Money And Run". I retired during April 2011 at age 64 after 44 years in the workforce. I am in perfect health, and I still start my day at 5:00 AM (every day) walking, jogging, lifting weights and sometimes riding my bicycle. While all these physical activities are good; none of it is a guarantee that many of us will live long enough to collect SS let alone live until we are age 80+. My suggestion for future retirees is to plan on making lifestyle adjustments (mostly scaling back on expenses) during retirement, and apply for social security as soon as you become eligible. Do not leave a dime on the table for our representatives in Washington that keep telling us that they are speaking for the American public. As one respondent indicated earlier "no one poled me". If you die before retirement or even early on in retirement and you leave that money on the table; your representatives in Washington will love you for it. Of course they might send your survivor benefit ($250.00) to your beneficiary.

Just to visit the other side of the coin...I too am 64 and plan to continue to work as long as I can up to age 70. Fortunately I am in a business that will continue to employe me...gladly. I can choose to cut back on the total number of hours I work and slip into retirement slowly. My services will continue to be in demand. Since I am divorced, and was married for 10 years, I can claim 1/2 of my spouse's ss benefit until the age of 70 when I can claim my own benefit. This becomes available to me at age 66. Seems a pity not to claim it. The ss agent I spoke with described it as my vested benefit. I look at it as the pension I can recieve for staying at home to raise children when they were very young. I plan to get as much as I possibly can from ss. And since I just buried my mother at age 90, I will probably need every penny!
I learned about this benefit through a local life-long learning class offered by a couple of financial planners. I bet this kind of class is available in many communities. It was worth the time and the small fee for materials.
Whatever your situation, BECOME INFORMED ABOUT YOUR OPTIONS. The truely sad situation is to decide on early retirement without knowing all the oprions because there are no more "do-overs"!

:roll:

Most people who live to/beyond their age group life expectantcy numbers will withdraw more than they and their employers paid in. :twisted: Thanks, for the money, kids/graA

Interesting to read all the coments that have been left. I can see both sides of this issue, however, the people who are still working should be aware that they may not receive their full benefit anyway if they exceed the maximum earnings scale. Yes, they'll get it all back later when they stop working, but it will be based on their benefit at 62 or whenever they signed up, rather than the date they stop working. If they had just continued to work and waited to collect when they stopped working or at least age 66, their benefit would be greater. Now, if someone is already out of work or has health issues, it may make sense for them to take the SS & run. Everyone's situation is different and that's why it's so important people do their homework before making a decision.

I am 65 and my spouse is 63. We are both lucky to have thus far survived the economic downturn with jobs intact and our health is good. But we have calculated that we must pay off our house before we retire. When I turn 66, I plan to apply for SS but keep working. That extra income will speed up the house payoff. When my husband turns 66, he'll claim a spousal benefit from me. That extra income will be used to build our emergency fund until I finally retire at 68 1/2 or 69. With my SS, the spousal benefit, some PT income and a pension he gets from previous employer, we should be able to get by until he turns 70, at which time he'll switch over to his own SS benefit. We'll gain $600+ COLA for the remainder of our lives by doing this.

LuLum is right - people need to be aware of their options and all the ways they can optimize their benefits within the system.

Reference annuities - I generally dislike most of what I've seen. However the indexed annuities are definitely a product to research and examine. They can offer a lot of plusses with very few (if any) negatives. Again - know what your options are. As someone said below - there are no more do-overs.

I took SS at 62 because I don't trust the ability of government to manage money. It has been interesting. 8 years ago the advice was always to take SS as soon as possible. Now they tell you to hold off. Why the change? Hmmmmmmmmmm

Easily, the Too Many Boomers Leave Money on the Social Security Table blog post is really the greatest on this topic. I concur with your conclusions and will look forward to your future updates.

Regarding when to take ss I'm taking mind at 62 even though I don't need it. I plan on investing some and paying my mortgage off. When looking at the whole picture this makes most sense to me. It would take me to age 78 just to break even. If you consider the additional money I will earn on my ss investments it would take me into my eighties to break even!

How much information regarding these options can be obtained through a visit to the Social Security Administration office? Has anyone tried this? I have accessed my annual report, which is quite helpful, but of course, decision making when you have a spouse becomes far more complicated.

Skip makes a good point, However in my situation, it made more sense for me to delay, since I have a 401k and a pension that I'm building up also, it should increases my income significantly. By drawing s/s at 62 I would be paying a penalty for working. And the argument is: where can I get 8% return (guaranteed)on my money? Everyone's situation is different. One strategy for maximizing benefits is to file and suspend.(not for me tho) A good book out there is "Social Security for Dummies". It can be purchased from Amazon.

And don't forget about taxes when it comes to SS. From a free Motley Fool report available here: http://www.fool.com/investing/general/2013/10/20/will-your-2013-social-security-benefits-be-taxed.aspx

"Under current law, Social Security benefits are sometimes subject to tax. The IRS looks at your total taxable income and then adds in half of your Social Security benefits. For every $1 by which that figure exceeds $25,000 for single filers or $32,000 for joint filers, another $0.50 of your benefits gets added to your taxable income. Once the figure exceeds $34,000 for singles or $44,000 for joint filers, the amount added to your income jumps to $0.85 per $1.

Sometimes, waiting to take Social Security will open up opportunities for smart tax planning. For instance, many retirees take taxable IRA withdrawals to pay living expenses. If you front-load those withdrawals while waiting until later to take Social Security, then you might avoid paying any taxes on the higher benefits you receive in the future, if by then your taxable income has shrunk from having spent down most of your taxable IRA assets."

This can work particularly well by converting your conventional IRAs to Roth IRAs which are not taxed or subject to RMDs by owner or spouse. By taking the time when you have lower income due to retirement, you can convert these accounts with a lower tax bill, and draw on them to supplement your SS without fear of losing it to taxes. Many retirees are surprised by the tax bill they get when RMDs kick in and they are forced to take out more than they need. While having more than you need is a nice position to be in, giving more of that to the IRS is not when thinking ahead could limit your government contribution.

The report above is very readable.