Social
Security is about to celebrate its 80th birthday. Born in the heart of the Great Depression, it
has survived wars, economic crises, social upheaval and Republican Presidential
candidates. What would be the financial
state of retired Americans if this program do not exist?
As workers
transition from paying into Social Security to receiving monthly checks, it is
a time for making crucial financial decisions.
There probably is no more important time in an individual’s life to do
financial planning than in their sixties.
This is a
complicated system, but the most common Social Security decision concerns when
to start benefits. Retirees can start
receiving income benefits at age 62. At
66 (for those born before 1955), you can receive your “full” benefit without
reduction or you continue to work. You
can wait until age 70 and receive the maximum benefit. For each year you delay receiving benefits,
your future monthly benefits would increase by 8% per year.
I’m about to
turn 67. Yikes!! I thought I’d be collecting SS benefits by
now but decided to wait. If I start at
age 70, my monthly benefit will be 32% higher for life. Naturally, I could have received benefits now
and invested them, but I thought a guaranteed 8% return was too good to compete
with. If I live past 83 or so, I should
be ahead.
Generally, it
makes sense to wait if: 1) you don’t really need the additional money
currently, 2) you are in good health, and 3) you have a family history of
longevity.
If you are
entering this transitional phase of your life, it might be worthwhile to schedule
a consultation with your neighborhood financial consultant visit your local
Social Security office, or check out http://www.ssa.gov/