Chart from the Social Security Administration: http://www.ssa.gov/pubs/EN-05-10147.pdf http://www.ssa.gov/pubs/EN-05-10035.pdf “If you are younger than full retirement age, $1 in benefits will be deducted for each $2 in earnings you have above the annual limit. In the year you reach your full retirement age, your benefits will be reduced $1 for every $3 you earn over an annual limit until the month you reach full retirement age. Once you reach full retirement age, you can keep working, and your Social Security benefit will not be reduced no matter how much you earn.”
http://www.forbes.com/sites/janetnovack/2011/02/15/the-big-decision-when-to-take-social-security/ “While those benefit amounts sound dramatically different, in theory the system is neutral—meaning if you live to an average age, you’ll end up with roughly the same total benefit no matter when you claim.”
http://www.ssa.gov/pubs/EN-05-10035.pdf “NOTE: Sometimes health problems force people to retire early. If you cannot work because of health problems, you should consider applying for Social Security disability benefits. The amount of the disability benefit is the same as a full, unreduced retirement benefit. If you are receiving Social Security disability benefits when you reach full retirement age, those benefits will be converted to retirement benefits.”
Image found via google image search, “Turned out pockets”, with “labeled for reuse with modification” selected. http://cruisewithmike.files.wordpress.com/2011/01/marketing-empty-pockets.jpg
Image found via google images search for ‘casket’, with “labeled for reuse with modification” selected. http://commons.wikimedia.org/wiki/File:US_Navy_040607-N-6811L-108_A_mourner_pays_his_respects_to_former_President_Ronald_Reagan_as_his_casket_lays_in_repose_at_the_Ronald_Reagan_Presidential_Library_in_Simi_Valley,_Calif.jpg
Found via google images search for “bar chart growth.” Image source: http://pixabay.com/en/achievement-bar-business-chart-18134/
http://www.huffingtonpost.com/bob-rosenblatt/social-security-doover-an_b_5296254.html “Now she needs the money, and needs it quickly. She files for Social Security and begins collecting the $750 a month. She does this for 10 months, and then gets a job. Mary can repay the $7,500 she collected from Social Security, and there is no penalty. And no interest charges for the benefits she received. Now she has used the do-over provision, and she can wait till age 66 according to her original plan to delay benefits so she would get a bigger check.”
Chart from the Social Security Administration: http://www.ssa.gov/pubs/EN-05-10147.pdf
Image source: http://pixabay.com/en/crash-statistics-chart-graphic-bar-215512/ , found through google images search for “market crash” with “labeled for reuse with modification” turned on
3 Reasons to Take Your Social Security Early
3 Reasons to Take Your
Social Security Early
You have a choice on when to take Social Security
You can start any time from age 62 to 70.
Source: Social Security Administration.
There are trade-offs:
• The younger you start, the lower
your monthly benefit amount,
but you’ll likely receive benefits
for a longer period of time.
• If you take Social Security before
your “full retirement age” but
are still working, your benefit is
reduced by as much as $1 for
every $2 in income you earn
above an annual cap.
Your life, your benefits, your choice
• Regardless of when you choose to receive Social Security benefits, on
average, recipients receive the same gross payouts over the course of
• That doesn’t mean your choice is completely neutral based on the
age you start receiving benefits.
• In the next few slides, you’ll see three good reasons to consider
taking your Social Security benefits before your full retirement age.
No. 1: You really need the money
• If your early benefits would make the
difference between starving and
surviving, take the money.
• If you find yourself unexpectedly retiring
early without job prospects or enough
savings to last until your full retirement
age, take the money.
• Note that if you’re disabled and under
your full retirement age, you can take
Social Security disability instead of
retirement benefits, and those disability
benefits are not reduced based on your
No. 2: You don’t anticipate a long life
• If you have a good reason to believe you will not
survive to reach the average life expectancy,
taking benefits early could provide you more
over your lifetime than waiting.
• Of course, none of us really knows when our
time is up. If you defy the odds and your
expectations, your lifetime benefits could be
lower by starting early.
Source: U.S. Navy, via Wikimedia Commons.
No. 3: You’re a decent investor
• If you’re retired, your key sources of income are your
pension (if you get one), your Social Security, and the
money you earn from your investments.
• Money you receive from Social Security is money you
don’t have to take out of your investments to cover
your costs of living. That money you’re not taking out
of your investments can compound longer on your
behalf, potentially remaining tax deferred.
• Additionally, if you invest well and get a decent rate
of return, you may end up with higher lifetime
retirement income than had you spent down your
investments earlier to cover what Social Security
could have been paying you in early benefits.
Is there a downside?
Taking Social Security early may
seem like a good idea, but
• If you start early, your benefits
are likely permanently reduced.
• The only “do over” option
requires you to pay back all the
benefits you’ve received since
starting and only lets you take
that “do over” in the first year
you’re receiving benefits.
Source: Social Security Administration.
Don’t forget the later years of your retirement
• As you age, your costs may rise faster
than the inflation rate used to adjust
Social Security benefit checks.
• Health care costs have been
rising faster than inflation and
generally increase as people age,
even without considering health
care cost inflation.
• You may need to hire people to
help you with tasks you used to
be able to handle on your own,
adding to your costs.
Source: Rama and Eliot Lash,
via Wikimedia Commons.
There still are no guarantees in the market
• Even if you are a decent investor, the
market may not cooperate.
• Once you start relying on your
portfolio for income, a market
downturn has a bigger impact because
you can’t “wait it out” as easily.
• Social Security payments have no
direct contact with how the market
performs. The key risk in Social
Security is that benefit cuts could
occur if the trust fund runs dry.