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Filing for Social Security – 5 Reasons Why It’s A Lot More Complicated Than You Think

Category: Financial and taxes in retirement

October 11, 2016 — We just read a bunch of articles on how to “maximize” your Social Security benefit from some of the top experts in the field. Did we get enlightened? Actually we ended up more confused than ever. In fact we got so tangled up by the explanations that we almost think that one SS guru did it on purpose to sell his Social Security software. And we didn’t feel any better after reading that the same expert believes that employees at the SSA are not permitted to give out certain information (like breakeven points for various claiming options), and often give incorrect information to their clients.

This article provides 5 reasons why we think taking your Social Security retirement benefit is nowhere near as simple as you might think. We will also give you some ideas on how to gain the confidence that you are making the right decisions. Please note that we are not Social Security experts nor are we providing advice. We are merely providing you with some basic information – we urge you to carefully consult with your family and other advisors before you make any important financial decision.

A big reason for the confusion
First, we need to give you some background on why filing for Social Security benefits is more complicated than ever. As many Topretirements Members are aware, late last year Congress removed two loopholes that were enjoyed by some Social Security recipients – the File and Suspend and Restricted Benefit options. Another important change that many people don’t realize is the “deemed filing” rule, which applies to anyone born after Jan. 1, 1954. The deemed filing rules say that if you are eligible for a your own retirement benefit and a spousal benefit at the time you apply, you cannot claim one without claiming the other. You are “deemed” to be applying for both at the same time, so the SSA will decide for you which is the highest benefit and give that to you. All of that legislation changed the SS filing landscape, and people who thought they understood the system had to learn it over again. See “How the New Social Security Rules Affect You” from late last year.

File and Suspend essentially ended on April 30, 2016 – if you were eligible and hadn’t taken advantage of it by then, it is gone. For the record, this strategy allowed beneficiaries to “file” for their SS benefits, and then immediately “suspend” them. By filing, the person’s spouse could then receive spousal benefits. By immediately suspending his own benefits, the original spouse would continue to accrue an 8% per year increase up to when benefits are maximized, age 70.

The Restricted Benefit remains for some baby boomers, those born before born January 1, 1954. Those folks still have the right to file a “Restricted benefit application” and just claim benefits on the earnings of their eligible spouse. They can get the spousal benefit and continue to accrue 2/3% increase per month on their own earnings record. But again, their spouse must have applied for his or her benefit to be eligible. Even for people who are eligible for the Restricted Benefit, the decision to take it or not is highly individual.

5 reasons why claiming Social Security is a lot more complicated than you think
In some ways claiming is easier for single people – they just have to worry about when to claim their own benefits, and spousal benefits and surviving spouse issues are not a factor. Note that claiming rules for divorced spouses and widows and widowers are slightly different and not discussed here – See this SSA booklet.

1. Claiming at 62 is usually not the best strategy. But, and this is a BIG but, there are a whole host of reasons why it might be a bad, or a good strategy for you. Your expected lifespan (and that of your spouse), if you need the money, and whether you believe Social Security will run out of money all need to be considered. Without evaluating those, you can’t know if you are making the right choice. But do know this, if you file at age 62 you will only get 75% of what you would get if you wait to FRA.

2. Filing for a spousal benefit is a complex decision. Spousal benefits are maximized when the receiving spouse is at Full Retirement Age (FRA) – 66 for most boomers. At that age the spousal benefit will be 50% of the primary recipient’s benefit at FRA, assuming the primary spouse did not claim before that age (the spousal benefit does not increase if they claimed later). If your spouse claims his or her benefit at age 62, they only get 35% of your FRA payment as a spousal benefit. But remember, in order to get a spousal benefit the other spouse must currently be receiving Social Security benefits. So assuming both spouses have reached their FRAs, is it worth it for the primary recipient to file? If the primary waits until age 70, their benefit will have increased 8% per year, plus any COLAs. But by waiting the spousal benefit will have been forgone until that time too.

3. Earning histories and age differences and between spouses muddy the waters. Lets take 2 examples (assume the people in both examples were born after Jan. 1, 1954 – so the Restricted Benefit option is no longer available). In example 1 the wife eventually reaches her FRA at age 66 and so does her husband. The wife’s earning history is far higher than the husband’s. In this case if the couple is looking for income, the husband might be wise to start taking his benefit at age 66, but the higher earning wife should probably delay filing until age 70. The husband is forgoing some income by not waiting, but at least the couple has 4 years of benefits coming in. And by waiting to file, the bigger earner gets 8% a year on a much higher base.

In example 2 the husband is age 69 and the wife is 66. Neither has claimed yet, and their earning histories are identical. This couple has a confusing plethora of options. They can both claim now and forgo the bonus they would get by waiting until age 70. If they both claim SSA would give them each their own benefit, since it would be higher than the 50% of FRA spousal benefit. Or, one of them could claim now and the other could wait to age 70 (no spousal benefit). One of them could file and the other take the spousal benefit. Or, they could both wait until age 70 to file. The challenge is to know which of these options maximizes benefits and factors in life expectancy, financial needs, etc. Bottom line: this not an easy decision.

4. If you are married, your decision on when to file has a huge potential impact on your spouse. Let’s assume that you are the higher earner and you decide to file as soon as you are eligible, which is age 62. Your spouse is also 62 so she can also file. Because of “deemed filing”, her check will be based on the higher of her own record or a fraction of maximum spousal benefit, whichever is higher. Years later, you die at age 75, at which time your spouse now gets your benefit for the remainder of her life, if it is higher than her own benefit. Your wife, however, enjoys a long life to age 90. Unfortunately for her, when you made the decision to file at age 62 you were guaranteeing that your spouse gets a benefit that is a fraction of what it could have been if you had waited – for 15 more years!

5. The maximum age you might live to is a much more important consideration than your life expectancy. At age 65 a man has an average life expectancy of about 17 years. But what if you live to 100 – 35 more years. The worst thing that can happen to you is that you outlive your money. All we are saying is that when you decide at what age to take SS, think about how long you might live (if you and your spouse die early and leave SS money on the table, it won’t bother you, because you’ll be dead!) By the way, Abaris is an excellent life expectancy calculator that takes into account lifestyle factors to give you a more informed estimate.

So what can you do to eliminate this confusion?
First, you need to understand your options. There is plenty of information at the SSA website, including specific examples that might fit your situation. Many financial companies like Fidelity and Vanguard have helpful articles. If you do not carefully study what the rules are and evaluate them against your unique situation, you might make a choice you regret.

If you have a financial advisor, do not rely solely on their advice without researching the subject on our own. Few people are experts on SS – there is much bad advice out there.

Visit your Social Security office and ask about your options. But do not assume they understand your situation well enough to give you the best advice.

Lastly, here are some helpful links that can get you started:
Who Should Claim First
SS Gotchas Can Cut Benefits Forever
Vanguard: Married? Team Up for Social Security
Social Security Changes Explained

Think it doesn’t matter?
Think again. Here is what Senator Susan Collins (R-Maine) said: “Deciding at what age to begin claiming Social Security retirement benefits is the single most important financial decision that many Americans will ever make.”

What tactics are you planning to take in this changed claiming landscape? Please share your thoughts and ideas in the Comments section below.

Posted by Admin on October 10th, 2016


  1. What about divorced spouses of Federal Employees can they claim any social security benefits? I was married for 15 years to a Federal Employee–he started working in 1979–left the government to start his own business and then returned in 1994 or so. Are these ex spouses left in the cold?

    Also what if a person is forced to take a lower paying job after making a significantly higher income. Does that mean that benefits are penalized for the lower paying years one was forced to take?

    by Jennifer — October 11, 2016

  2. I would like to see more positive input on people taking SS early and feeling like they made the right decision. Seems all the ‘experts’ would have us all work till age 70. Has there been any studies on how many people are actually in the work force at age 70? Can anyone tell us where to get a decent job when we are in our mid 60’s so we can continue to pay into SS so our benefits increase while we wait till age 70 to collect? There are so many variables that come into play on when to take SS. The wealth you have or have not accumulated during your working years. How healthy you are. Do you still have a job? Can you mentally and physically still deal with your job? Do you have assets such as a home to sell and downsize or move to another lower cost state? Do you expect to come into an inheritance? Are you divorced, widowed? Do you collect alimony. Can you collect on your spouse’s SS and wait for yours? And many more scenarios.

    My Hub started collecting SS at age 63 and I started at age 62 1/2. We both collect much more than the $1,000 that are used as examples on why you should wait till age 70. We feel we made good decisions by retiring and collecting SS early. With our two SS checks, one small pension check we only need to take out a small amount out of our savings per year. We are frugal and take advantage of savings such as 10% off groceries on Senior day Tuesdays. We return our bottles and cans and save the money for a rainy day. We have a cash back Costco Visa card and use the card to pay for normal expenses even our health insurance with it. We expect to get back around $400 for just spending normally and paying off the balance each month. We contacted our car/home insurance to find ways to reduce the cost of the insurance. We locked into our per gallon oil price for the season and saved a lot of money there because the cost of oil dropped. We sold our 3rd vehicle this year while it still had value. That put some money in the bank and saved us money on taxes and insurance. We still live in our 3 bedroom home, pay our taxes but consider downsizing when we feel it is the right time. We got money back on Federal and State tax returns…first time in years so I put that money aside and divided it by 12 and make deposits into our checking each month. Because we were able to save a lot of money out of our payroll checks, we really maintain about the same lifestyle as we did before retirement but now not saving. We never had children so we didn’t have the expenses associated with raising kids and college expenses. Like I said in the beginning, we all have different lives and this wait till age 70 thing the experts recommend does not take into consideration many factors. One size does not fit all! Those of you who retired early, collect SS and feel you have made the right decision let us know!

    by Louise — October 11, 2016

  3. Jennifer, the highest 35 years of income is averaged. See:

    by Louise — October 11, 2016

  4. Like Louise I’m curious to hear from those who have taken SS early.

    My husband and I are planning on taking it ASAP based on our particular circumstances. We will have a pension coming in and prefer to leave our IRA money untouched for as long as possible. We are also in one of the hottest housing market in the country (sheer dumb luck) and wish to move elsewhere for retirement. We hope this will allow us to purchase a house outright in a less expensive market.

    Our CPA is solidly against taking it early, our financial planner has more of an attitude that it should be based on the individual situation. We both have no health problems at this point and historically both parents/grandparents have had long lives and when shortened were from self induced medical issues ( obesity in particular). We expect to meet the break even age at which the amount we actually receive would be the same as compared to deferring payment. Google that info, it’s interesting.

    What struck me in the article was this “if you and your spouse die early and leave SS money on the table, it won’t bother you, because you’ll be dead!”
    I have to say I don’t feel this way about our IRA so I’m not sure why I would feel that way about SS.
    We do have one adult married child and yes we would like to leave a modest nest egg for her….and that doesn’t happen with SS but it will hopefully with our IRA and a bit of life insurance.

    I think our situation is different so of course this plan would not work across the board. We will adjust as needed. I continue to look for a compelling argument not to take it early but so far haven’t found one. I had always assumed we would wait for as long as possible so changing our minds was a slow process, after lots of reading and looking at our expenses going into retirement. We are lucky to have in our part of the world a few folks in a similar situation who came to the same conclusion over time. I picked their brains about the logic of their decision.I think the real estate situation factors into this so much for us but we still willing to change our minds again if we feel that is best.

    by Carole — October 11, 2016

  5. Carole, there are good reasons for some to wait. At age 66 you get 100% of your SS benefit and at age 70 you get 132%. Some people were not able to save for various reasons like divorce, raising children, lay offs, low paying jobs and so forth. So getting a smaller check at 62 does present problems. Waiting 8 more years for some makes sense. That is if they have a job, can keep the job, and are able to keep doing a physical or mentally challenging job that makes working difficult. If they aren’t sick or a spouse isn’t sick. But like we all know, SS was never meant to be the only source of income at retirement age but a supplement. Another problem is the interest rates at the banks! Even if you have $100,000 in the bank you can’t figure on just taking the interest to supplement your SS. The interest is non existent! I have saved 3 statements from 1983 and 1984 and the interest we could make back then! One was in June 1, 1983 a 30 month term at 12%, the next was June 1, 1984 a 30 month term at 12.55% and the last was July 25, 1984 an 18 month term at 10%! Today’s interest rates are sickening.

    Carole, you might think about putting your daughter’s name on the title on your new home as a joint owner and it would go to her upon you and your husbands death. That is what I had wished my Mom had done. I am an only child too. That way I would have avoided probate with the house and wish we had done it on the title for her car too. She would have been more than willing to do so but we didn’t know. She also put me on all of her bank accounts and her IRA accounts so it was a seamless transition to me when she passed away. One other thing that was really hard was figuring out her stocks. She had stuff that had been sold several times. Our financial advisor helped me with that. If you have stocks you might want to put her name on them too. Probate was miserable. I did it myself to avoid paying an attorney. Got through it though and was pretty proud of myself!

    by Louise — October 11, 2016

  6. I am 63 and my wife is 62. I was downsized at 60 and received a years buyout. I had a difficult time finding a job that I felt comfortable doing. We had done a good job setting aside money in a 401k and a profit sharing account and so at 621/2 I took social security and my wife just filed for the spousal benefit. While not getting rich we felt(and our adviser) did as well that we could easily work part time(she substitute teaches 2 days a week and volunteers and I took part time sales job. If you do the math our break even point on waiting for full SS was about 78. Maybe I’m being stubborn but I feel we will have much more fun between now and 78(if we live that long) than we will after age 78. Also our grand children live about 8 hours from here and we now get to go visit them much more frequently than we did prior and now we’re contemplating moving near them which is how I found this website to begin with. That’s why we decided to SS at 62. I talked with othere who did the same thing. Besides we figure that they keep screwing around with SS and you might as well take it so you’re grandfathered in.

    by David — October 11, 2016

  7. Carole where do you live? If it is a hot housing market that would be a good reason to consider the early SS benefits.
    I think I too live in a hot market…Washington, DC.

    I read that the average SS recipient takes six to eight months of benefits before they die, if they wait until age 65 or older.

    by Jennifer — October 11, 2016

  8. We agree with David and Jennifer. My husband was “downsized” from his job of 38 years with the same company at age 64. He was given a 4 month severance package. We were in the process of selling our 5BR family home at the time, planning to move to a condo until my husband’s retirement at age 66. We decided to go ahead and move out of state to our retirement home which we had previously purchased and was rented out. As my husband’s severance pkg ran out, he filed for SS – just before turning 65. I have a state pension from 33 years of teaching. We also have an IRA. What we learned in the past year is this: You will need and spend more money in the early years of retirement, when you are active and traveling etc. We are both golfing, biking, kayaking, participating in fitness classes, enjoying the restaurants and cultural activities of our new community, and travel often to visit friends and family. If he had waited until we were 70 to take out his SS, we would have had to withdraw more from the IRA annually, and we would probably have to cut back on all of these activities. Once we turned 70, we would probably be unlikely to participate in activities and travel to the degree that we do now as young retirees. As active as we are now, we plan to live a long life and pass that break-even age by a long shot!

    by SandyZ — October 12, 2016

  9. Louise,
    Good ideas on the title etc for an only child, esp the cars. I will investigate that more as the time approaches. She is already a beneficiary on everything..IRAs etc but it sounds like it might be an easier transition with the ideas you put forth. I will check with our financial planner (FP) on this, Thank you.

    Sandy Z,
    Yes We expect to spend more in the beginning while younger and have heard that from more than one person. We are hoping to withdraw from the IRA at around 4% a year …to keep the principle intact as per advice from the FP.

    In general I do feel the push to wait on SS is because of the drain on the fund if everyone opts to do it. Like David we think there is an advantage to being grandfathered in as quickly as possible. We thought for many years we would not have SS at all and ignored in our calculations. As the time nears it will mean we can slow the withdrawal from the IRA.

    by Carole — October 12, 2016

  10. My biggest fear is one of us will have to, at some point, go into a nursing home. If you go in for rehab, Medicare pays for up to 100 days then you are on your own. If you can’t get better with rehab and need to stay in the nursing home, start thinking $12,000 a month. That is what it was here in CT when my Mom was in a home 3 years ago. The spouse that isn’t in the nursing home can keep about half of what the couple has in savings. Then when that runs out, which will be pretty fast at $12K a month, the nursing home patient can go on Medicaid. The nursing home my Mom was in was supposed to be very good but as usual in those places they never have enough help. For that price it wasn’t even a private room and the rooms were crowded. Barely enough room for a chair when visiting. UGH!

    If you can afford to retire earlier than full retirement age go for it. Do your due diligence, pay off all your debts, credit cards, add up all you bills and see what you come up with! You might be surprised to find out it is possible to retire early.

    by Louise — October 12, 2016

  11. re interest rates on savings accounts back in the 1980’s: On the flip side mortgage rates were out of sight; FHA was 12% in 1983; Bank rate mortgages even higher. Car loan rates were high too. Yeah it stinks getting 1% on my American Express savings account but our mortgage and car payment interest rates are real, real low. . .

    by rich — October 12, 2016

  12. Navigating the SS rules may be less complex for single retirees, but having only one SS benefit a month to rely on still requires consideration of a number of variables: health, wealth, longevity probability, portfolio, employment history, assets, debts, etc. Single retirees, many who are women, have many of the same retirement wants and needs as couples do, albeit for one. At 66, I take it one year at a time to stretch out taking SS, and I continue to work now, when I am able. My increased monthly benefit each year I wait up to age 70 may make a real difference in my later years. My elders commonly live into their 90s, some into their 100s. I do not consider the SS cutoff point because I am pretty sure I’ll pass it by due to my genes and my lifestyle. I look at what will come in each month, what can I rely on when I’m 85 and no longer want to work. The difference between $1500 and $2000 is huge.

    Jennifer’s question is important about former spouses of federal workers. I do not know the answer.

    by Elaine C. — October 12, 2016

  13. I found a great, free, simple to use SS calculator for optimization and what-iffing on Bedrock Capital’s website called SSAnalyze at It was as good as my CFP/broker’s SS calculator and maybe even a little better, as it offers a “recommended solution” as well as “alternative SS benefit scenarios” to try out. Try it, you’ll like it.

    by jeff — October 12, 2016

  14. question on restricted benefit. Do you have to wait until you’re FRA, 66 in my case, to get my spousal benefit under restricted application? I am eligible for the restricted benefit…born before 1954. My wife is 4 years older than me and filed for and collecting her SS benefits at her FRA of 66. My SS benefit will be larger than hers. I have a couple years before I reach my FRA. I am getting conflicting answers on whether I can collect a spousal benefit now or have to wait until 66. Thanks

    by jeff — October 12, 2016

  15. Jennifer, a federal employee who worked during that time was most likely covered under CSRS, and they did not pay nor were they covered under SS, therefore no benefit earned for themselves or spouses/ex-spouses. IF they converted from CSRS to FERS, they may have some benefits, but as most found out if they did, their retirement pay was less (unless they additionally contributed to TSP fully). With all that said, if you read between the lines and the if-thens, you’ll have to check which retirement plan he was under and whether he had any qualifying SS from other jobs non-civil-service. The SSA can tell you by looking up him SS#.

    I’m 62 and considering waiting to at least 66 FRA; however, there is a lot to be said about having money to spend while you’re younger. Should I really care to collect more money when I’m 70+ and can’t/don’t do as much but sit around and drool? I want to get out and do things now. I don’t want to be one of those to visit the Grand Canyon in my hover-round!

    by Alan B. — October 12, 2016

  16. Jeff, the link you posted provides very interesting information. It took less than a minute to fill in my particulars and the results were instantly available on the site (no requirement to join an email list). The calculator recommends that i file at 68 and DH file only for spousal benefits from my earnings until he turns 70, at which point he would file for his own benefits. If he predeceases me, I would then receive survivor’s benefits from his SS. If I predecease him, there would be no change in his benefits.

    I’m not sure if we will follow Bedrock Capital’s advice – and if so, if we will follow it to the letter – but this new information definitely adds another wrinkle to the already perplexing SS question. Thank you for taking the time to post the link.

    by JCarol — October 12, 2016

  17. Other Complexities.
    1. If one waits until 70, payments may increase by more than two-thirds. Example (from at 62, $2102; at 66, $ 2806; 70, $3721. (monthly; top wage earner, turning 62 in 2016)
    2. However, consider (a) higher tax brackets, state and federal; (b) higher medicare premiums (based on total income)

    by OldNassau — October 12, 2016

  18. The decision that plays the biggest role in how much you get, though, is the age when you claim Social Security. More than half of retirees take Social Security benefits right at age 62, when they first become eligible. Only about 20% waited at least until full retirement age of 66, with only a small portion of those waiting beyond 66 for a boost in monthly benefits.If you’re not in great health and you want to get some of your tax dollars back, it can make sense to start claiming Social Security as early as possible. Regardless of when you take Social Security and when you stop working, you need to enroll in Medicare when you first become eligible at 65, or you could face financial penalties in the form of higher premiums.
    Early retirement is a combination of low expense levels and high savings rates.Late retirement is a combination of high expense levels and low savings rates. Entertainment things rarely costs as much as having material things There are also a few of us, who choose to live on much less in return for the time with loved ones and spend our life-energy doing things that are more meaningful to us than spending saved money. Retirement comes down to budgeting (housing, medical, transportation, entertainment, and food expense.)Since switching my thinking to how little do I need to retire from how much do I need, I realize I’m much closer to retirement than I thought. Before I thought my current retirement savings were nothing compared to what I needed to save. But based on a more minimal retirement need I’m already 8/12 of the way towards having enough money to retire. I look at it as having January thru August covered and I just need to add the rest of the months now.
    According to the Employee Benefit Research Institute, only two-thirds of Americans have saved for retirement and most have saved less than $25,000. The average retiree depends on Social Security for 70 percent of his or her income. “too frail to work, too poor to retire” A common concern is whether Social Security will even exist by the time someone is eligible to receive it, and it’s a valid one: The trustees who oversee Social Security say the program’s trust funds will run dry in 2033, leaving the program with only enough revenue to pay about 75 percent of benefits. Already, the program is paying out more in benefits than it collects in payroll taxes.
    I want to semi retire around 66 or so, but do not want to make over $15,0000/year for obvious reasons, and this includes investment income. People are financially concerned about living longer instead of living life as it comes. You never know what tomorrow will bring, enjoy what you have with those you love.

    by DeyErmand — October 12, 2016

  19. I am a retired postal employees. I am collecting SS from previous work in private industry. But WEP effected me greatly. My same sex spouse collects total SS Disability she is 58 and I am 69. My questions are, should we tell SS administration we are married as of 2013, how does it benefit us. Also, does Spousal Benefits apply to us, and how. I receive an annuity, and small amount of SS. She recieves a much larger amt of SS. Thank you.

    by Mona — October 12, 2016

  20. Mona, Here is a link that might help your questions:

    by Louise — October 12, 2016

  21. To add another question which I have not been able to get any answers to: My husband took his Social Security at FRA. As a former Federal Employee he is subject to the Windfall Elimination Provision (WEP) which cut his SS payments WAY down. I will reach FRA next year and am pondering restricting my application to the Spousal Benefit. If I do so, will I receive 50% of my husband’s current reduced benefit or 50% of his benefit before the WEP was applied? Any information on this would be much appreciated.

    by Brigitte — October 12, 2016

  22. My husband was a long term federal employee under the CSRS, so he did not have SS, however, when he died some time ago, I receive widows benefits. I can collect SS from when I worked..

    by Lora — October 13, 2016

  23. I took my SS at 64 instead of 66. The math made sense to me. Let’s assume my benefit was $1,000/mth at 64 and my benefit was $1,200/mth at 66. In this example my breakeven year would be age 74. After age 74, I would be losing 200/mth. Not so.

    Let’s say I live to age 94. My total benefits from age 64 would be $360K. My total benefits if I waited to 66(28 years) would be $403.2K. The difference is $43.2K. If you divide that over 30 years, you end up with only a $120/mth difference. If I lived to 84, the difference was only $80/mth. And at current life expectancy at 78, I would lose only $28 a month. Getting benefits now while I’m younger made sense to me.

    by Tom Egly — October 13, 2016

  24. Good points, DeyErmand. When we started to look at retirement a few years ago, the prevailing financial wisdom was that a couple needed a strong pension and/or at least a million dollars in funds (home equity not included) to draw against. There was no way DH and I were even close to that! When we ignored that advice and put pencil to paper, looking at our likely expenses versus what we could draw from our savings (at 3.5% per year) plus SS, it was clear that we COULD retire on what we’d already set aside.

    We are delaying SS a bit because of enjoyable seasonal jobs that put us over the annual $30K SS earning threshold. I completely agree with your comment that retirement comes down to budgeting (housing, medical, transportation, entertainment, and food expense). Other than repairs we mostly are past the acquisition phase of our lives, which brings down our cost of living considerably.

    Life is shorter than we think, and who knows what health or other challenges lie in our near future? Carpe diem!

    by JCarol — October 13, 2016

  25. JCarol, That is a very good point you brought out. If a person has an enjoyable job that is not taxing their health, they should keep working. It isn’t easy to live on 30K a year ($1600 a month) unless everything is paid off. Health premiums kill the budget. My wife and I have been doing it to prepare for retirement for 5 years now. A serious health or life issue can wipe out your savings. I personally think if I will get 32% more waiting to retire at 70 then that is what I need to have saved to retire at 66 yrs of age times two (minimum). Retirement at 62 won’t give anyone Medicare benefits. A lot can happen in those 4 year waiting…

    by DeyErmand — October 14, 2016

  26. DeyErmand, you are correct. A lot can happen. We have Obamacare and thank goodness for that. This summer my Hub was diagnosed with prostate cancer. He has been back and forth with tests and specialists and in two weeks will undergo robotic surgery to remove his prostate. We have gotten hit with many bills so far and one was for $8,000 but all we had to pay on that was around $336! WHEW!!! There were other bills that have been filtering in all summer and Hub just had a physical yesterday to prepare for the surgery so more will come. Our hospitalization cost with Obamacare is $500 per night. He is scheduled for one night but more if needed. I am staying in a hotel nearby for the duration (more money). Our dogs will go to a kennel for the first time in their lives (more money). We have no idea how much we will pay for this surgery. Even though the insurance company has the codes associated with prices they say that once the doctors operate they may find other things so the bill could be higher. Fortunately Obamacare has a maximum out of pocket expense per person per year of $6,850 and maximum family out of pocket for 2016 is $13,700. So if any of you contemplating early retirement I urge you not to be foolish and opt out of buying health care. This is so frustrating too because my Hub will be 65 in March and if he was on Medicare and we bought the appropriate plans, we would have paid nothing or close to nothing. But the robotic surgeon didn’t feel waiting 5 more months was a good idea. He said it was up to us but I’d rather be safe than sorry. So our lives got turned upside down in an instant. My Hub retired April 1st 2015 at age 63. Yes, we all need money to survive but life is short so like they say, smell the roses along the way. The financial experts don’t have that part figured out in their fancy PowerPoint Presentations.

    by Louise — October 14, 2016

  27. Huffington Post Article: Social Security

    by Louise — October 15, 2016

  28. Louise, every hospital in this country has a financial billing department. Go to them and prove your monthly income. This can reduce the amount you owe and set up a monthly payment plan. My retired uncle’s heart surgery was completely “forgiven” and my accident of last year was reduced to $100 a month for 6 months. I try not to think about the what if’s of this country’s medical future.

    by DeyErmand — October 15, 2016

  29. DeyErmand, my statement above was likely misleading. To clarify, DH & I won’t be living on $30K per year (which divides out to $2500 monthly, not $1600). We’ll supplement that with the 3.5% draw from the nontaxable portion of our retirement savings, which will give us another $18K to live on. With no mortgage, car notes or other debt, we can easily live on $4,000 per month.

    Obamacare has been a Godsend for us and many others. I’m hoping that after this election it will be refined and improved. Throwing the baby out with the bathwater serves few.

    by JCarol — October 15, 2016

  30. DeyErmand, Thank you for bringing up contacting the hospital’s financial department. Will they analyze monthly income or total net worth?

    Agreed JCarol, Obamacare is a Godsend! Yes, let’s improve it, not destroy it.

    by Louise — October 15, 2016

  31. I am also very happy to have access to Obamacare for my health insurance. As a small business owner, which required self-insuring since 1999, I know how much the individual insurers cost, about continual rising premiums, and to add insult to injury —no guarantee of insurance if you need it. This ability to drop customers if they actually needed the insurance for severe illness, really irked me! With Obamacare, insurers cannot drop you if you get sick! Until I am eligible for Medicare, I am thankful for something which is MUCH better than what we had in the past!
    I hope we keep it for everyone and improve it over time.

    by Maureen — October 15, 2016

  32. Louise they only asked for proof of monthly income.not bank statements, didn’t even asked if I owned my home or for any utility bills.

    JCarol, oops I meant living under 30K is hard. $1600 is a ballpark figure on the average Social Security check for one person after insurance premiums. I should of clarified. My apologies.

    I don’t think the Affordable Care Act is the problem. Doctors are limiting how many new patients they take with these policies like they did with Medicaid. The lower and slower reimbursement rates make some physicians reluctant to sign on to some of these plans or accept too many of the patients once they are in the plans.My doctor said the only problem he has is when the patient doesn’t pay their premiums and he has to go after the patient for payment.

    by DeyErmand — October 16, 2016

  33. I looked up the average SS payment for retirement benefits only (not including SS payments to surviving minor children or disabled people). As of June 2016, it’s $1350 per month, totalling $16,200 per year before Medicare premiums are taken out. (

    OUCH! Even without mortgage or car loan obligations that amount would be very challenging to live on, and the payment amount is an average, not a minimum, so plenty of retirees receive less than $1350 per month.

    Finding doctors willing to take ACA insurance plans may vary from state to state. In CA I’ve had no difficulty finding doctors.

    by JCarol — October 16, 2016

  34. I am still working and will soon turn 65. I have health insurance through my employer. If I don’t sign up for Medicare at age 65, do I face penalties. I hope to put off taking SS until 66 and I will work until I die or cannot work anymore.

    by MaryNB — October 16, 2016

  35. If you are still working and have insurance from your employer, you don’t have to sign up for Medicare. I am 65 and will retire as of January 1st, 2017. I have applied for Medicare B to begin on January 1st. When I applied, she said she would give me Medicare A starting on 8/2016 (my birth month), since it doesn’t cost anything. Also, if you continue to work after 66 and still have health insurance, you don’t need to take your social security or medicare until our 70-1/2.

    by Stacey — October 16, 2016

  36. When to quit your job:

    by Louise — October 16, 2016

  37. JCarol, I was figuring average @ 70yrs of age in my County and State.

    by DeyErmand — October 17, 2016

  38. For someone at the full retirement age of 66, taking benefits at age 62 results in a 25% reduction in their primary insurance amount, with a 30% reduction for a spousal benefit. Waiting until age 70 results in a 32% increase in the primary insurance amount for someone at the full retirement age.

    The maximum monthly Social Security benefit for those claiming benefits at the current full retirement age of 66 is $2,663 per month, or $31,956 annually. Workers receiving this benefit earned the maximum taxable earnings for 35 or more years. The maximum monthly benefit changes each year with changes in wage levels.

    That sounds pretty good until you realize that the average monthly Social Security retirement benefit was $1,328, or $15,936 annually. The average monthly benefit changes each month because of the ebb and flow of retirees applying for Social Security retirement benefits early at 62 years of age.**

    by DeyErmand — October 17, 2016

  39. Stacey-“If you are still working and have insurance from your employer, you don’t have to sign up for Medicare.” I think you need to sign up for Medicare A even if you’re still working. If you have less than 20 employees, you need to sign up for Medicare B also. Right?

    Editor’s Note: This Social Security article seems to have taken a left hand turn into Medicare, an equally interesting and sometimes puzzling topic. We think you would be better off posting over there (we will copy this thread over there, so if you would like to Comment, and we hope you do, please do it over there).

    by Tom Egly — October 17, 2016

  40. This Comment from MaryNB was moved to this Blog:

    Louise: The article about when to quit your job really doesn’t apply to people in their 60’s in a bad economy. It would be really nice to have the luxury to quit in this economy. I say if you have a job, hang on to it as long as you are physically able to do it !

    by Admin — October 17, 2016

  41. MaryNB, I don’t agree. Louise’s article was about a person’s mental state in their job. Just yesterday on the news, a study had been done on how people were not living as long in retirement due to their mental state in their jobs with this economy. MSNBC news stated women in a stressful job were only living to 78.5 years. Women are the caretakers, and they do their 8 hour job, then take care of their families and the housework while most men relax after work. The study said men with a stressful job shortened their lives to 77 years of age, which wasn’t as drastic as the shortening of a woman’s lifespan. Also the study mentioned the stress of taking care of a ill spouse shortened the lifespan and how well we finance our retirement effects how long we live in retirement too.

    by DeyErmand — October 18, 2016

  42. MaryNB I disagree. My husband worked for a company that didn’t offer most employees opportunity to move into other positions even though they made bold statements that every employee would have a chance to move up. Many employees applied for other positions but were turned down each time and they hired from outside. My husband grew more disgruntled over a 10 year period for many reasons. He had opportunities to move up but the opportunities were not challenging enough. He no longer had the passion he once had for the job. He finally decided it was no longer worth the anxiety the job was causing and retired. So yes, when your job starts to make you sick and your boss has no clue what you do to make the company shine, it is time to get outta Dodge. Yes, many people chose to stay in a thankless job because they have to. We decided it was time to enjoy life. We saved and prepared for retirement not everyone is that lucky.

    by Louise — October 18, 2016

  43. I agree DeyErmand. My wife passed at 68 after working 20 years in a job that started pushing her buttons over her age once she turned 58. I believe if we had retired at 62 , she would still be here with me now. We both retired at 65. Money don’t replace hours alone. DeyErmand, find a way to cover your health insurance until 65 and get out of the rat race. Check and see if the company you work for has a Cobra plan. Part time jobs with more than a 100 workers do offer insurance plans. Stress causes health issues.

    by John Last — October 18, 2016

  44. I find this debate interesting. I’m still working in a high-stress environment, with others in their 60s. I’ve been hoping to work to 65, but I may not make it. I have seen multiple co-workers get cancer among other problems as they deal with the stress and long hours. Stresses come from everything from the nature of the job, to not-so-hidden age discriimination. Maybe we’re just in the age group that starts to see these illnesses more, but I believe stress is a big factor. Walking away voluntarily from the paycheck, not pulling on savings as long as possible, and adding another year’s income to a person’s social security earnings record, even with the stress, is a very tough decision.

    A warning – don’t assume COBRA is your best bet until you price insurance through Obamacare. Signing up for Cobra may make you ineligible for other health insurance until the next open sign-up period. Cobra can be a very expensive decision (over $1000/mo for a single person at my company).

    by Kate — October 19, 2016

  45. In my case COBRA was cheaper than Obamacare. Everyone needs to do their own investigating. Once I became age eligible for Medicare, my COBRA was discontinued.

    by Staci — October 19, 2016

  46. John Last, Sorry for your loss. We never know what the future holds for any of us. As far as your wife’s job “pushing her buttons from age 58” I believe this is true in a lot of industries. Companies don’t want to pay older worker the higher pay they have attained through longevity. They figure they can hire two for the price of one. Get rid of the older higher paid worker and hire two new college grads that are green behind the ears. There seems to be less respect for the experienced workers and companies continuously offer packages to weed out everyone 55 and older. However, the experts keep telling us we should work till age 70! Yes, there are exceptions to the rule and some companies are happy to keep their older employees. I bet there are a lot of horror stories of older people trying to find jobs and the personal feeling of failure when not able to find anything.

    In my last job I was in a conversation with someone in regard to a candidate who was being interviewed for an open position. The person who interviewed the candidate told me that they liked the candidate, they hired him and they got him CHEAP! OH, that made my blood boil. They were so thrilled they hired this guy for such a lower pay than they could have offered him. He was in his 40’s so you can imagine if they ever hired an ‘older’ person. They probably think older people are looking for a job just to ‘get out of the house’.

    by Louise — October 19, 2016

  47. Food for thought:

    by Louise — October 19, 2016

  48. Well, as far as when to retire, everyone has a different circumstance and different needs. I am in my mid 60’s and have changed to a less stressful career that allows me to give back and still work. I was not looking for greater challenges or promotions. Been there done that. There are lots of late in life divorces and I think being single might be different than a married couple. I saw the movie, ” The Intern” and really related to it. I hope it doesn’t shorten my life.

    by MaryNB — October 20, 2016

  49. Don’t use the concept of retirement to put off doing things that are important to you. You can’t predict what will come once you’re retired. The strongest links between stress and mortality involve cardiovascular conditions, not cancer. Problems don’t go away in retirement. Groceries, rent, utilities, medical bills and premiums have gone up in 6 years. I would suggest to all get a good heart doctor before retiring and don’t touch your savings and investments for a couple of years after retiring. Too many retirees spend all their savings within 3 years of retirement. When the government changes things, they change it for their benefit, not ours. They know they have no choice but to raise Medicare to 67 years with 1/3 less workers paying into Social security with the weight of the boomers retiring.

    by John Last — October 20, 2016

  50. Definitely retirement is personal. I always planned to retire at 62 until the company cut giving us a pension at retirement for the 401K account. The medical insurance keeps me there for now. I am looking for a part time job with medical insurance even if it is for less pay. My wife had to go back to school to get her part time job, a 25% wage cut. We consider it sizing down our work hours before actual retirement. You got to have a healthy attitude towards retirement.

    by DeyErmand — October 20, 2016

  51. Just a question. A lot of people commenting on this thread have said that staying versus leaving a job is personal as it should be. I have similar stress related problems and can relate to John Last who’s wife started getting her “buttons pushed” at age 58. Well I’m 57 and it started about two years ago for me. I have a boss who doesn’t have a clue what is going on and pushes the company’s “directives” down my throat on a daily basis. Anyway, I have an opportunity to retire from that job and have my healthcare taken care of at no expense to me. I’ve saved for the “future” also. My question is should I just do it and leave or stick it out. The stress was causing health issues that required medication. Any advicevent would help me out.
    Thanks all.

    by Curt B — October 20, 2016

  52. Curt B, Getting personal here but How do you have your healthcare taken care of at no expense? I would be out of there so fast if that was the case for me!

    by DeyErmand — October 20, 2016

  53. Curt B. It is very hard to advise you on this. Would your company offer you a severance package along with the health insurance? If so, you might also be entitled to unemployment insurance. Years ago I was able to collect my severance package along with an unemployment check. My company was very generous and I got six months full pay plus 3 months half pay and I was able to collect unemployment for 6 months. So that could carry you almost a year to age 58. Then that would give you 4 more years til you would be eligible for SS. You say you have saved for the future. Since we don’t know what your financial needs are per year but if you need $35,000 a year, as an example to pay your bills, would you plan to use your savings? If so, you would have to part with $140K in savings or more for those 4 years if your financial needs are more per year. What if you took the health package and quit your job then took a less stressful job somewhere like Home Depot or somewhere to squeak by till you are eligible for SS. If you have equity in your home you could consider a reverse mortgage at age 62 and get cash in your hand but remember the bank basically owns the house like a real mortgage. You could sell your house and move into a small home and use the cash leftover to support yourself for a few years. Is there any chance you can take another position within your company that is less stressful? Or take a transfer to another state working for the same company? If you have a parent or parents that are still alive, maybe you could move in with them and help them in lieu of rent. Believe it or not, there are people that make a living selling stuff on ebay. If you were so inclined, you could set up a little business there. Or if you have a hobby you might be able to turn it into a business. If you like wood working you might find an opportunity there. A lot of retired people drive school busses or work for an auto parts store and deliver parts during the day. Unless you have money to support yourself for 5 years before SS kicks in, maybe you should consider a less stressful job and take the health insurance and run! Your health is the most important thing to consider.

    by Louise — October 20, 2016

  54. That is an idea, transfer to another county or a state you want to retire with the same company and work til 62.

    by DeyErmand — October 20, 2016

  55. CurtB – I would take the buy out, the no expense medical ins. would be a BIG key factor. Certainly make sure you check that out completely, no expense to you sounds too good (know what they say about that), does it cover your other half if you have one, will it still apply when you can get medicare, does it have a ‘very’ high out of pocket/your costs? You need to weigh a lot but remember your health is probably your number one priority, you could win the lottery but if you can’t enjoy life you have nothing,money certainly helps but it isn’t everything. We can offer ideas/etc. here but do your homework & hopefully you make the best choice for you, good luck!

    by Sue M — October 21, 2016

  56. Curt B here are some other ideas on how to generate income without penalty from your 401K. See Rule 55. You are 57 so this should work for you.

    by Louise — October 21, 2016

  57. Curt B. I would be out of there so fast I’d burn through a new pair of sneakers. As a response to Ron, with the nation $20 trillion in debt there is no way that they can not make changes to SS. That’s why in my earlier post I said I decided to take SS at 62 1/2 because I felt at least I was grandfathered in

    by David — October 21, 2016

  58. Chuck Schumer:

    by Louise — October 23, 2016

  59. DeyErmand, you mentioned looking for part time work and leaving your current employer. I have heard that Home Depot is very good towards older workers and offers health insurance too. However, you might have to be full time, not sure about that. I don’t think they pay very good but it might provide insurance that you need plus a small income. Some jobs might be better than others as far as compensation goes. I have a friend who is in his mid 50’s who works in a grocery store as a custodian. It took quite a while for him to get full time status but now he has health insurance. He hates the job because of the typical favoritism and gossipy atmosphere but he says it is close to home and he barely puts any miles on his car. Being a custodian lets him be a free spirit and not chained to a cash register or behind the deli! I also know of two people who worked at Home Depot and would go out to people’s homes to do estimates for things like kitchen cabinets or other services Home Depot offers. I think they were paid on commission. I have a girlfriend who works for Walmart. She is a typical older worker who could NOT find a job. She was in banking for 20 years and retired from it with a pension when she was pretty young. Then had responsible jobs after that. She moved to another state and applied for a banking job and was told by a younger man that she didn’t have enough experience! OMG! She was unemployed so long she lost her home, her car and went bankrupt. It was extremely sad. However, she now works for WM and the pay is pretty lousy but she has health insurance and 401k. Plus, they offer tuition reimbursement. One of her coworkers got a college degree and WM paid for it. Not sure if it was 100% paid for but anything helps!

    by Louise — October 24, 2016

  60. A friend of mine asked when he and his wife should take Social Security. Here is what I said:

    One thing you might want to discuss with your financial advisor is when to take Social Security. I have always been a big proponent of waiting to age 70, if you can afford to. Some financial types don’t agree. Here is one of many Topretirements articles on the topic
    Todays New York times has an excellent article that basically agrees with me. The only wrinkle is what happens in 2034 when the trust funds are depleted and only current contributions become the funding source. I don’t think any politician will vote to cut SS, so I think it will get fixed, somehow. But it is an issue.

    The other issue my friend had was what to do about a significant amount of college loans they took out to fund their children’s college. They plan to retire in 2 years, and the question is should they take money out of retirement savings to pay them off. I suggested starting to pay them down every month and try to get the number down before they retire. Anyone else want to opine?

    by John Brady — September 5, 2021

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