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To Work Or Not to Work: Many Early SS Claimers Make An Un-informed Choice

Category: Financial and taxes in retirement

February 2, 2016 — Social Security – so misunderstood. And unfortunately, that misinformation causes many people to make very costly decisions. This article will talk about how one of those decisions – filing early and deciding not to work any more because of fear that earnings will be taken away – can jeopardize financial health. We’ll explain that mistake in detail, but first we have to give some background, including how concerns about Obamacare can complicate the decision making. Note: we are not accountants or financial experts. Before you make any important financial decision consider it carefully and get expert help.

Over the years Congress has tweaked Social Security to encourage people to work to at least Normal Retirement Age (66 for most boomers), rather than collecting sooner (the earliest you can claim is at age 62). The thought was to encourage folks to work longer and delay benefits so they have the opportunity to save more money for retirement. And, because they paid more into the SS system, they and their surviving spouses get higher benefits for the rest of their lives. Both factors result in a better chance at having a financially secure retirement.

The Carrot
To encourage us to work to at least our NRA Congress created an incentive – by waiting until age 66 (or NRA) we get a lot more money each month. The benefit paid at the minimum age at which we can take your retirement benefit, 62, is only 75% of what we would get at age 66. If, for example, our NRA benefit is $2000/month, our age 62 benefit would be $1500, or $500 a month less than if we waited 4 years to claim. That higher benefit goes to our surviving spouse when we die, and it could mean tens of thousands of dollars over time.

The Stick
Congress also set up a disincentive for collecting retirement benefits before our NRA. If we receive benefits before our NRA and we are working, they are subject to an Earnings Test. From age 62 up until the year we reach our NRA, SS will deduct $1 from our benefits for each $2 we earn above the threshold. In the year we reach normal retirement age they will deduct $1 for every $3 we earn above a much higher threshold. For 2016 the earnings threshold is $15,720. Use this Earnings Test Calculator to determine how much your benefit might be reduced.

The mistake
Although almost 50% of beneficiaries claim their benefits at age 62, most experts agree this is usually a costly retirement decision. Over the long run, beneficiaries and their surviving spouses will almost always get a higher benefit by delaying.

Beyond that, that “take early benefits” decision is compounded because many people also stop working at that point. Yes, benefits will be reduced if the relatively low earnings threshold is exceeded. BUT, this is a temporary disincentive. Any withheld benefits will be added back, starting a year after reaching full retirement age. In other words there is no tax – unless we have the misfortune to die before we collect (but our spouse will likely get them anyway). By the way, those extra earnings still put extra money in the checkbook – only a portion of SS benefits are temporarily reduced by any earnings over the limit.

The Obamacare Kicker
As several early readers of this article noted, if someone receives a low income subsidy for Obamacare health insurance, the decision to make more money or not gets trickier. Some are also concerned about higher income premiums for Medicare, but realistically that is not a factor for most retirees – higher premiums only kick in if married filing jointly MAGI is over $170,000. Medicaid is another issue. In states that expanded Medicare you can earn up to 138% of the Federal Poverty Level. The FPL was $11,770 for one person in 2015.

We used the Kaiser Family Foundation Calculator to explore what ifs for a typical retired couple on Social Security, age 62-65. In doing so we used a typical couple with a combined (primary and spousal) SS benefit of $2000/month ($24,000/year). We then calculated out of pocket premiums for the couple at various earnings levels: no earnings beyond SS; at Earnings Test limit of $15,720; additional earnings of $29,000; and earnings of $31,000. Note that the latter figure puts a couple just above the 400% of the Federal Poverty level where subsidies stop.

The Result – Only a Tiny Impact on the Obamacare Subsidy
Total Earnings
Social Security only ($24,000)
SS plus Erngs Test lmt ($39,720)
Your Cost for a Silver Plan
$16,127/yr (no subsidy)

Note from the above that earnings up to $63,000 have only a small effect on Obamacare premiums, thanks to the premium tax credit. However, if you go above that you probably want to go way above that figure, so you make enough to pay the $10,000 in extra premiums you will encounter at that level.

Reasons why you should never not work to avoid having your benefits reduced
To summarize, here are several reasons why you not worry about working if you are under your NRA and receiving SS benefits:

1. Even if you exceed the earnings limit you will get any benefit reduction back after you hit your Normal Retirement Age. The money is not lost.

2. Any wages you earn after signing up for Social Security may increase your overall average earnings, and your benefit probably will increase. Even better, that higher benefit will be indexed to inflation – for the rest of your life.

3. A significant number of retirees are worried about having enough money for a comfortable retirement. So if you are fortunate enough to have a job, why not work as long as you can? With your earnings you’ll have less need to tap your retirement savings in those years, and you’ll probably even be able to add to those savings.

4. As long as you don’t have total earnings above 400% of the poverty level, your Obamacare premiums will not go up enough to forgo the extra income you get from working.

Bottom Line
If you can wait to take Social Security, there are a lot of good reasons to delay. Not only for you, but for your surviving spouse, who will get those higher benefits for as long as he or she lives. But if you do take your benefit before your NRA – don’t stop working to avoid a tax – there isn’t one. You will get the reduced benefits back, and you probably won’t affect your Obamacare premiums either.

Comments? Do you have experience with this issue. If you had your benefits reduced, did you get them back? Please share your thoughts in the Comments section below.

For further reading:
What You Don’t Know About Social Security Could Hurt You

Posted by Admin on February 1st, 2016


  1. Hub started collecting SS at age 63. I will start collecting in two weeks at age 62 1/2. Hub has a pension and we have one stock that pays quarterly dividends. We have no regrets starting SS before Normal Retirement Age (NRA).

    We are on Obamacare and receive a subsidy of $1100 per month ($13,200 a year) and are left to pay $446.18 per month for health insurance premiums. Adding subsidy and insurance premium together equals $18,554.16 per year.

    CT minimum wage is $9.60. If I were to work one year at that rate I would earn $19,968 before taxes. This amount would put our yearly income over the maximum income threshold of $63,720 Obamacare has in place for 2 family members. So if I worked a full year and made $19,968 we wouldn’t qualify for the subsidy and would have to pay $18,554.16 per year for Obamacare. So after working all year at minimum wage and paying full bolt for insurance I would have nothing to show after taxes. Not to mention I would be penalized because the Federal maximum I can earn is $15,720 and at $19,968 that would be $4,248 over, so they would take $2,124. I do realize that my SS will be recalculated when I turn (NRA) and could get more money per month in my SS check.

    So for that reason, we will not work in retirement unless we wait till we turn 65 and are on Medicare and no longer have to worry about exceeding Obamacare income limits.

    by Louise — February 2, 2016

  2. Louise,

    I am also in CT. I can’t afford to retire early due to losing health insurance. My brother retired early due to disability and while he was waiting for Medicare he was on Obamacare. He found that practically all of his doctors did not participate and he had a hard time finding medical care. He said that if you are on a subsidy that less docs take your insurance. Do you find that to be true? We are in Fairfield County.

    by Karen — February 2, 2016

  3. Karen,
    No, I have not had a problem with any doctors taking our insurance. I have Anthem Blue Cross, Blue Shield Silver plan and has been accepted at an eye specialist and a dermatology group I visited. No problem with prescriptions either. We live in Litchfield County. Of coarse the insurance still doesn’t pay a lot and the copays are $50 for specialists. The dermatology group I went to took off 3 small moles and charged almost $1,000 which is ridiculous to say the least. It was a 5 minute procedure and they did lab work on the moles. Insurance wouldn’t pay about $250 of that bill plus the $50 copay. A lot out of the pocket.

    Not sure why your brother had problems. The subsidy should have nothing to do with getting insurance. It is paid directly to the insurance company along with the participants payment. By chance was he on a Medicaid plan? I hear Doctors don’t want to deal with Medicaid.

    by Louise — February 2, 2016

  4. Karen,
    One more thing, you say you lost insurance and can’t afford to retire. Please check out Obamacare. If your income is low enough you will get subsidies to make it much more affordable. You might be surprised!

    by Louise — February 2, 2016

  5. Hi All,

    Thanks for all the great information. Question, has anyone that is retired from the Military and using TRICARE switched to Obamacare? If so has Obamacare worked or is it too costly? My wife and I have not had a lot of luck with TRICARE in our area NY & FL as we are snowbirds.


    Bob & Barb

    by Bob & Barb — February 2, 2016

  6. I was laid off in 2013 and now caregiving mom with dementia. I am 60 and cannot work so will be filing for SS benefits in 2 yrs. I currently receive medicaid health benefits which includes Snap as well. If I worked I would lose all those benefits plus who would take care of my mother. …

    by Mary Jane — February 2, 2016

  7. Louise, regarding work and making too much money. Two solutions. 1) Work part time. If the employer has only full time work, then 2) contribute to an IRA or a 401k plan. Both lower your MAGI. Last year both the wife and I together made over $100,000. We contributed the maximum $23,000 to both of our 401k’s AND put $4,000 into an IRA. That brought our MAGI down under the $63,000 ACA limit, so we did not lose the subsidy.
    If you don’t have a 401k then you are a little more limited. You both can put up to $6,500 into an IRA. So technically your can make a little over $76,000 per year working with an IRA all by itself. And all the money you put into an IRA is just more you will have in the future.
    Standard disclaimers: I are not and attorney or CPA, I don’t play one on TV, nor did I sleep at a Holiday Inn Express last night. I just know what worked for us. It was all blessed by our CPA… who admitted even he didn’t know we could do that until I pointed it out and he researched it. I told him I’d send him my bill.

    by Art Bonds — February 2, 2016

  8. Mary Jane – You’re in a tough place, but I wanted to reassure you that it’s possible to work and still care for your Mom. I worked a full time job and cared for my spouse for more than a decade as he fought early onset Alzheimers (while raising multiple kids). Easter Seals was one of many places that had a great day care program at a cost that was based on income. There was a state elder agency that helped with finding placement. My spouse started off resisting day care, but eventually liked it. At first, he thought he was volunteering and then it became a social place for him. They were experts at keeping him engaged with life. I used my vacation and sick time for his needs, with FMLA as a backup. Eventually Medicaid helped to pay for his nursing home costs when the day care center could no longer keep him, and his condition had deteriorated to the extent that home health care was also no longer possible. As our family went through this journey, I met other families struggling with the same disease who were helped by their church communities, other family members and even caring neighbors. I also met people who were caring for family members who were terrified that they would lose their homes and income (they were living on their family member’s social security) when their family members needed nursing home. And trust me…that day arrives someday no matter what we think when we begin caregiving. Few of us can lift and care for incontinent, bedridden patients, combative patients, loved ones who refuse to swallow food or medicines, patients who only doze but refuse to sleep (meaning that their caregiver has to be up all night too to keep them safe) etc. And the disease is terminal. My point is that you may have other reasons for not being able to work at this point — but if you are physically capable of finding any employment, there may be ways to obtain care for your Mom that would not be dependent on you giving up your life and your own financial security to care for her. It’s just one more struggle, but don’t forget to take care of yourself too. My prayers are with you and your Mom.

    by Kate — February 3, 2016

  9. Art, Thanks for pointing out the IRA and 401k advantages. Last year my Hub retired and our financial situation was a bit jumbled due to him working 3 months, waiting for his first SS check and tapping into an annuity. When I had our taxes done I had asked the CPA if we should go over the $63,720 Obamacare threshold, could we open an IRA to offset the extra income and she said yes. I knew that part but didn’t think about a 401k and I do recall that ‘older’ people can do a catch up contribution on top of the regular 401k limits. I also didn’t know you could open an IRA if you have a 401k. You pointed out some very good information.

    by Louise — February 3, 2016

  10. One other thing to consider if you decide to retire early, or are “forced” to retire early as my husband was when the company he had worked for was sold, is to determine what your federal tax bracket will be for your retirement income. Count up everything in your income “bucket” – then, if possible, try to stay under the tax bracket that is most comfortable for you. We also learned that unless you tell SS to withhold federal taxes, they do not! Another reason to try to determine your tax bracket after retirement – before retirement! Or April 15 could be painful! Ouch…

    by SandyZ — February 3, 2016

  11. This article addresses married couples. What about all of the single people who will not have a surviving spouse to collect all the extra money put into SS from ages 62-66. Also, I am unclear album whether if I continue to work to age age 66 and after will the benefit be reduced? What about those of us who may not have an average life expectancy and are single?

    by Mary NB — February 3, 2016

  12. That earnings test, does it include corporate pension or IRA withdrawals or only working income?

    by Mark labinov — February 3, 2016

  13. During my recent visit to Social Security to sign up for Medicare, I was told that if I wanted to retire 65 (one year earlier then my normal retirement age), I could not earn one penny more than $15,720 for all of 2016. If I went over by one penny, Social Security would withhold 6 or 7 months worth of checks. Not taxes, just flat out withholding checks for 6 or 7 months. Maybe you should have put that in your article. I was shocked when the agent told me that and I am sure many others who are contemplating early retirement would be too.

    by Roseann — February 3, 2016

  14. Roseann, during your first year of retirement when you transition from working to collecting Social Security (SS), that first year there is a special rule that allows you to make any amount and you can still collect SS without any checks being withheld. Here is the rule:

    There is a good example on the website. It explains it well.

    My Hub retired April 1st , 2015 and made more than the $15,720 and not one check was withheld.

    by Louise — February 3, 2016

  15. It always amazes me that so many “experts” tell you wait until your Normal Retirement Age (age 66) before taking Social Security benefits because “you will get more money each month”. Just do the math. It is easy. I took the amount that I will get from SS and entered it into a spreadsheet. I would collect over $77,000 in the 4 years between age 62 and age 66. It would take me 16 years and 3 months to break even with the amount of money I WOULD HAVE LOST by NOT taking SS at the minimum age of 62 and waiting until age 66 instead. That means I would have to be 82 1/4 years old before I would break even. That is IF I live that long. My dad died at 75. I have already had cancer TWICE! The government (and all those “experts” who tell you to wait) are just hoping that you will die before collecting SS. Then you get NOTHING!
    Me, I am going to take it while I am still alive….

    by Mike — February 3, 2016

  16. We will attempt to address a few of the comments and good questions made here. Hopefully others can chime in if they have the answers:
    MaryNB: The equation changes somewhat for single people, since no one will get your benefit when you retire. You have to figure if waiting is worth it just for yourself. After you reach Normal Retirement Age (66 for most of us) you can work all you want and there are no benefit reductions. A good reason to take SS early is if you believe you have less than normal life expectancy.

    Mark I: The Earnings Test only applies to what you make employed by someone else, or your net earnings if self-employed. There is a section in this doc that explains it

    Roseanne: What that SS person told you is completely, flat-out wrong. We hope you misheard them it is so far off base.

    Louise: That is a great reference and you bring up a good point about what happens in the year you retire. According to the reference you provided you CAN have some benefits withheld in that first year, it has to do with you going over the limit in the months AFTER you retire.

    Mike: Our back of the envelope calculations say it would take 12 years to make up for taking early vs waiting till 66 and getting 100% instead of 75%. Plus, any COLAs are applied, meaning the higher benefit gets higher faster, and the difference gets made up faster. And there is the issue of a surviving spouse if you are married. However, if you think you and your spouse have a less than average life expectancy, take it and run!

    by Admin — February 3, 2016

  17. Admin:
    Thanks for the info, but my calculations are black and white. 16 years and 3 months to break even. It is based on how much SS you have earned. And the COLA argument has no meaning to me. Almost no one can keep up with the cost of living nowadays. And, I would still be getting COLAS (if any) between age 62 and 66, so that would still narrow down the difference. Yes, I am married. In fact, my wife will get more SS than me. Fortunately, we both have retirement incomes and our nest eggs which we saved for all our lives. As far as SS is concerned, we both plan to take the money and run…
    PS…She has had cancer too. Life is too short to wait an additional 4+ years just to make a couple of hundred dollars more a month versus not living to get a cent.

    by Mike — February 3, 2016

  18. Mike, I am no mathematician but did an Excel spreadsheet about a year and a half ago and my calculations were pretty close to yours. I would also be 82ish when I would break even. I also would collect $76,000. I waited till 62 1/2 years old to collect. Two weeks from today I get my first check! Excited!

    Yes, it is tiring to hear ‘what you SHOULD do’. That is why Social Security gives you options to start as young as 62 or wait till you are 70. Everyone has something different in their lives. Illness, unemployment issues, no savings, lots of savings, sick family members that need caring for, or just sick of the rat race and need to get out and can afford to do so. Some people are satisfied with their jobs and want to keep working. Some retire and regret it and are bored. Some have such physical jobs that they can no longer do it even if they want to. There is no right or wrong and each of us needs to make the decision that is right for us.

    This article makes it sound like you are very ignorant if you take SS at age 62. My Hub and I saved very diligently over the years and have a very nice nest egg. SS is just the frosting on the cake for us. It is the foundation and we will pull from savings as needed.

    The thing that really bothers me too is that they tell you to keep working till you are 66. I was laid off at age 57 and hard as I tried I couldn’t get a decent job. I was making around $50k a year and to take a fast food job making about $20k a year just didn’t appeal to me. So, I became one of the ‘chronically unemployed’. If you are in your 50’s, good luck today keeping a job. I do believe there is discrimination for older employees. When I was laid off there were 4 of us in our 50’s and they threw in one token part time 20 year old to lay off. No discrimination? I wonder to this day.

    by Louise — February 3, 2016

  19. Mike,,thank you for your perspective. I also have had cancer twice in the last 4 yrs. I am presently working and plan to work as long as I am physically able to. As a divorced woman, my question is whether the calculations are different for single people?

    It really strikes me as terribly unfair that if I die before collecting all or any of the money that I have paid into SS, my money goes back into the pot because I do not have a surviving spouse. That strikes me as so discriminatory and unfair to unmarried people. Shouldn’t we be able to designate a beneficiary? I think so. Unmarried people are being very unfairly disadvantaged in this system.

    by MaryNB — February 3, 2016

  20. Again, lots of great information! My wife will be 62 in April of this year and I will be 64. This is our plan. My wife will collect SS at 62, I plan to hold off until I reach 66 then I plan to file a restricted application for half of my wife’s SS while holding off until I turn 70 to collect SS. My thoughts are to hold off until I reach 70 so that when I pass my wife will receive a higher monthly amount. We both are lucky in that we receive a small retirement each month and we have worked hard to save. Any thoughts on our plan for SS? Thanks, Bob

    by Bob & Barb — February 3, 2016

  21. MaryNB, My Hub and I have also paid into SS our entire lives. There is no option of ‘willing’ your Social Security money to anyone that I know of. My Hub and I are childless and if we both died today, we would be in the same boat as you. We both worked and if you die prematurely, yes your money just goes in the general pot for other up and coming retirees. It is like insurance. It really has nothing to do with unfairness towards unmarried people. However, if you had a child/children and you as an unmarried person died, SS would pay for that child in SS benefits until a certain legal age.

    Another dumb thing with SS is that when my father died Mom got a small amount of money to bury him. Like $225. When Mom died, and I buried her, there was no stipend for her! There has to be a living spouse from what I was told.

    by Louise — February 3, 2016

  22. Yes, so when one of you dies, the surviving spouse is the beneficiary. In the case of a single person, it will always go back to the general fund. That is the inequity. It sort of changes the calculus as to when to start withdrawing SS. The law unfairly favors married people.

    by MaryNB — February 4, 2016

  23. Bob & Barb, we were recently informed by SSA that if you wait until age 70 to claim your benefits, you will receive that higher amount for your lifetime. However, if you should pass before your wife, she will only receive the benefit accrued as of your Full Retirement Age (in your case, age 66), not the higher amount you had been receiving since you waited until age 70 to claim. This might be important in your planning. It sure was for us.

    by Gemzee — February 4, 2016

  24. Thank you Louise and the others who gave me such good information. I must have really misunderstood what the SS rep was telling me. I am going to retire in April 2016, one year ahead of schedule. Now I know what I can earn before I start collecting benefits. Thanks to all of you.

    by Roseann — February 4, 2016

  25. I have a question: Both my husband and I get a pension, although mine was reduced because I left a bit early. He started collecting his SS at age 62, I’m turning 62 this year, but will probably delay it since I’m still working part time. My question is this: since we both draw a pension and when we are both drawing SS–are we going to pay a penalty because of that? We do not have survivor benefits tied to either pension, but i heard if both parties draw a pension AND social security we pay a penalty. thanks.

    by Donna — February 4, 2016

  26. Gemzee,SSA is wrong again! Daa. When hubby dies the wife will receive what he was receiving at time of death. E Z answer. Check with SSA supervisor to confirm.

    I checked this out on with Prof. Rick Plumb, who has a ‘wealth of information on SS.

    by Dick L — February 4, 2016

  27. Good on your early retirement Roseann! Glad we all could help!

    I have to call Access Health in the next few days to report a change of income with me starting to get my SS income. I dread calling them as they really, really messed up which caused me to lose my subsidy for two months last year. I called and called a hundred times but couldn’t talk to a supervisor, only the worker bees. It was the most frustrating thing on earth. Finally, I put in for a hearing and someone with knowledge called me many weeks later and fixed it pronto. UGH, when they send letters with dates they mean it. However, I was inquiring about the insurance months before I needed it but their clock started ticking from that initial contact and they wanted paperwork! Hub and I didn’t get onto the insurance till May 1st and as of May 9th they cut off the subsidy! OMG! It took me over 2 months and over $1,000 a month for two months to pay my subsidy while they straightened it all out. I did get refunded but it was a nightmare. It didn’t get fixed immediately either to get my money back. I had to contact the Access Health Agent at least 4 or 5 more times for her to submit more paperwork. UGH, very afraid to call THEM! LOL!

    by Louise — February 4, 2016

  28. Hi
    I do have one more question. Is it better to apply in person at the Social Security office or should I just apply on the website? Thanks.

    by Roseann — February 4, 2016

  29. Louise,
    Is Access Health your medical insurance company? You mentioned your subsidy so I assume your insurance is through Obamacare? If thats the case you might have better luck calling the Federal Market Place directly rather than the insurance company.

    by Jim C — February 5, 2016

  30. Access Health is the Connecticut version of the Federal Market Place. It is where we enroll or call to report changes or change insurance during open enrollment. Through them we have chosen a Silver plan with Anthem Blue Cross/Blue Shield. The people who work at Access Health are trained very well, however, if anything is slightly out of the box they can’t seem to deal with it. It is a long story on my issues with them. I inquired 5 months before we actually needed insurance and somehow the computers decided we were starting very soon and we had not chosen anything at that point but the letters kept coming asking for income documentation. I couldn’t give them all the information because Hub was still working and his date of retirement changed too. But their computer kept demanding documents. UGH, so all went well, we got our insurance in May and then May 9th they cut off our subsidy. When they cut it off there is no going back. I couldn’t convince them their dates were off plus, every letter I received had a different date on the letters. One of the Access Health reps chastised me and said I should have submitted the on the first date given. How would anyone know that when every letter had a different date??? When I finally got a call from the Appeals person, it was like I was finally talking to a human, not robots! She solved it without any arguments! I almost fainted she solved it immediately after the zillion phone calls I made to Access Health!

    by Louise — February 5, 2016

  31. MaryNB,
    I am also Single (never married, no children) I am waiting until 70 for SS (I retired at 67 so beyond 66 full retire age). My dad died at 97 and my mom at 95. There was an 8 year difference in their ages. Both healthy until very near the end. I am not rich, but have enough that I do not have to eat cat food to survive until 70. My only travel is to investigate places for retirement…all in semi reasonable driving distances and on the cheap. Interesting. For me this is the right decision. It might be for you also…the good news is that you decision is less complicated.

    I may die tomorrow,but then I will not care who gets the money…I am not going to spend the rest of my life resenting the government for something that may not happen. Got plenty of other government things to resent if I so desire to spend my time that way.

    The good news is that you only have yourself to consider when making SS decisions. I think that there are some heartbreaking stories of married women (and men)who suffered through long illnesses of their spouses or those with gray divorces can really have suffered financial problems….guess children can complicate thing further. Of course most of those persons will not have read this far.

    by elaine — February 5, 2016

  32. Louise,
    Thanks for clarifying that. I live in Georgia so would not be familiar with Access Health. We don’t have a state run Health Exchange in this state so have to contact the Federal Exchange.

    by Jim C — February 5, 2016

  33. Roseann, if you feel timid or uncomfortable doing it on the computer see a SS agent and I think you can do it over the phone. My Hub and I did it on the computer. I felt more comfortable with him at my side so we could go through each question and not make mistakes. It is pretty straight forward and easy. Just don’t rush through it. I also think you can start it and stop then go back later to finish. I didn’t want to do that so we just went through the whole thing at once. It really doesn’t take long at all. The only one thing that I did make a mistake with is that they ask you what month you want to start. I chose January. WELL, the first month you ‘earn’ and then receive your first check ‘earnings’ the next month and for me that will be February. I should have chosen December so I would have had a full year this year. DUH to me!

    Funny, after we signed up my Hub he got a call from the SS people to verify a few things about 4 days after he applied. After I signed up for SS I expected to get a phone call too for the same verification process, but never did receive a phone call!

    by Louise — February 5, 2016

  34. Motley Fool ahs a great article on the breaking even with social security. Type “why i should take social security benefits early” into google. search
    We are drawing as soon as possible because if I draw less from my retirement savings there may be some left for my children. After paying into SS for over 40 years and the fact i cannot will it to my children we are taking every penny we can as soon as we can. God willing, I will draw 87,000 in SS benefits between 62 and my full retirement age. I want to retire not work in retirement!

    by SPOSGM — February 5, 2016

  35. SPOSGM, I am in your corner taking SS early. Hub took his at 63 and me at 62 1/2.

    I just want to point out that the money you would like to leave your children is very thoughtful on your part, however, if you or your wife should get very sick your money can disappear very quickly. My Mom needed nursing home care and two years ago it cost $12,000 a month. Once you deplete a huge portion of your money, Medicaid will kick in. Some people take out life insurance policies for their wives and children. Maybe someone here who has experience in that area could expand on that. Hub and I have Long Term Care Policies that I got from a former employer. When I looked at the terms a while back, it says it will pay up to $6,000 a month towards care. I live in CT and I am sure the $12,000 cost has gone up. My Aunt is in a nursing home right now in TN and her cost is around $6,000 a month. What a difference in price! Medicaid is paying for her stay and will take her property when she dies. Plus, she is supposed to get an inheritance worth around $60K and Medicaid will get that too. Life insurance policies are very expensive but I don’t think Medicaid can take them either.

    by Louise — February 6, 2016

  36. Elaine, when I say I am single, I mean divorced. I divorced at age 50 and have one child. I call myself single. Maybe being divorced changes the calculus? I did not remarry, but my former husband did. He is 65 and still working also. I am not sure what this means to me??

    by MaryNB — February 6, 2016

  37. Thanks Louise,
    We are fortunate that when I retire from the Army we will have health care for life and intend to maximize our medical and other benefits by living near a military installation. We are going to retire in a state that does not tax SS nor military pensions. Many of the states we are considering also have lower sales and property taxes-every bit of savings helps. Moving to a new location for retirement is not for everyone however, for us the difference in the cost of living was convincing and we are used to moving after 30 years in the Army.


    by SPOSGM — February 6, 2016

  38. Dick L Thanks for the reply and correction. As you said, I did find on the Social Security website that a widowed spouse will receive the full amount that her husband was receiving, as long as she has reached her full retirement age when she applies for it.

    by Gemzee — February 6, 2016

  39. MaryNB Here is some good information on collecting SS after being divorced.

    by Louise — February 6, 2016

  40. SPOSGM Thank you for your military service! You are making a wise move to be near Military medical facilities.

    On top of that, not to be morbid, you and your wife could be buried at a military cemetery and save money there too. This comes to mind as my 91 year old uncle just died and was buried at Camp Nelson in KY this week.

    My HUB is LOVING retirement and says “it is the best job I ever had”! I hope you can say the same thing soon!

    by Louise — February 6, 2016

  41. Thank you Louise. I appreciate your help. Also, thanks for the tip on when to start receiving benefits, since I will want my first check in May, I will be sure to say I want the benefits to start in April.
    Thanks again.

    by Roseann — February 6, 2016

  42. There are many mistakes in the above analysis. In order to calculate the true impact of taking SS early one needs to calculate the commuted value. This is what actuaries do when valuing a pension. In doing so you factor in mortality. It has a huge impact. Taking SS early is absolutely the best idea. For most the crossover point is 78 years old. The SS admin wants people to wait as long as possible so they can save MONEY. They are not in the business of being your benevolent provider as this article tries to portray them. SS is broke and will do anything they can to keep kicking the can down the road. Conning people into waiting is one way to do that. I’ve run the calculations for many scenarios. Taking SS early always results in the largest valued commuted value. Don’t sucker for these phony articles.

    Editor’s comment: Dr. Brown is entitled to his opinion. There certainly are some circumstances where it makes sense to file at age 62 – for example if you believe you have less than average life expectancy (at age 62, it is age 82 for males and 84.5 for females) or you need the money to live on. If you search anywhere you probably won’t find a single expert with believable credentials who advocates taking it early except in a few circumstances like we just mentioned.

    In the interest of providing fact-based information, you might find the following helpful. This is from the introduction of a document from the SSA which explains various efforts to try to help Americans enjoy a more financially secure retirement:
    “Among Social Security retired-worker beneficiaries, nearly half claim their retirement benefits as early as possible, and almost all of them claim at some point before their full retirement age (FRA) (Muldoon and Kopcke 2008; Song and Manchester 2007a). Because Americans are living longer but retiring earlier (Burtless and Quinn 2002; Wise 1997), often with a lack of personal retirement savings, the timing of benefit claiming can be crucial to financial well-being in retirement. Because claiming benefits before the FRA results in permanently reduced benefits, many researchers argue that delaying claiming is often the best decision economically (Coile and others 2002; Shoven and Slavov 2013). In fact, delaying the claiming of Social Security retirement benefits is now recognized as an important way to enhance retirement security (see, for example, Munnell and Sass (2008)).”

    Here is the link to the full document, which has a lot of helpful information

    by DrBrown — February 6, 2016

  43. If the crossover point is approx 78 years old and life expectancy is 82 for a man (4 years after life expectancy) and 84.5 for a woman (6.5 years after life expectancy).

    This is my take on what you would collect if you waited till FRA. Just examples. I hope my math is correct!

    Man living till 82 years old, 4 years after life expectancy:
    By waiting here are three scenarios of extra income if waited for FRA at age 66 and death at age 82:
    At $500 a month more, as an example, for a man it would be $24,000 total lifetime more collected if waited for FRA.
    At $400 a month more, as an example, for a man it would be $19,200 total lifetime more collected if waited for FRA.
    At $300 a month more, as an example, for a man it would be $14,400 total lifetime more collected if waited for FRA.

    Woman living till 84.5 years old, 6.5 years after life expectancy:
    By waiting here are three scenarios of extra income if waited for FRA at age 66 and death at age 84.5:
    At $500 a month more, as an example, for a woman, it would be $39,000 total lifetime more if waited for FRA.
    At $400 a month more, as an example, for a woman, it would be $31,200 total lifetime more if waited for FRA.
    At $300 a month more, as an example, for a woman, it would be $23,400 total lifetime more if waited for FRA.

    by Louise — February 6, 2016

  44. Hi to Everyone,
    My name is Juan, I am retired not by choice. We are looking to move in 5 year. I read everyone of your comments. So many places to go. I am in Fayetteville, NC. This location is “The Home of the Airborne”. I want to stay on the east coast, since, I travel many west area.
    Please send comments, do not forget I am retired from the Army, so taxes are important to me and my spouse, I do not pay taxes on my retirement.
    God bless…..

    by Juan jimenez — February 25, 2016

  45. The last few comments concerning elder care, Medicare and Alzheimers were moved to a more appropriate Blog for further discussion :

    by Jane at Topretirements — February 25, 2016

  46. This may be the article Steve mentioned on Motley Fool. It shows a chart and the crossover point where break even takes place during early retirement at age 62, full retirement at age 66 and delayed retirement at age 70.

    Editor’s comment: Thanks for the link Louise, it is helpful. Just a few comments about the Motley Fool article. It cites average life expectancies, but neglects to mention that if you manage to live to age 65 your average life expectancy is much higher than it was at birth: if you live to age 65 your new average life expectancy is 82 for men and 85 for women. Of course if you are in poor health or your parents died young it is different. Also, if you wait for the higher benefits that also means higher COLA $s. It doesn’t mention that if your spouse lives longer than you he or she gets the higher benefit for the rest of her life. That said, if you are 62 and need the money to live on, it is an easy choice to start taking SS. And finally, the article contains several hard-sell links from Motley Fool – just so you are prepared.

    by Louise — March 12, 2016

  47. I agree, Editor. Motley Fool really does push their wares. Buyer beware!
    Anyway, i have a major question. My husband has always earned more than me and has worked longer. He’s also 11 years older than me. Does it matter if i begin taking my social security benefits at 66 or 70, being that at some point i will most likely be a widow and will receive his benefit amount. Consequently, by the time i hit that cross-over line, i may be receiving his higher benefit. Any input would be most appreciated. Thanks!

    by ella — March 13, 2016

  48. Putting aside the fact that Motley Fool is trying to ‘push their wares’, this article gives those who contemplate retiring early or later a good idea, by looking at the chart, when break even point takes place. Until break even point retiring early or late provides the recipient with the same amount of money. Retire early then you get smaller checks for a longer period of time or retire later and get bigger checks for a shorter period of time.

    Breakeven point according to this chart is 77 years old. After break even point, those who wait will get more lifetime benefits.

    However, it all depends of how long they live.

    For those who have children and wish to give savings as an inheritance, SS income will slow the withdrawals from savings, 401k’s, IRA’s. You can Will your savings, but, you cannot Will your Social Security.

    by Louise — March 14, 2016

  49. We consulted a financial advisor who specializes in Social Security – no charge to get a consultation. He knows all of the ins and outs, he educated himself because his parents came to him and he knew he needed to know a whole lot more than he did before he helped them sign up for SS benefits. He now uses his expertise to help retiries from all walks of life. It is well worth the time, as there are more than 100 ways to file, and that many ways of not filing that can cost you lots of money in the long run.

    by Bobbi — March 29, 2016

  50. I have a question on Social Security. I was talking to a guy in regard to him and his wife collecting SS at age 62 and 63 and working. He said his wife got penalized due to income above $15,720 and SS was reduced $1 for every two dollars earned. My question is if this woman has a 401k at work or contributes to an IRA would that penalty be waived as income? If the person was able to put $15,720 into a 401k would the income still have to be added to SS income?

    by Louise — December 7, 2016

  51. It doesn’t matter where that money is funneled to. The SS administration still sees it as income and the ceiling of $15,720 will continue to apply to reduced benefits.

    by Rebecca — December 8, 2016

  52. Wow, didn’t know all earned income had to be added to SS income.

    Is the $15,720 above and beyond the amount you get for SS. So if you get $12,000 a year SS you would add $15,720 earned income to that and any money made above that amount is subject to penalty? The max you could make would be $27,720 before penalty. But if you got more SS per month, let’s say $18,000 a year you still add the $15,720 to that?

    by Louise — December 8, 2016

  53. Louise – I have found everyone I have dealt with through the SS administration to be extremely helpful and very willing to make sure I completely understand the earnings income cap. It can be time consuming to do your due diligence, but it is well worth it. Call the SS administration office that is closest to where you live. You can go in and have a one-on-one talk with a benefits manager, or at the very least call the toll free number provided on the SS web site. Be prepared to sit and wait on hold depending on the day/time you call. You can also go through the voice message system and ask for a call back.

    A lot of people will claim that the SS administration is not helpful and is just out to save the system as much money as possible. My personal experience is that the people I have dealt with are around retirement age and really do want to help people, particularly in the same age category they are in because they really understand where we are coming from. So, be patient and do the work. The SS web site is clear and helpful now to. That’s where I started my search about the earned income cap. Once you reach FULL retirement age you can earn as much extra income as you’d like above what your SS income is. I am currently taking widow’s benefits and have taken a job with reduced income and retirement benefits to get below the earned income level and I was in a lot of physical pain from sitting in front of a computer all day long. I have regretted the decision in some ways because I am BORED with my job now, but that’s a whole other issue.

    If you Google this, it will get you to the proper information on the SS site.
    Retirement Planner: Getting Benefits While Working
    I hope this is helpful.

    by Rebecca — December 9, 2016

  54. Louise, SS benefits/payments are not considered earned income. Earned income is from working (as employee or self employed). SS has brochures available on a variety of subjects. You can access them thru (over 150 brochures). The brochure that answers your question specifically is EN-05-10069, How Work Affects Your Benefits, last page, last paragraph. Hope this helps you and others.

    I too have called SSA. It is a long wait, but I chose the option to leave my name and number and be called when next agent is available and system gives you an estimated wait time to expect to be called back. Has worked well for me and agents have been warm and friendly and helped me.

    by BeckyN. — December 9, 2016

  55. Thanks for the information!

    by Louise — December 9, 2016

  56. Thanks all, good discussion of options available. Military retirement pensions are not considered earned income which works in our favor and we have a Survivor’s Benefit Plan for spouses. The SSBP enables spouses to have a life time annuity should the military retiree pass first. Point is there are no cookie cutter solutions, each person must do the research and decide what options fit your situation. We are so looking forward to our retirement together and pray you will all be successful in you retirement planning. Enjoy the good discussions. Wishing you all a Merry Christmas.


    by Steve Whittaker — December 11, 2016

  57. Also Merry Christmas! I have also found the folks at SS to be very helpful. I use their online caculators and get my printed statements, but I also call SS once each year to check the numbers. The long wait to talk to a representative is really worth the peace of mind, and they’ve been very patient with my questions.

    I’m close to 64, and expecting a layoff anytime between now and 65 (but I’ll retire at 65 if I can make it that far – I don’t want to handle the stress of a high pressure job in a toxic corporate environment once I can have the safety net of Medicare to minimize health insurance costs). In the meantime, the extra paychecks and 401K deposits are obviously good. I will take widows benefits first, and then switch to my own SS later. My benefit will be the maximum, and my widow’s benefit is about $200 less. The SS representatives have verified the amount of my widow’s benefit for me each year, and explained the process for applying so I could get the paperwork ready. I did not know that you had to go into a SS office to apply for widow’s benefits, for ex. I also had to order extra copies of our marriage license and death certificate to get ready for the application. I’m still a little fuzzy on when the checks start after an application, and if they’re retroactive to the application date. I did discover that my checks will be deposited at the end of the month due to my birthday.

    I learned from my spouse’s death that the check in the month of death had to be refunded, which is something that couples might want to keep in mind when setting up a cushion in their budgets.

    by Kate S. — December 12, 2016

  58. Apparently the government is oblivious to the trend of “letting” people of 50 plus years go! Even at my job I have seen people work to 29 years and they are pushed out. Companies don’t want to pay a 30 year pension now a days. My wife was a displaced worker looking for work! It took her some time to get a part-time job too. That part-time job keeps us from dipping into our retirement savings, but her income doesn’t allow for her to contribute to those savings. My wife intends to collect Social Security at 62 yrs and keep working part-time as long as she is physically able. I am looking to see if I can transfer to our area of retirement a year before she collects so we can regroup. I also will look for a part-time job at that time, but will not file for retirement until NRA if at all possible. Health issues could arise and change everything. I have Anthem Blue Cross and Blue shield now at work and can keep it when I retire. I have no problem getting doctors with it. We chose it for the MIL since she doesn’t qualify for Medicaid. In Ohio, the state will take any life insurance policies in your name. Nursing homes put everyone they can on Medicaid, by claiming the property, life insurance policies, bank accounts, etc to pay for your care and look financially back 7 years. MIL can now go in a Nursing Home since it has been 7 years since she sold her house. We have kept track of all her spending, keeping all receipts in her name, She only has to sign over her 50K life insurance to them or pay 7K a month for Nursing home care. She prefers for my wife to take care of her free of charge. She will be 82 this year.

    by DeyErmand — December 13, 2016

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