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A Surprising Answer: When Should You Start Taking Social Security

April 2012 Updates:
1. Social Security Administration has a great Article on when to start taking Social Security benefits. Definitely worth reading.
2. Topretirements updated this question in a newer, updated article, "What You Think You Know About Social Security Might Help You".

Ask just about anybody when a baby boomer should start taking their social security distributions. Our experience is 9 to 1 you’ll get this answer: “As soon as you can”. For those of us born in 1946 or after, “as soon as” normally translates to 62 years of age.

Conventional wisdom has it that you should start collecting your checks as early as possible. The logic is that even though you will get a smaller monthly check the earlier you start, you will be better off because it will take a long time to make up for the value of money received early. In fact, you might not live long enough to ever catch up.

On a December 2006 PBS television special, however,” You Can Do It: Baby Boomers Guide to a Great Retirement”, host Jonathan Pond challenged the audience to understand that this generalization might not always be the best choice. He has a book with the same name as the TV special (for more details go to Jonathan’s website 

Jonathan’s basic premise is that everyone’s situation is not the same. For some people the "start taking it at 62" approach is the best one. But before deciding that for yourself, he urged the audience to answer 6 questions like the ones below. In his opinion, a yes to any of these questions increases the likelihood that you should delay taking the money.

Here is a loose approximation of the 6 questions he posed:
- Will you earn more than the minimum allowable income in the years between your 62 and 67th birthdays?
If you are married and file jointly, and your Adjusted Gross Income (AGI) is $32,000, you will probably have to pay taxes on your social security benefit. Taking the social security benefit in these years will hurt you because you will be taxed on it. And, since by taking the money early you get far less every year for the rest of your life, you might as well wait and collect at a higher rate. If you can wait even longer than 67 to start collecting, Uncle Sam will reward you substantially for delaying your benefits. Editor's note: See comments on this question at end

- Do you have or do you expect to have an irregular earnings history?
If this is true for you there might be some years when you wish you weren’t getting your social security benefits, because of the taxation problem mentioned above.

- Will social security benefits be a substantial part of your income?
If they will be you might be better off working longer and taking the higher benefits that will come from delaying your social security payments.

- Have you and your spouse contributed to the system in very different amounts?
If that is the case it might make sense in some circumstances for one or both of you to delay so that you get the maximum possible distribution. You will want to study this issue to fully understand it, or ask your financial advisor.

- Are you in good health with no known life shortening conditions?
If you are, you could live a long time. The payback on the cost of money on an early vs. late distribution is variously pegged at 11 – 17 years. So if you live beyond 79 years of age you will probably wish you had delayed the benefit to have a lot bigger payout in the last 10 -20 years of your life.

- Did your parents live long lives?
The best predictor of how long you might live is how long your parents lived. Obviously anything bad can happen to anyone at any time. But people who inherit the long-life set of genes have much better odds of living into their 90s, even 100’s. So if that is the case, you might want to wait as long as you legally can before you start taking your distributions.

Summary: Everyone’s situation is different. For example, if you need the money at 62 and cannot or do not want to work, you are better off taking the money then, even if some of these other reasons apply. Any financial advisor should be able to run the numbers for you and determine when the payback for waiting for a higher benefit applies to you. So our advice would be to discuss these ideas with your own financial advisor and then make a more informed decision.

More Thoughts about Why Delaying Might be a Better Strategy
Our good friend Michael Losey, SPHR, CAE, the Past-President and CEO of the Society for Human Resource Management (SHRM), wrote to with some additional thoughts about the first of Jonathan's questions - Will you earn more than the minimum allowable income in the years between your 62 and 67th birthdays? Mike gave us permission to quote his response here:

"This does not mention the offset in social security monthly benefits if an individual earns more than the allowed amount if they have started their Social Security payments prior to their Full Retirement Age (FRA).

As highlighted in the following Social Security Web page "$1 in benefits will be deducted for each $2 you earn above the annual limit. For 2012 that limit is $14,660." That is a BIG bite and you experience the reduction of benefits, also. In the year you reach Full Retirement Age the reduction is $1 for every $3 above the limit of $38,880.

Here is more information from the Social Security Administration on when to start taking your security 

Also, other considerations:

1. If you are entitled to SS benefits but do not wish to take them now since you anticipate exceeding these earning limits, other things happen. For instance:

  • If employed or self employed you will not only postpone your commencement of benefits and thus increase your eventual payment by 5/9ths of one percent per month but you will also continue to pay into Social Security and your eventual benefit, when drawn, will increase based on those additional payments to the fund. (Note: The SS monthly benefit will continue to increase even after othe person attains the FRA --- if the person continues to work and pays into SS. Monthly SS payment adjustments are made in the subsequent year for the addition monies paid to the fund.)

As noted, after participant meets the FRA there is NO offset and they can make all they want. "

Thanks Mike!

Have Your Own Opinion? Go to the Topretirements Forum topic on social security benefits.

Other helpful social security  links:
Motley Fool's interesting discussion of taxation of benefits:
Taxation of Social Security Benefits
How much can i earn and still receive social security benefits

Topretirements Members Discuss This Issue


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