I’m 64 and like my job as a plant supervisor. I plan to continue working until I am 70. Is it better to begin drawing full Social Security at age 66 or wait until 70 and get the higher amount? I am getting conflicting advice.
Not So Secure
Dear Not So,
You ask a loaded question because none of us know how long we’ll live! So, setting aside the unknown factor of our actual lifespan vs. our expected life span, I will provide some input to your question.
Although Social Security administrators have incentivized us to wait until 70 by providing us a larger monthly income, it is not necessarily the best choice as I will attempt to show. No doubt, it is a complicated equation with a number of variables including your health, financial condition, lifestyle and retirement plans. I will cover the basics here.
The Social Security Act was passed by Congress as part of the New Deal in 1935. It was our government’s attempt to help the elderly, unemployed, widows, orphans, and impoverished impacted by the Great Depression. Today, Americans associate it with retirement income. In fact, a survey from TransAmerica reveals that most seniors expect Social Security to be their primary income.
Retirement is a major concern among many because they are not saving or have not saved enough. In a recent report, Google revealed the 10 most asked questions about retirement:
1. How much do I need to retire?
2. How to retire early
3. When can I retire?
4. What is the retirement age?
5. How much to save for retirement?
6. How to save for retirement
7. How to retire at 50
8. How to retire
9. What is the full retirement age for Social Security?
10. Where to retire
Social Security benefits are based on the top 35 years of earning history and determined by the age one begins collecting. It is possible to begin claiming benefits at 62, but to get 100% of the benefits, one must wait until full retirement age (FRA). For those born between 1943-1954 that age is 66; those born between 1955-1959 – age 66 plus several months; and for those born after 1960 – age 67.
The average retiree draws $1,461 a month or $17,532 in a year, enough to replace about 40% of the average American’s pre-retirement income. This makes saving, investing, and other sources of income imperative to reduce personal and family stress when work is no longer possible.
My father, like many he knows, could not imagine living into his 80s, but he has. Others, younger than him, fear running out of resources as they will likely live longer than ever expected.
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SOURCE: Christian Post, Chuck Bentley