Taking Social Security Early or Later

[Bayspieler]

My mother-in-law is long divorced and 64 years old. She's worked since about 1969, and she intends to continue working for the next few years regardless of whether or not she has the financial resources to retire. She currently makes enough to get by okay. Her house is paid for, and she has had no major expenses, etc.

She recently asked me about taking Social Security. My opinion is that she should delay taking SS for as long as possible. She comes from a family where the women live a long time -- her mother is 89 and still lives here in town. My understanding was that delaying SS for as long as possible is generally a good idea, and that the money you received monthly/annually was significantly more with each year you delayed.

However, she reports that a number of her friends have said that this simply isn't true. They reported that the monthly premium only increased by something on the order of five to ten dollars a month between those took SS at 62 and those who took it at, say, 65.

My own research on the SS web site suggests that this is nonsense, and that the payments increase by about 8% per year of delay. However, she puts a lot of weight on the opinions of some of these friends she's talked to, and, frankly, I do too. (Some of them I don't put much trust in, and fortunately, her opinions generally match my own, but you all probably don't care about that

So, I guess I'd like the SA forum's opinion on the 'five to ten dollar' claim. Has anyone had any experience with this? Is there anything to this claim at all?

Thanks in advance.

[disneysteve]

Her friends are wrong. The increase is significant, as you have learned. It increases each year until age 70 when it maxes out so she should definitely collect then if she didn't do it before that.

[Retired To Win]

Her friends are wrong. The increase is significant, as you have learned. It increases each year until age 70 when it maxes out so she should definitely collect then if she didn't do it before that.

Right. The increase is indeed around 8% per year until you reach 70, when the monthly benefit maxes out.

I chose to take Social Security at 65, even though financially I could have waited until I reached 70. One reason was that I decided it would be better for me better to have a smaller bird in the hand (or in this case, the money in my pocket) than a bigger one in the bush, so to speak.

Another reason, because I did not need the money, is that I could -- over the 5 years between age 65 and 70 -- collect $100,000 from social security and invest it for a future return later. The kind of person I am, I'd rather do that and be in control of that money.

[bigdaddybus]

Bayspieler, what you and your MIL need to understand is that her SS benifits are equal (regardless of age) from an actuarial perspective based on the life expectancy used by the SS administration. That age is currently 80 yrs old.

So that means if she begins collecting at 65, 68, or 70 to the SS administration its an equal payout as far as they are concerned, as they assume she has the average life expectancy (age 80)

So knowing this, and the fact that you said your MIL will likely live to be older that 80 years old, the best option for her is to take her social security benifits as late in life as she can afford to.

As late as she can afford to is a key point. Do to various reasons (health, loss of job, etc) we can't all afford to wait to start SS payments.

hope this helps, there are numerous articles available on this such as this one from the WSJ yesterday. http://online.wsj.com/news/articles/...707675310.html



as RTW stated, wealthy people tend to take SS payments early (and invest it) as they dont need the money (both my parents did this) but that doesnt sound like the case for your MIL. She should delay as late as possible for the largest payout which will improve her standard of living over an early withdrawl.

[feh]

A prime example why people should do their own research instead of listening to friends/family.

8% increase per year. Assuming she doesn't need the money and expects to live a long while, wait until 70.

[jIM_Ohio]

do BOTH

collect ex husbands spousal benefit now
delay own benefit until age 70

[Like2Plan]

My mother-in-law is long divorced and 64 years old. She's worked since about 1969, and she intends to continue working for the next few years regardless of whether or not she has the financial resources to retire. She currently makes enough to get by okay. Her house is paid for, and she has had no major expenses, etc.

However, she reports that a number of her friends have said that this simply isn't true. They reported that the monthly premium only increased by something on the order of five to ten dollars a month between those took SS at 62 and those who took it at, say, 65.

Comparisons would only be relevant if the friend had identical employment (wages) over the high 35 years of employment, so doesn't do too much good to compare.
Also, if she is working, she will take a reduction in benefits if she exceeds the annual exempt amount if she hasn't reached the full retirement age (not sure what year her birthday is):

1.For people younger than full retirement age in 2013, the annual exempt amount is $15,120. (We deduct $1 from benefits for each $2 earned over $15,120.); or
2.For people who reach in 2013, the annual exempt amount is $40,080. (We deduct $1 from benefits for each $3 earned over $40,080 until the month you reach full retirement age.)
There is no limit on earnings for workers who are full retirement age or older the entire year.


link to FAQ

Normal Retirement Age