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Money Matters for Seniors by Robert
Valentine
Social Security: Collect Later, Collect More
Many Americans collect Social Security benefits early and
face a penalty, but by waiting until their official retirement age, they
would receive full benefits.
By
Robert Valentine, Columnist, Certified Senior Advisor,
Jan. 19, 2006 - John Post works hard. Born during World War II,
just before the Baby Boom began, he’s 62 years old and has spent his
entire career in education. As a high school administrator, most of his
work days start at 7 a.m., and many don’t end until 10 or 11 p.m. after
a school-related event. He works six days a week and rarely takes a
vacation. While he’s in decent health, it’s been a year since
triple-bypass surgery and he does his best to eat right and exercise.
But one of these days he’s going to have to
retire.
A man responsible for educating students for
several decades will soon have to call it quits as a high school
superintendent. Post hopes to return to the classroom and teach
part-time after retirement. Besides teaching, he’s got a whole list of
things he would like to do in retirement, and continuing to work and
receive extra income is extremely important to him.
Mr. Post didn’t consult with a financial planner
when thinking about retirement. Thus, he’s always had some sort of a
plan, but only a loosely defined one. Now he wants to make sure he
doesn’t outlive his retirement income and that means working a bit
longer and in the process, avoiding collecting Social Security early.
It’s one more reason to seek professional advice when planning for
retirement. Sound familiar?
The Baby Boomer generation is famous for a lot of
things. One could easily argue that people born during the era are some
of the most unique individuals that have ever lived. Now, with improved
health conditions, an increased standard of living, and major medical
advances, people are living longer than ever before. They’re also
working longer than ever before. Some are working longer to keep
active, others because of the benefits. But many people, Mr. Post
included, are working longer to make sure something is left after he’s
gone. He’s working as long as he can to avoid using up personal
retirement savings and to maximize his Social Security benefits.
By drawing Social Security benefits early, (the
earliest you’re eligible is age 62), you automatically reduce the amount
in benefits you’ll receive for the rest of your life. A majority of
Americans take their Social Security benefits early, which means they’re
left with less money. Some people are forced to take early retirement
due to a lack of planning or situations beyond their control.
The chart below gives some examples provided by the
Social Security Calculator at www.ssa.gov.
This chart assumes that you were born in 1950 and are currently earning
$85,000 a year in income. You can see below how much can be gained by
simply waiting a few years.
|
Retirement Benefit Estimates |
|
Retirement Age: |
Monthly Benefit Amount |
|
62 and 1 month in 2012 |
$1,373.00 |
|
66 in 2016 |
$1,875.00 |
|
70 in 2020 |
$2,540.00 |
So why would anyone draw early? Quite honestly,
many people are forced to draw early because of a lack of proper
retirement planning. Some reach 62 and are just ready to be done
working but don’t have any other (or very little) retirement income in
place. Without a proper plan, they’re forced to collect Social Security
to help pay the bills. It’s one more reason why professional advice can
go a long way to helping you be independent in your retirement years.
Currently, the official retirement age varies
according to the year you were born.
In Post’s case, his official age to retire and
receive full benefits is 65 years and 10 months. He plans on waiting
until that day so that he can collect full benefits. He also wants to
work that long so he can continue to receive healthcare through his
employer and continue to earn income.
If you do start drawing benefits early and you
still work, there are certain limits to how much money you can make each
year while drawing Social Security benefits. If you go over those
limits, your benefit is reduced even more. That’s just one more reason
to wait as long as possible to take Social Security.
Post emphasizes that the longer he can earn a
steady income, the longer he can wait to collect Social Security
benefits. Not to mention that once he starts drawing Social Security,
his benefits will be increased by the added income.
Post also emphasized the fun-factor in continuing
to work. He’s excited because by working longer, his retirement savings
can stay intact longer and he’ll have more assets left for things like
vacation and hobbies. He’s also concerned about leaving something to
pass on to the next generation.
Once Post reaches his retirement age of 65 years
and 10 months, he can also begin to work as much or as little as he
wants with no effect on his Social Security benefits. At that point,
Post says, he’ll return to the class room and work as much or as little
as his health and his travel schedule will allow.
When deciding what age you should retire at, you
should always consult with a financial professional. There are more
than just the factors above to think about when making such an important
decision. However, if you want to receive full Social Security
benefits, it’s important that you wait until your official retirement
age. That can be a difficult decision for some people to make. Post
says the decision to wait was an easy one for him.
Post spoke about why he’s working longer and the
benefits of waiting to draw Social Security. He added that when you’re
finally able to travel and you see all the sights of this country, you
realize why you’re retired. It’s to enjoy the great things this world
has to offer. And the longer he can afford to do that, the happier
he’ll be!
Robert Valentine is a Certified Senior Advisor in
Huntington Beach, CA. He can be reached at (877) 732-2637.
About author
This article was submitted by Robert
Valentine of Financial and Retirement Management. Robert (CA Insurance
Lic #0C23496) is a Registered Representative of and offers securities
through Securities America, Inc., a Registered Broker/Dealer, Member
NASD/SIPC. Advisory services offered through Financial and Retirement
Management, a Registered Investment Advisory firm. Robert is a Certified
Senior Advisor in Huntington Beach, CA. Several of his articles on
financial planning matters that concern investors have been published by
SeniorJournal.com. Robert
can be reached at (877) 732-2637.
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