Monday, Oct. 26, 2009

Delay Social Security Benefits

You become eligible for early Social Security benefits at age 62. Normal collection begins at around age 66 and you must start collecting at age 70. This presents a lot of confusing choices, but in general the longer you wait to collect the better off you will be. An exception is for folks who are in poor health, are desperate for income or have a higher earning spouse. Such people should start collecting as soon as possible. Why wait? For one thing, if you are still working you'll pay tax on your benefits. That's just silly. But the main reason to wait is to collect the higher benefit. The monthly benefit at age 70 could be as much as double the monthly benefit taken at age 62, say, $3,000 versus $1,500. In this example, a 70-year-old today will by age 80 have exceeded the total benefits paid to someone who started collecting at age 62 — and have the rest of their life (and a surviving spouse's life) to collect the higher monthly amount. By the way, if you are part of a 65-year-old couple, odds are one of you will make it to 90.


Planning For Retirement: Your 60s

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