Saturday, September 24, 2011

Living Richly in Retirement-When Should I Access Social Security?

The big question facing many retirees is when to take social security. Since the "full retirement" age has changed to 70, the question has become more difficult for many people. It used to be that the advise from SS itself was to take benefits early(the take it while you can still enjoy it theory). Now they tend to advise people to wait, arguing that have more money per month later is important, especially as we live longer.

It's a difficult question, and it seems to me that the answers cross the spectrum. For some people waiting til 70 makes sense. These folks most likely have large savings (the kind we're all "supposed" to have) or else the ability work more years at a regular job.  For the rest of us, the answers will lie somewhere in between. Some folks will take Social Security early for fear of what may happen to the system later, others will take it out of need. Others will opt in for any one of many reasons.

In my case, I have taken social security exceptionally early. At fifty nine (about to turn sixty), I'm now eligible for my husband's social security benefit. In theory, I could defer this, just as I could defer my own benefit for up to ten years.  I chose to take this social security benefit  as soon as I could for a variety of reasons. The first and most obvious reason was that due to some pretty horrible financial decisions (or lack of intelligent decision), I was operating with no savings and a thousand dollar pension.  Social security moves me from having nothing to having a moderate income-which I am still learning to manage in retirement.

Even without this circumstance however, I can see good reasons to take social security early, both for myself and for others.  Why?
  • It may be that taking social security makes more sense than increasing your annual "take" from savings and investments. If your "number" per year is too tight, social security may make the difference. Yes, you could also take more from savings. But if you believe as many do that in the end result you make money in the stock market, it may make more sense to leave that interest producing money where it is. At the moment I have no savings. but I hope to rebuild at some level, and I would like that money to be earning money for as long as possible.
  • Even if you are not on the edge, taking social security may enable certain extras. While most of us manage to cut expenses in retirement, there are those occasions where we could make use of that extra cash for the little things.
  • For most of us, expenses (other than medical costs) will lessen as we age. We'll certainly be more interested in traveling at sixty five than at, say, eighty five.  This in no way implies that life is not full at eighty five, just different. As such, I prefer to have the extra income available currently.
  • For some, taking that money enables us to actually make life more stable later on.  While some retirees have homes paid off, upgraded, repaired and outfitted for later years, some of us are not there yet. If I am to retire in place, it makes more sense for me to use whatever income I have now to make my house manageable, insulate to decrease costs, add things like safety bars and security systems if i feel they are needed. Not only that, but it may be cheaper to do it now while am able to do a certain amount of labor myself.
  • We can always change our minds. I have returned to college with the goal of working at least part time as a translator. I also have a slowly blooming quilt business. Should those two options produce enough income for me, I can simply contact social security and defer payments until a later date.
Financial decisions are unique to each family or person. This is true at any time of life.  While I realize the official "doctrine' on social security is the opposite of what I have chosen, it works for me.  What about you-have you made a decision on social security?  How will you manage (or are you managing) that portion of your retirement finances.


  1. I thought widows couldn't qualify until age 60? Just wondering as I'm a widow too and I am 58, turning 59 next month. Stella

  2. For clarification, full retirement age for most of us is defined as 66. You can wait as late as 70 to have even higher monthly checks, though there is no increase past that age.

    At 62, I am now eligible to take Social Security but have decided to wait until 64. The difference between those two years is about 10% more money each month. As you note I won't really bb it, but it will provide for some extras in our life.

    Of course, if our medical costs keep going up 20% a year all that extra money might go to insurance companies. I still have 2 1/2 years until Medicare helps me in that regard.

  3. Thanks bob, not sure why I thought 70 was the magic that what its supposed to be in few years perhaps. BY the way, I have now read the paper copy of the mag (I prefer real reading for most things). Very nice.

  4. Stella, I will be sixty in the next month. sorry if I was unclear about that in the article, I will edt.

  5. We are planning on looking at social security each year. As of now we do not "need" it. We seem to be going on a good path without it. If curcumstances change and we need more funds, we may dive in.
    My sister is awaiting her 60. She lost her husband five years ago. Is it a big cut if you take it at 60?

  6. I'm not too optimistic of ever being able to collect social security since my dad's battled cancer for 10 yrs since 56 and my mom suddenly died from brain cancer barely a month after her 65th bday and the way the govt is I'll probably keep paying into it and there wont' be any left by the time I hit the minimum age(I'm 44 almost 45 now)...but I'll play!!

    I'm planning on taking it as soon as I can! same with any pensions I have - the larger of the 2 pensions refuses to give an estimate(complicated formula) until I'm 55 and yep I plan to take that too and I'm counting the years! of course things can always change but here's where I see myself in 15 yrs:
    I see my townhome paid off, no debt, an inheritance(not in the millions but looking like a good amount for an emergency fund or to purchase a one story home)..helping my friend's now 3 yr old with college/trade school if I'm able..maybe wanting to do a little traveling.I also have my 401k and roth IRA and I'm still contributing to the 401k and plan to fund the roth some more after I pay off the car and build up an emergency fund and possibly do some improvements around the townhome(and furniture I include as an improvement)of course all this depends on keeping my job now and decent health! of course these pensions and social security may turn out to be not enough in which case I have no idea what I'll do...I mean work a job on a rotating shift I hate for that many years and still be no better off than if I'd done nothing..*shudder* don't wanna think about it!

    wow this was fun! and I know every generation has worried about social security not being there!


  7. I found it is helpful to use the calculator/report generated by to learn about potential scenarios that will benefit you the most. I wrote about my own results ( and how much they surprised me. Hard to learn all of the details of the current laws on your own. I can see why you made the choice you did but you still might want to try this out.

  8. Interesting post. I was recently laid off at the age of 61. I have been trying to decide what to do since I qualify in February for SS. I never thought about it but it makes sense to leave the investments where they are to grow rather than start drawing on them now and take the early benefits even though they are lower.

  9. Juhlie, your blog post is very interesting. However, I no longer have the option of two socia security payments (or two anything else) as a single person. As a single person my options are entirely different. I plan to do some more writing on sindehood in retirement or otherwise.

  10. Roberta, I'm not a financial professional by any means, and I suppose everyone has to do what works. It just seems to ma that any itnerest is better than none...

  11. OOPs, after looking, the widow's page doesnt even have a calculator-how unfair is that!

  12. Barb, the calculator/report I mentioned has an option for those who are widowed. Its free still so it might be interesting if nothing else to see what it says. Not suggesting you change anything, just offering some info.

  13. Oops - sorry, I hadn't checked out the widowed page. They are doing this as a free service so I guess they haven't gotten to that yet.

  14. Juhli, not a problem. It is worth noting that on the widowed page they do observe that its av ery valid choice, because I can always change to my social security at some point in the fugure ...........although mine is much lower than hubbys so I doubt I will ever do that

  15. Thank you for your response. I have elected to take my own social security at 60, then switch over to my husbands later, at full retirement age since he has higher monthly benefits. Stella

  16. I will be turning 62 in Nov-when I was younger I always said that I would take my SS early if I was no longer working. Now that I'm retired I feel differently. My pension pays my bills and I am very grateful I have other investments. It makes sense for me to wait rather than take a big cut now.
    Anyone who needs the income or is in poor health should take it early-though I guess it is difficult to predict one's life expectency.
    This is a very individual decision. Thanks for the discussion.ja

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