Social Security: Take it now or wait

Collect Now, or Later? Timing Your Social Security Benefits

Excerpt:

You can claim Social Security any time from age 62 to 70, but the longer you wait, the larger your monthly check. And many people come out ahead if they wait at least until their full retirement age, which is different from the day you stop working for good. For people born 1943 to 1954, full retirement age is 66, and it creeps up for younger people.

What do you stand to lose by taking benefits early? Take those who are set to receive $1,000 a month at their full retirement age. If they sign up for benefits at age 62, they will collect only $750. But if they wait until 70, they will earn extra credit and receive up to $1,320 a month — nearly a third more.

At first glance, it seems that everyone should wait until they are 70. But that is not the case. The answer depends on many factors, including when you stop working, how much you have in savings, whether you are healthy, whether you are married or single and whether your spouse earns more — or less.

Comment: Nice graphic with the article. More on issue below:

Paying Back Social Security: Does It Make Sense?

It sounds far-fetched, but repaying the government for the Social Security benefits you’ve already received may boost your monthly income. Here’s how it works:

Say you retired and began receiving Social Security benefits at age 62. You’re now 70. You can repay the money you’ve already received and then reapply for Social Security. Because you’re older, your new checks will be larger every month.

For example, say you’ve been receiving $13,250 annually. You’ll have to repay $94,556, but your yearly benefit would rise by $7,443 to $20,693. You’d recoup your initial outlay just before you turn 83.

Moreover, you’re not required to pay any interest on the benefits you’ve already received. “That’s the key,” says Larry Kotlikoff, professor of economics at Boston University. Paying back the government and restarting your Social Security is similar to purchasing an annuity—spending a sum of money now for guaranteed income in the future. However, because you don’t have to repay interest on the benefits you’ve received, and there are no fees, this tends to be less expensive than buying an annuity.

Comment: The above idea was the discussion among my retirement aged relatives this week. Interesting ... take a benefit at 62 .... if you can pay it back at 66, do it and get a higher benefit.