When to Take Social security Benefits

Ken: We get it all the time and it’s not easy to explain but what—are you ready to try it? Daria: I’m ready. Ken: Easy, Daria. Daria: I don’t know if I’m I able but I’m ready. Ken: Should you take Social Security benefits at the age 62 or your NRA which is Normal Retirement Age or even later than that. A lot of other people saying “Oh, no. I’m a lot of baby boomers are turning 62 this year. I know maybe I’ll take it. I’ve take a while I can get it and I’ll be happy. It may not be the best decision. Daria: May not be the best decision at all. First of, if you were born post 1943 and particularly at 1943 to 1954 then your natural normal retirement age, your NRA is 66 years of age. Ken: And it goes up from there. Daria: It goes up from there in halfs and quarters. Ken: All right here’s the deal. Daria: Slices and dices. Ken: A lot depends on your health. Now just bear with us here okay kids and boomers and even older. If you take your money at age 62, remember you use to get 80% of your benefits, forget it. It’s now 75% of your benefits if you get it early. Daria: So you leave in 25% behind right from day one with that early retirement. Ken: Forever basically, generally speaking forever. The decision to take it early or wait is really a function of your health and almost how long you would expect to live because here is how it works. The longer you live, you take it at 62, the longer you live you’re going to laugh in it—oh its not so funny. The longer you live, the more money you lose because you’re going at the rate of 75%. Daria: Of your full retirement benefit and unfortunately up till now, I haven’t seen a later statistics but the last statistics I saw, 70% of us take early retirement benefits, way bad. Ken: Wow. Daria: 70% that was USA today a year or two ago. It maybe worse now, it maybe better but that’s scary. Ken: Let’s continue. If you way pass your NRA, your normal retirement age as Daria said now for all us 66 and later. Your benefit will be 32% larger than if you took it even at your normal retirement age which is really incredible if you wait until 70. Also something you didn’t know a little Dolan and a how— Daria: This is really good. Ken: Which surprise me as we did research for these videos? If you wait till age 70 guess what you get all the cost of living adjustments. You know the annual one, January 1st. You get them all the way from your normal retirement accruing to age 70. Daria: So that would be four more years. Ken: All right give us amount. Daria: The 66 is your retirement age. Ken: All right, we’re going to do a little math here and that’s simply this. It’s something called the break-even age. The break-even age is about 80 and that’s the age of which benefits pay to pay recipients start exceeding those who took it earlier about age 80 and there’s a little bit. So now the question is there a chance for me living to 80? The chances are 80% that one of the spouses will be alive at age 80. Daria: Exactly and don’t forget not on medicine. We’re living longer and longer and longer than ever before. Now if you’re married and you and your spouse are around the same age and your debating as to whether you should take those 62 year of age benefits of that, the early one. If you’re married it’s often beneficial if the higher earning spouse, who ever made the most money puts off taking Social Security benefits for as long as possible. Ken: Not often the husband. Daria: It is unfortunately often the husband— Ken: Who lives longer—? Daria: Because it’s just the remaining spouse who may have taken the earlier 75% benefits at age 62 gets the bump up to the deceased spouse’ higher benefit. Ken: Exactly right. Daria: So if the woman was the larger earner, you’ve probably aren’t going to benefit from that because on longevity wise up to early women outlive men. Ken: Exactly right. Daria: But generally speaking, it’s the man who earns more and if it’s the man, who earns more, postpone his as long as you possibly can. Ken: All right, give me a couple of reasons why it makes sense not to wait to take it early. I supposed if you’re in bad health, get the benefits you may in bad health. Daria: Of course, that also begs question how you pay for health insurance between 62 and 65. Ken: If you’re really— Daria: Medicare. Ken: If you really need the money, really need the money. Daria: Absolutely but knowing that you’re going to lose 25% from day one in perpetuity. Ken: What you may want to do to make the final decision. Here again the math is a little bit confusing and we’re saying generally speaking if you can't and many people it makes sense to wait until at least your normal retirement age and possibly even longer. That’s sort of a Dolan bottom line. You may want to talk to your financial adviser or your tax adviser and discuss it or even the Social Security Administration which is 800-7721-213. Well, this is worth discussing it. Daria: One last point what I do want to make and I’ll make it very quickly. A lot of us look around and say you know what they’re going to jiggle with Social Security. They’re going to have to change this. Ken: Don’t start with that. Daria: No, no let me finish. So until it just starts with early take that 62 early benefit because I’m afraid if I wait until 66, I’m not going to get what I should be getting. Don’t do that if it’s done out of fear that your benefits are going to change, believe me there is not a standing member in the Congress of the United States or the government from the president on down that would dare to mess around with somebody in their 60’s benefits. Ken: 39 million recipients, 39 million votes. Daria: So don’t do it just had a fear that your benefits will change, trust me. They won’t. Ken: Thank you.