I have a client that is age 62, retired from her old job a year and a half ago and now has a small interior design company. She recently received the annual summary statement regarding her social security and was a little alarmed that her expected monthly benefit is so low (as a result of not having any income the last couple years). Would you suggest she start drawing on her social security now to keep the benefit higher? What other factors should they consider?
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I don't understand your statement how drawing her social security at age 62 would keep her benefit higher. If she starts drawing at 62 her benefit per month will be lower than if she waits to age 65+. Note also that if she is working at age 62 she would have an income limitation of $12,480 at which point she starts loosing $1 in benefits received for every $2 in earnings above the limit. Once she starts taking benefits her additional wages do not change her benefits yet they are subject to payroll taxes.
However, I like a bird in the hand instead of in the bush. As a rule of thumb, If the client expects to live to around 80 its a break-even (at around 80) to start drawing at age 62. If the client dies before say 80 she would get more than waiting to 65. If the client will live older than say 80 she will lose money to start early. To be exact you would have to calculate with actual numbers.Last edited by OldJack; 01-11-2006, 04:11 PM. -
ss NOW OR LATER
Really this decision is different for each individual. It's been my experience that the SS people advise most people to take retirement at 62.Comment
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I think the point about the offset if she's still working is a major consideration. I'm not drawing mine yet because of that very issue. Once I'm at full retirement age (not that far off, I'm afraid), I can make as much as the market will bear, and my physical infirmities will permit.Comment
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Retirement
I agree that collecting at age 62 hinges of facts and circumstances. But if the t/p is still working or plans on working during the 62-65 years, it seems foolish to start at 62 because of the payback rules. Of course there is $11,000 that is allowed before payback starts.This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
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I meant to include mental infirmities, but I forgot.Originally posted by rosieeaComment
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Thanks for the comments everyone.Originally posted by OldJack
Arent your benefits based on your wages for the last 3 or 4 years? That is why I thought her benefits would decrease. She will have little to no earnings over the next few years and if they base her payments on those years, she will not be receiving much. Maybe I'm mistaken.Comment
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No, the benefits are based on the best 35 out of the last 40 years. So a couple of years up or down is not going to affect it very much.Originally posted by UnregisteredComment
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