Social Security – Don’t Start Early

Don’t start collecting early because Social Security has money problems

Yes, Social Security has money problems. After benefit payments deplete the program’s Trust Fund, in about 2037, Social Security will only be able to pay about 78¢ on the dollar.

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The most prominent proposals to cut benefits:

Raise the Full Retirement Age – So those affected would need to claim later, and collect for a shorter period of time, to get the same monthly benefit.

Freeze the purchasing power of monthly benefits at current levels – So if wages continue to rise, Social Security would replace a smaller share of the earnings of those affected.

Cut the benefits of high earners – But protect the benefits of low earners.

None of these proposals give you more if you claim early. If you are affected, you’ll get less no matter when you claim.

*Nearly all proposals to fix Social Security would also protect those age 55 and older.

© 2009, by Trustees of Boston College, Center for Retirement Research


Does not represent the Social Security Administration.

Social Security – Should you bet that your life will be short?

Yes, you might get less over your lifetime if you claim later

Monthly benefits are set so that lifetime benefits are much the same no matter when the average person starts to collect Social Security.

– If you’re in poor health and unlikely to live as long as the average person, you’ll probably get less, over your lifetime, the later you claim. (That’s because you probably won’t get the highter monthly benefit long enough to make up for starting later).

But note: many whose health is poor still outlive the “average person”.

Should you bet that your life will be short?

No one really knows how long they will live. But if you health is OK, you’ll probably outlive the average person. If you’re married and both in good health, the odds are even greater that you or your spouse outlives the average person.

 

The cost could be quite high if you lose the bet and live “too long”. If blessed with long life, you might barely scrape by in your 80’s.

© 2009, by Trustees of Boston College, Center for Retirement Research


Does not represent the Social Security Administration.

Social Security – Working after you Claim

You can continue to work after you claim

However, Social Security is designed to replace your earnings when you no longer work. So if you start to collect benefits and continue work before you reach your Full Retirement Age, some of your benefits might be withheld.

Before the Full Retirement Age, Social Security withholds…

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Benefits withheld aren’t lost

They’re rolled forward to increase your Social Security monthly benefits after you reach the Full Retirement Age.

For example, say you start to collect benefits at 62, continue to work, and only retire for good at 63. If you earn so much that half your monthly benefits are withheld, at the Full Retirement Age your monthly benefit is raised to what it would be had you started to collect at 62 and a half.

© 2009, by Trustees of Boston College, Center for Retirement Research


Does not represent the Social Security Administration.