Can anyone point me to a spreadsheet or calculator that helps with this decision? The wife turns 62 in 2008 but I am still working and have a quite high income. I don't want to pay it all back in taxes. Thanks TED

The decision to draw SS at 62 is your personal decision. If you go to the actual social security website, you will get a lot of information. Also, if you have a SS office close by where you can talk to a real life person, they can give you the actual figures of what she would receive at age 62 vs what she would receive at full retirement age.

In my case, I started to draw at age 62, as I had retired from my company at age 59.5. Gezzer was still working when I retired. His income did not count as income for me, even tho we filed joint taxes. I am receiving somewhat less each month by drawing at 62 instead of waiting until 65 & 10 months.

If she is drawing on her work history, then your income has no bearing on her SS. However, if she is drawing on your work history, I don't know how that works.

One thing to remember, if either of you start to draw SS at age 62, you can only earn a limited amount, about $12,000 per year until you reach full retirement age, then you can draw substantially more. Again, the SS website and/ or office can advise you of those dollars.

I hope I have helped a little, I'm sure others with more knowledge will also answer, but you should check with SS for your exact $$$$.

Safe travels,

Judy

TED,

Judy said it very succinctly, it is a personal decision.

For every month you draw SS before your regular 65+ age your payment will be permanently decreased by a percentage,

BUT

you will also get the decreased amount every month before your "regular" date.

In my case I started at 62 1/2 and my regular date is, I believe, 65 and some months.

Only if I live beyond 85 years and 7 months I will be "upside down".

And that does not worry me, therefore for me it was a no-brainer.

As usual: Your SS payments may differ

Check out other "other topics". I ask this same ? about a month ago. Lots of answers. I will be 62 in Jan. '08. I'm waiting 'til I'm 66.
Dr.Kool

If you can afford to retire and not draw until 66, then wait. If it will help make early retirement easier, go for it. The early you retire the more years of enjoyment you'll have and the greater chance of living long enough to be "upside down" as was stated above.

This Social Security calculation gets somewhat more complicated when you receive SS benefits and earn enough income to have to payback some or all of the SS benefit. Your benefit is recalculated at age your normal retirement age taking into consideration that you had additional income AND you had to payback some benefits. I do not know the exact calculation, but I am currently researching it as I did not start SS at 62 but am considering it at age 63.

I really want to find out what happens at age 65 if I contiue to work and have to payback benefits.

A good part of your assessment has to factor in your health. The "system" is based on an average lifespan. If you have reason to believe you'll live much longer (or not) than the average person, you should make you election accordingly.

Paul

According to the Social Security actuaries the differences are as follows:

• 62 (early) vs. 66 (NRA). Break-even age is 76 and 6 months.
• 62 (early) vs. 70 (late). Break-even age is 79 and 1 month.
• 66 (NRA) vs. 70 (late). Break-even age is 81 and 1 month.

There is some very interesting information about the timing of Social Security for married couples:

quote:

But here’s a new twist, from Boston College’s Center for Retirement Research: most married couples can maximize their benefits if the wife takes early retirement and starts her benefits at 62, and the husband waits until at least 66 to start his.

If you are a married couple, you may want to look at the research that has been done on this matter. I have read much of it, and is interesting.

The age at which to collect Social Security is important and very personal.

If you will continue earnings between age 62 and age 66 (assuming that is your NRA), waiting is probably a good deal (because of the reduction of benefits for "excess" earnings).

If you are in poor health or have a family history of early demise, early distributions may be beneficial (remember, break even happens at about age 76.5).

An important factor may be your need for the funds. Even if you determine that age 66 is your best bet, if you need the money to live at age 62, that may be the deciding factor.

New to our (baby boomer generation) is the worry about the health of the Social Security system. Many believe that the Social Security system is in trouble and that, at best, benefits will need to be reduced in future years. That has lead many to decide to take benefits at the earliest (62) moment in order to assure the maximum distributions before benefits are substantially reduced in order to keep Social Security going.

Art, that is very interesting information. When I became 62 the average break-point was 11 years to re-gain the reduction in money vs 65.

I started drawing mine at 62 the only thing that made me do this is I thought that i would draw mine at 65 but then they changed the rules on me and everyone now what if at 63 or what ever age they decide to change no ss at 62 or untill your 70 or more then this thinking is what made me draw mine early.

I just read an article in the WSJ on resetting SS payout if you start SS early and continue to earn more than the limit. The highlights:
This example used $1,250/month as benefit at 66 and reduced to $1,000 per month if you start early at 62. In 2008 the limit you can earn without $1 deduction on every $2 earned is $13,560. The example provided listed a hypothetical $33,560 income. You would get the first $13,560 of the income without SS deduction. The remaining $20,000 would reduce your SS benefit by $10,000. Assuming you had a SS benefit at 62 of $1,000 per month or $12,000 per year, you will lose $10,000 of the benefit but still get $2,000 of SS payout. You are still $2,000 ahead in this income example. If you continued to do this until 66, you would earn an extra $2,000 per year or $8,000. Your SS benefit would be recalculated at age 66 and in this example would be reset from $1,000 per month to $1,208. SS does this since you continued to earn from 62 and 66 and paid into the system.
In this example you get the extra $8,000 of SS benefit from 62 - 66 and the SS benefit resets to almost the full benefit once you reach 66.
The author recommended that you check the SS calculators against your own situation but to start taking the benefit in January rather than waiting if you are going to start SS early AND will be earning income above the $13,560 limit.

THANKS everyone for the insight you all provided on this subject. My question is with my wife who is not working starting to draw her SS. I will continue to work at a high income for a few more years. She thinks she wants the income but I don't think we really 'need' it as long as I work. I think it is a status thing for her but I don't want to pay it all back in taxes when we could just as well have waited until I quit working and hen she gets more by waiting. If her SS draw is not taxable based on my income then there would be no penalty to me. Ted

quote:

Originally posted by Ted-N-Ruthy:
THANKS everyone for the insight you all provided on this subject. My question is with my wife who is not working starting to draw her SS. I will continue to work at a high income for a few more years. She thinks she wants the income but I don't think we really 'need' it as long as I work. I think it is a status thing for her but I don't want to pay it all back in taxes when we could just as well have waited until I quit working and hen she gets more by waiting. If her SS draw is not taxable based on my income then there would be no penalty to me. Ted

I think her SS will be taxed based upon your income. You'll need to see what the point is where they start taxing SS, but I believe that it is less than 30K for a married couple.

Barb

Ted n Ruthy

You should talk to an actual SS person, Ruthy will have to register for SS 3 months prior to her 62nd birthday to be able to receive a check.

You MUST talk to them if she is not working and going to draw against Ted's income. If you earn over the designated amount, SS will not send her a check. I cashed in a stock option and SS considered it income, so I lost my SS check for about 8 months.

Please, please talk to a SS rep.

Safe travels,

Judy

Ted N Ruthy,

I urge you to look at the information available for women taking early benefits and men taking later benefits. (This research assumes that the male is the larger earner...not always true, but generally true).

Yes, Ruthy's benefits may or will be taxable. However, this is not the same as the reduced benefits if she continued to earn income.

The key to maximizing social security benefits for married couples is the survivor benefits. The surviving spouse (generally the wife) can collect 100% of the benefits of the higher earning (deceased) spouse benefits.