Patinelli & Chang, LLP

What Women Need to Know about Social Security

“Understanding the rules about Social Security benefits and when to start claiming Social Security can be difficult. However, they’re critically important, especially for women—since women typically live longer lives than men.”

Deciding when and how to claim Social Security benefits depends on several different factors, all of which are unique to each person’s situation. For women, there are additional financial realities to be aware of, according to the article “3 Things Women Must Know About Social Security Benefits” from Next Avenue.

First, the Earnings Limit Test. Many people end up taking their benefits before they reach their FRA—full retirement age. However, for those who keep working and want to claim benefits at the same time, there is the Social Security Earnings Limit test, which may lower benefits, while you are working. Any retirement benefits over the limit are withheld, until you reach your FRA. They are eventually paid to you.

Here’s an example: Dolores is turning 62 in December 2019. She currently earns $55,000 working full time. If she goes part time, her income will drop to $35,000. Her idea is to start claiming Social Security benefits at the earliest age, when her benefits would be about $1,170. Note that if she waited until her FRA, age 66 and six months, she would receive $1,616.

However, the 2019 earnings limit is $17,640. She earns twice that, so her benefit would be reduced by $1 for every $2 she is over the limit. Her annual Social Security payment of $14,060 would be reduced by half of her excess earnings, or $8,680. She’ll get the benefits back when she reaches FRA, but while she is working, she won’t get as much as she might have expected.

Social Security Benefits and Taxes. The general rule for this is that if a household’s combined income exceeds a certain amount, a portion of the taxes are taxed. The limits for determining the income level are not indexed for inflation, so every year more and more retirees fall into this tax range.

For single women who have an income of $34,000 or more, as much as 85% of Social Security payments for the year will be considered income and taxed as ordinary income. Married women filing jointly with a combined income of $44,000 or more will also have up to 85% of their Social Security payments for the year reported on IRS Form 1040 as income.

Medicare Premiums and Social Security Benefits. Consider your Medicare Part B premiums, before you consider claiming Social Security benefits. The Social Security and Medicare programs are separate programs, but each has a bearing on the other. The Social Security Administration collects Part B Medicare premiums and automatically deducts premiums from Social Security benefits before you receive them. This is often a big surprise to women. Their benefits are reduced, and they may not have included this in their budget.

Medicare B is the part that pays for doctors and outpatient procedures. There are co-pays and deductibles. However, generally speaking, Part B pays for about 80% of covered services. The amount that is paid depends upon the overall household income. The standard monthly premium is $135.50 per month, or $1,626 for the entire year. That’s a per-person cost. If you have a high household income, you’ll pay more for Part B—the range is from $160 to more than $460 a month per person.

Like many other aspects of retirement, you’ll need to do your homework and understand how Social Security works to make the best decisions about your benefits.

Reference: Next Avenue (Nov. 19, 2019) “3 Things Women Must Know About Social Security Benefits”

How Many Ways Can You Ruin Your Retirement? Plenty!

“The fantasy of being your own boss and filling your days as you wish is a powerful one. However, if you’re not careful, you could spend those golden years trying to earn more or pinching every penny.”

There are just about as many ways to ruin your retirement, as there are light bulbs on Broadway, or stars in the sky. You get the picture: it’s easy to ruin your retirement, says Reader’s Digest in the article “15 Retirement Mistakes That Will Ruin Your Retirement.” These useful tips deserve your attention.

Using your retirement accounts like a checking account. Treat your 401(k) and IRA accounts like they are pure gold and only for retirement. Only use them in emergencies and understand that you’ll pay a penalty, if you withdraw from a 401(k) before age 59 1/2. Every dollar you take out of a 401(k), costs you $10-$20 in lost future retirement income.

Forgot to plan for long-term care? This is one of the biggest threats to everyone’s nest egg. One year in an assisted living facility could add up to an average of $43,200, and the cost of a nursing home for one year could easily be double that. Long-term care insurance pays for adult day care, respite care, stays in special facilities for Alzheimer’s patients and hospice. LTC insurance also pays for in-home care, like skilled nursing, rehab therapy and personal care.

Getting aggressive in the market a few years before retirement. Three to five years before retirement is not the time to bet the house and hope your ship comes in. If you take a big hit, there’s no time to make up for twenty or thirty years of saving.

Expect a short and sweet life? You might be surprised at how long you live. However, you may also be surprised at the amount of money you need to live a long life. Create a retirement budget that anticipates a longer life span. You can always find a way to spend or give away money.

Make retirement saving a top priority. It’s not easy when you are trying to save for retirement, put kids through college and maybe remodel your kitchen. However, the new kitchen won’t be as much fun, if you are struggling to pay bills on a fixed income.

Neglecting to diversify investments. The right asset allocation can reduce the overall risk of a portfolio, especially as you get closer to retirement. Focusing on fixed income and value-oriented equities will supplement other income sources, like Social Security and a pension.

Being completely conservative. Some of your investments do need to be a little bit risky. You can’t be completely in cash or totally in CDs. There is still a need for growth, and that comes with some risk.

Supporting adult children. Putting retirement at risk because of children who aren’t fully independent creates problems for parents and children. The children need to understand that parent’s retirement accounts are not their personal ATMs.

Underestimating healthcare costs. A recent study found that the average healthy senior couple can expect to spend more than $275,000 on healthcare in retirement. Look into using a Health Savings Account (HSA) and have some emergency funds set aside.

Responding to volatile markets with emotions. A series of down days on the market, or bad news that pushes markets down for a few days or even a few months, is not the time to call a broker in a panic.

The impact of state income tax and high property tax rates. Most people have lost the ability to take itemized deductions or are limited by what they can deduct. The SALT limit is $10,000. A move to a lower tax state may be helpful in stretching retirement dollars.

Social Security planning strategies. Don’t just take your benefits as soon as you can. There are strategies that can maximize benefits for you and a surviving spouse.

Debt during retirement. Before retiring, pay off as much debt as you can. The more debt you have, the more vulnerable you are. That’s when an unexpected expense can derail retirement.

Have a realistic budget. Create a budget based on what your income will be during retirement. Do this before you stop working and try living on it. If you don’t have enough, keep working and rework your budget.

Procrastination on saving. Save early and save often. The longer you put off saving for retirement, the less time you have to catch up. Time can be your best friend, if you start early, or your worst enemy, if you wait too long.

Reference: Reader’s Digest (October 2019) “15 Retirement Mistakes That Will Ruin Your Retirement”

A Sensible Look at Social Security

“As people approach the age of 60, many of them start thinking about how and when to access their Social Security benefits. The basic rule is that you can start to receive Social Security as early as age 62 or you can delay taking benefits until age 70.”

If it seems like there are too many different recommendations on when to start taking Social Security, you are right. Every week brings another theory of when to take benefits, when spouses should take benefits, or news about Social Security’s trust fund drying up. The recent article from The Denver Post asks “Road to Retirement: When should you start taking Social Security?” This article breaks down the choices and explains what’s really at stake.

The general rule is that for each year you wait after age 62, benefit payments increase by about 6% to 8%. The adjustment depends upon whether you start before or after your “normal retirement date,” which today is 66 for people born between 1943–1954. The Social Security Administration website gives all the estimates for you when you take benefits from age 62 to 70. The longer you wait, the higher your benefit. However, if you wait, you’ll receive benefits for a shorter period of time.

How can you make sure you’re getting everything you’re entitled to? Unless you know when you are going to die, you really can’t. However, on paper, it doesn’t matter that much. Social Security’s actuaries have done the numbers. On average, the benefit payment options are designed to be actuarially equivalent, regardless when you start taking benefits.

If you took a group of 10,000 retirees and analyzed all of their choices, some taking benefits early, others taking benefits late, they would all receive about the same benefits. Some of those who took benefits early will die early. Some who wait will die without ever taking any benefits. Those who wait until age 70 and live until 100, will get more than projected.

Determining which is best, is dependent upon when you die. Unless you have a crystal ball, there’s no way to know whether taking benefits earlier or later will be best for you.

A better approach: consider what risks you are more concerned about and select the strategy that helps to minimize that risk.

If you are worried about living a long time and running out of money, then your best bet is to wait until age 70. You’ll receive about 30% more than if you take benefits at age 66. If you live to 100, then your benefits will come in as long as you are living.

What if you are worried that Congress is going to let Social Security die or change the rules? If that’s your main concern, then you would want to take benefits earlier. That way if benefit formulas change, you’ll know that you got the most you could before the rules changed.

What if you retired at age 63 and a year after that, the markets tanked? Your retirement accounts took a hit and your cash flow is tighter than you anticipated. Social Security benefits could give you the option of taking less from your retirement accounts, while giving the market and your accounts a chance to recover.

What if you are healthy and well and want to enjoy your life to the fullest while you can, including travelling and doing whatever you want while you are well? Then taking your Social Security benefits early makes sense, because you’ll have more income in the earlier part of your retirement.

As you can see, there’s no one right answer for everyone when it comes to taking Social Security benefits early. However, there is one right answer for each person, depending on their lifestyle, retirement account size and personal health.

Reference: The Denver Post (Aug. 4, 2019) “Road to Retirement: When should you start taking Social Security?”

When You Might Want to Take Social Security Early

“Although it’s common to point out why it might make sense to delay taking Social Security benefits, there are legitimate reasons for some people to claim their benefits sooner rather than later.”

Most people decide to start receiving Social Security benefits when they turn 62, or when they stop working, if they’re older than 62. Social Security’s own statistics show that 70% of the 42.4 million retirees get reduced benefits, because of taking them before their full retirement age, according to a recent article aptly titled “Why You Might Want to Take Social Security Early” from Government Executive. While there are plenty of reasons to take Social Security as late as possible—as late as 70—there are also reasons why it makes sense to take it earlier.

The biggest one, is if you can’t afford to retire without claiming your benefit. There’s no need to sacrifice your financial security early on in the hope that you’ll get a big payout later in life. However, you should do those calculations carefully. A Social Security benefit along with other retirement sources, like a federal retirement benefit for federal employees, might provide adequate income. Just make sure that you’re balancing all the funds you are withdrawing and be mindful of taxes on those withdrawals.

Social Security benefits are a little more tax-friendly than withdrawals from traditional retirement savings. Delaying Social Security and increasing the withdrawals from retirement savings a little between the ages of 62 and 70 might lead to lower tax bills in your later years.

Another reason to take your benefits early, is to help family members receive benefits based on your work record. A spouse or child could receive a monthly benefit of up to half of your full retirement benefit, if they qualify. If your spouse does not have an earned Social Security benefit of their own, or if their benefit is smaller than half of yours, it may be helpful for you to claim early.

The Social Security Administration reports that of the 25 million women age 65 or older who were receiving benefits as of December 2017, 52.2% of them were entitled solely to a retired-worker benefit. About 26.5% were entitled to both a retired-worker benefit and a wife’s or widow’s benefit, and about 21% were receiving wife’s or widow’s benefits only.

Note that payments to your family do not decrease your own retirement benefit. The value of the benefits your family may receive, when added to your own benefits, may help you decide that filing early for benefits will be better.

A widow or former spouse can explore what benefits their deceased or ex-spouse has earned. In some cases, you may be able to apply for retirement or survivors benefits now and switch to a higher benefit later. If you are already receiving retirement benefits, you can only apply for benefits as a widow or widower, if the retirement benefit you receive is less than the benefits you would receive as a surviving spouse.

If you were born before January 2, 1954 and have already reached full retirement age, you have the choice of receiving only your current or divorced spouse’s benefit and delay claiming your own retirement benefit. If you were born after that, the option to take only one benefit at full retirement age is no longer available. Therefore, if you file for one benefit, you will effectively be filing for all retirement or spousal benefits.

Reference: Government Executive (July 18, 2019) “Why You Might Want to Take Social Security Early”

No End in Sight for Social Security Scams

“I recently received a strange call from a Social Security employee. He told me my Social Security number had been suspended because it was involved in a crime, and that I needed to reactivate it and secure my bank funds by withdrawing them and putting them on gift cards. Is this a scam?”

This is one of thousands of phone calls being made to seniors across America. The writer of the question was wise to ask before doing anything foolish. The scam, according to The Sentinel Source’s article “How to protect yourself from the Social Security imposter scam,” has led more than 76,000 people to call the Federal Trade Commission. The average loss is about $1,500, although there are others who lose significantly more to the scammers.

The scam starts with a phone call from a person claiming to be with the Social Security Administration. The caller tells the victim that their Social Security number has been suspended, because it was stolen or involved in a crime. The voice sounds very authoritative, and people are fooled by it.

The phone caller may be a person or a robocaller that next instructs the victim to press 1 to speak with a fake support representative, who next claims to be able to reactivate the person’s Social Security account.

There’s a new variation on the scam, where the victim is told that they qualify for an increase in Social Security benefits. All they need to do is provide the caller with some personal information. That information is often enough for the scammer to drain their bank accounts or steal their identity.

Here’s the thing: there have been many data breaches in recent years. So much personal information is available for purchase on the internet, that scammers have learned to use all or a part of the information to convince victims that the scammers are legitimate callers. If a caller knows their victim’s Social Security number, people are more likely to be convinced that the call is legitimate.

Don’t fall victim to this scam. Here’s what you need to know:

Don’t trust caller ID. Technology allows the scammers to create a false caller ID. Therefore, that they appear to be calling from the Social Security Administration. If you see a call from Social Security, don’t answer it. Instead, call the real Social Security number at 800-772-1213.

Understand that Social Security will never suspend your number and then demand payment to fix the problem. Anyone saying that is scamming you.

Never give out any personal information, including Social Security numbers, bank account information or any personal information to anyone. If you already did, call Social Security to find out what steps you can take to protect your credit and your identity.

Just because the caller seems to know some of your information, don’t believe them. They can easily learn a host of information, just by looking at your social media accounts or buying information illegally.

No one from any government agency asks for payment in gift cards. They may describe the gift cards in some confusing term, like ‘certified official financial’ payments. However, if you can buy them at a store and they look like gift cards, they are gift cards.

If you have been scammed, don’t be embarrassed. Tell your family and friends and get the help you need. Alerting your friends and family helps them, so that they will be better prepared to defend themselves.

Reference: The Sentinel Source (June 16, 2019) “How to protect yourself from the Social Security imposter scam”

Be Aware of These Myths about Social Security

“Researchers tell us that most people would be better off waiting to claim Social Security benefits. Yet most people file early.”

Despite everything written about filing for benefits as late as possible, more than half of seniors apply for Social Security before they reach full retirement age. It is now 66 and will rise to 67 for people born in 1960 and later. More than a third of all Americans apply as soon as they possibly can—at age 62. Only one in twenty-five applicants puts off filing to age 70, when monthly benefits max out, says the Washington Post in the article advising readers “Don’t believe these Social Security myths.”

Some people have no choice and must take their benefits early, because they’ve lost their job and have no savings. Others have better options, but they aren’t aware of them. That’s because of the many myths about Social Security. A survey found that while 77% of Americans thought they were pretty smart about Social Security, 95% couldn’t answer eight basic questions about the program.

Let’s look at these myths.

It doesn’t matter when I take Social Security. Benefits increase by about 7% every year from age 62  to your full retirement age, and then by 8% each year between full retirement age and 70. This is a planned adjustment to ensure that people who opt for a larger check for a shorter period don’t receive more than those who file earlier and receive smaller checks. It’s better to delay, both for the larger check and the benefits that the surviving spouse receives. People who live longer can run out of savings, so having a larger check in your 90s could make a huge difference.

If I don’t expect to live a long time, I should claim benefits early. Most of us underestimate our life span. A 65-year old man today can expect to live to 84, and a 65-year old woman can expect to live to 86.5. Life expectancies are even longer for those in their mid-50s. However, here’s the thing: even if one spouse doesn’t live as long, by taking Social Security earlier, their spouse will have a smaller benefit. Married couples lose one of their checks when the first spouse dies, causing a big drop in income. The survivor receives the larger of the two checks the couple was receiving. Therefore, the higher earner in a couple, whose check will be larger, should delay taking benefits, if at all possible, to benefit the surviving spouse.

I can claim benefits early and invest the money to come out ahead. No investment today offers a guaranteed return as high, as what can be obtained from delaying benefits. You’d have to take a lot of risk to get close to the 7% or 8% guaranteed by Social Security.

As soon as I stop working, I have to file for Social Security benefits. Not true. You don’t have to file for Social Security benefits until you want to. Even delaying four years, from 62 to 66, can translate into a sustainable 33% increase in your standard of living.

I better apply before Social Security runs out of money and closes down. This myth becomes more widespread every year. If Congress doesn’t act, which is unlikely, by 2035, the system will still be able to make payments, although they may be curtailed by 20%. Eighty percent of your Social Security check is not zero. It’s also more than likely that Congress will address Social Security fixes.

Reference: Washington Post (June 10, 2019) “Don’t believe these Social Security myths”

Scammers Now Claim to be From Social Security Instead of the IRS

“Move over, Internal Revenue Service. Criminals now prefer the Social Security Administration as their cover agency, when they try to swindle Americans over the phone.”

For a long time, the callers identified themselves as calling on behalf of the IRS, pretending to be a representative wanting to collect taxes, personal information or both from their prey. However, in the last year, federal authorities say they have seen the number of scammers claiming to be from Social Security take a massive leap and have now overtaken the fake IRS calls, as reported in the article “Latest Rash of Calls Come From ‘Social Security’” from The New York Times.

That doesn’t mean to say that the IRS scam isn’t still around. The IRS lists the “imposter calls” as one of its dirty dozen scams. Scam artists are flexible and quick to adapt to changing circumstances and trends.

More than 76,000 reports about fake Social Security calls were made in the twelve months ending in March, with reported losses of $19 million. That’s according to the Federal Trade Commission (FTC), which investigates consumer fraud.

By comparison, consumers reported $17 million in losses to the IRS scam during its peak time, the twelve months that ended in September 2019. This information comes from the FTC’s Consumer Sentinel Network database, a pool of millions of consumer complaints.

The typical loss to an individual consumer is about $1,500. However, those are only the people who have contacted the FTC to report their situation.

In most cases, the criminals are aggressive and try to scare their targets into action. The caller tells the person that their Social Security number has been suspended, because it has been involved in a crime or due to suspicious activity. The caller often asks the victim to confirm their Social Security number. They tell their victims that they must act fast and that their bank accounts will be frozen, if they don’t act quickly.

Some people, especially seniors, are scared into action. However, the calls are not real.

The Social Security Administration does not make phone calls to individuals out of the blue. Don’t reveal or confirm your Social Security number to anyone who calls.

Don’t trust the number that appears on your caller ID. Thieves use technology to make it appear that the calls are coming from a government agency, but they are not.

In April, the inspector general of Social Security warned consumers that fake calls had spoofed the agency’s own fraud hotline number. That number will never appear on a consumer’s phone, as it is never used to make outgoing calls.

The best thing to do is hang up.

If you are concerned that the call might be real, call the agency directly yourself, using a phone number that you have found and not the number given to you by the scammer.

Older adults are more vulnerable to these calls, because they have access to their lifetime savings and they often exhibit behavior that puts them at risk. During a study of scam awareness, more than three fourths of seniors participating in the study answered the phone when it rang, even if they didn’t recognize the number. They also said they listened to telemarketing calls and struggled with ending unsolicited calls. The study also noted that falling prey to a telephone scam may be an early warning sign of cognitive problems in the future.

Reference: The New York Times (May 3, 2019) “Latest Rash of Calls Come From ‘Social Security’”

Could You Lose Your Social Security Benefits to Creditors?

“Not paying your debts can have some very serious consequences. If you're working and are delinquent on your payments, your creditors could get a court order to garnish your wages from your job.”

What if you are retired and the only income you have is your Social Security benefit? “Can Creditors Come After Your Social Security Benefits” is the question posed by Yahoo! Finance. While for the most part, you don’t have to worry about creditors coming after your Social Security benefits, there are others who can get them, if you haven’t paid certain debts.

Personal loan payments, credit card payments, or medical bills are usually not able to take your Social Security benefits. But there are some exceptions you’ll need to know about:

• The IRS will not blink at taking up to 15% of your benefits, if your taxes are not paid.
• If you owe on student loans, the loan companies can come after your Social Security benefits, even if the debt is decades old.
• The same is true if you are behind on either child support or alimony payments.

As long as your outstanding debt is not tax-related, the first $750 of your benefits is protected from being garnished. However, if you’re behind on child support or alimony, you could lose more than 50% of those benefits.

There are steps to take if debt is an issue. First, if you owe money to the IRS, contact the local IRS office to work out a payment plan. They will almost always work with people to reach an agreement on an installment payment agreement. This will avoid having your benefits garnished.

If you’re behind on student loan payments, reach out to the lender and work out an arrangement. If you can prove that your financial situation is dire, you might be able to come up with a deferred payment plan or change the repayment schedule.

If things are really bad, consider filing for bankruptcy. If you do, realize that not all your debt will be dischargeable. For the most part, the same debts that can cause Social Security benefits to be garnished, like overdue taxes and student loans, are not forgivable by a bankruptcy. If those are your key issues, bankruptcy is not your best option.

This might be a situation where a bankruptcy attorney or a debt settlement firm is needed. Be very cautious about working with a debt settlement firm, to be sure that they are credible and trustworthy. The firm or the attorney will be able to help negotiate the debts. Remember that the ultimate goal of any creditor is to get paid, and sometimes getting paid half of the amount is better than not being paid at all.

Your best bet is to approach this problem and tackle it before you file for Social Security. If your sole source of retirement income is compromised, you want to contact the local county Office for Aging services to find out what kind of help is available in your community. Don’t leave this hanging and hope that it will be resolved by itself.

Reference: Yahoo! Finance (April 27, 2019) “Can Creditors Come After Your Social Security Benefits”

How Many Social Security Mistakes are There?

“For couples, timing when to claim your Social Security benefits can be tricky, especially if one of you earned far more during your career.”

What happens when there is an age and an earnings gap and it’s time to think about when to file for Social Security benefits? That’s the question posed in the article “How couples can avoid a costly Social Security mistake” from Considerable.

Start by looking at the higher and lower earners levels. As the Social Security rules stand now, it makes sense for the higher earner to defer filing for Social Security, so that her benefit can be maximized. It’s also ensures that the spouse who lives longest, will have the largest household benefit, when one dies. This is the side of Social Security that is often overlooked, because who wants to think about what will happen when a spouse dies? However, in most cases, one survives the other, usually by as many as 10 years.

In a case where the lower earning spouse is also the younger spouse, one strategy is to have that spouse file first for his own retirement benefit, while the older and higher earning spouse files as late as possible.

The key variable: How old are the spouses when they file for benefits? One common misunderstanding is how Social Security benefits are determined. To claim a maximum spousal benefit, the filing spouse must not file for this benefit before his full retirement age (FRA). If either spouse files earlier, the potential for large reductions in the percentage of the benefit the spouse would otherwise receive will be significant.

If the lower earning spouse files early for his own retirement, it not only reduces his own retirement benefit, but also the potential for the spousal benefit in the future.

That additional benefit would equal the amount by which the lower-earners spousal benefit exceeded his own retirement benefit. There’s no double dipping here. You can’t get the full amount of both benefits, but you can get the amount equal to the higher of the two benefits.

Because the lower earner in this case would already be receiving benefits, the additional benefit would be termed “an excess spousal benefit” by Social Security.

Social Security benefits take a fair amount of figuring out, so do your homework before filing. Include this topic in your conversation, when you sit down with an estate planning attorney to update your estate plan and related documents.

Reference: Considerable (April 18, 2019) “How couples can avoid a costly Social Security mistake”

When Should You Start Claiming Social Security Benefits?

“Franklin D. Roosevelt signed the Social Security Act in 1935, creating the federal agency behind the benefits. Two years later, the first social security taxes were collected, and regular ongoing monthly benefits began in 1940.”

Social Security has helped generations of Americans. The intent of the program was to provide workers with income to supplement their retirement pensions. Through the years, reports The Crozet Gazette, the program has changed and now provides benefits to disabled workers, spouses and children of beneficiaries. The article, “When Should I Start Taking My Social Security Checks?” says that more than 62 million people receive benefits, making it one of the most used social benefit programs.

Over the years of working and paying taxes into the system, a working person receives a monthly benefit for life, with a COLA (Cost of Living Adjustment) being the only adjustment. Forty “work credits” are needed to be eligible for the program, which is about 10 years of work for most people. Benefits vary, depending upon the earnings of the individual and the number of years they paid into the system. The maximum benefit in 2019 would be $3,770 per month, although most payments range from $800 to $2,400, according to the Social Security Administration.

To receive the full amount, the worker must wait until FRA (Full Retirement Age) to collect benefits. Depending upon the year of birth, FRA can be age 65, 66 or 65. However, workers can take benefits as early as age 62 or as late as age 70. If benefits are taken early, the monthly amount is lower, and that can not change. The later benefits are claimed, the higher the monthly benefit will be.

The question to which there is no single answer, is when to start collecting benefits.

The first issue is if the person needs income and there are no other sources. Many people begin collecting Social Security early, because of unwanted early retirement. They are let go from their jobs and have a hard time finding another position. Another consideration is health. If someone has a chronic illness or a serious illness and they don’t expect to live a long time, it makes sense to take the money earlier.

What most people are looking for when they ask about the timing of benefits is a “break even” age. However, that is an inexact science. Unexpected events happen, so while the numbers may work at one point in time, life circumstances may happen, which makes those numbers useless.

Keep in mind that Social Security benefits may be taxable. Therefore, if you are still working, it makes sense to delay taking benefits.

There are varying opinions on what the future of Social Security will look like. In fact, 2018 was the first year since the 1980s when the program paid out more in benefits, than it received in tax revenue. Congress can authorize funding to address demographic shifts that will impact the trust assets. Social Security was designed as a supplement for worker pensions and not to be the sole income source, so retirement planning should include but not depend upon Social Security.

Reference: The Crozet Gazette (April 5, 2019) “When Should I Start Taking My Social Security Checks?”