On Social Security benefits..if you were 62 and were underemployed

[Horse with no Name]

and had the opportunity to collect early benefits, would you do it? If not, why not? Trying to make some decisions here. Thanks!

[thelordofhell]

1. Wait

I've had conversations with a lot of people who took early retirement on SS, they all reagret it.

[Fumesucker]

2. I just did it last month..

Of course I was long term unemployed and not just underemployed..

I was told while at the SS office that at 65 there is another program that can possibly increase my benefits, SSI for the aged..

[MineralMan]

3. I did it.

I did the math when I was about to turn 62. I was having trouble finding enough work in my profession of writing, and that had lasted a couple of years. It didn't look like it was going to improve soon. So I signed up. Over the four years before I turned 66, my full retirement age, I collected about $50K in SS payments. At 65, I went on Medicare. During those four years, my additional income was limited to about $13K a year without it causing a cutback in SS payments. I just about hit that limit each year. At 66, that limit went away, and I'm taking advantage of that as I can.

What a person has to do is to do the math. Each case is different. But, special attention should be paid to the amount you can earn during the time before you reach full retirement age. It gets complicated if you earn more than that, and there are time lags while the SSA gets things right or when things change. You don't want to deal with them cutting your payments if you can help it.

I think the amount you can earn, beyond your SS payments is about $14,000 now. That should be an important factor in any decision, I think.

[Horse with no Name]

6. It isn't for me but for a family member

whose salary has been whittled away to almost nothing. I think he is making close to $23k right now....

[MineralMan]

7. In that case, it may not make sense.

If he cuts back to avoid the earning limit, he'll still be in about the same boat. If he earns more, SSA will take away a good portion of the benefits, which will go back up at full retirement age. He needs to do the math. If the job is secure at that amount, then it won't make much sense to take it early.

One thing...you can apply at any time between 62 and full retirement. It takes about three months before you get your first SS payment. So, a guy can hold off if the math doesn't work, and then, if things get worse, apply then. Each month you wait means a larger monthly SS payment, up to full retirement age, when the payment is fixed at a certain amount.

It can be complicated, but the nice folks at the Social Security office can explain the whole thing very clearly. They're usually very friendly and helpful. And you won't believe how much information they have about you when you give them your SS#. They know your earnings month-by-month through your entire working life.

[Horse with no Name]

20. Just to make sure I have this right

His gross income is $23k

He only nets $480 every two weeks...insurance takes a huge hunk out of it.

So which income do they go by?

[MineralMan]

25. I can't answer that exactly.

I've always been self-employed. They used the bottom line of my Schedule C to determine income. They pull the income from a line on the 1040 or other tax form for their record-keeping. Insurance, I'm not sure about. Its status has changed over the years. It used to not be declarable on the Schedule C. Now it is.

I wish I could give you a definitive answer, but I'm just not sure how it works if you're a W-2 employee. They may use the Taxable Income from your 1040 or the Total wages or FICA wages number from the W-2. I don't know for sure. SSA.gov probably has all that information. It has just about everything you'd want to know in its pages.

[Glitterati]

38. It's gross income

I know because I collect survivor benefits from my deceased husband at 60. I can make $14k/year (gross) before they start cutting my benefits.

But it's definitely gross income. And, you should realize that an employer will report wages at least quarterly, and if it's a big company with lots of employees, they'll report it monthly. So SSA is going to be aware of income and start cutting pretty fast.

[hfojvt]

27. 23K is next to nothing?

It's less than I make now, but it's more than I made annually for the last five years.

As far as SS goes, he will make less money on social security than he does for working, but for me it is worth it to take a substantial pay cut just to not have to goto my fucking job every day all day.

For me, the math said - retire early. My earnings report in 2008 says (curiously enough I was making $22,924 in 2006).

At age 62 I get $656
at age 67 I get $993
at age 70 I get $1,257 per month.

So, by working those 5 years, I lose $39,360 in benefits. At age 67, I would start making another $337 a month. It takes 117 months before I come out finacially ahead from late retirement. IF I live that long, by that time I will be 76. Then I start losing $337 a month, but it is worth it, to me, for five more years of freedom.

But the other question is - can I live on $656 a month, with reduced pension and a smaller IRA? And what about health care? Too young for medicare, can I get medicaid, or health insurance, and can I afford health insurance? Many people that I know keep working because of the health insurance.

[Horse with no Name]

32. I'm guessing you missed the part where he brings home $480 every two weeks

after insurance and deductions--so living on less than $1k a month.

[FarCenter]

36. Retiring at 62 makes for a smaller check than he would get at full retirement age

You have to do the math, taking life expectancy and health into account.

Financial companies and periodicals have retirement calculators on their web sites.

http://www.ssa.gov/estimator/ is the SSA's estimator.

Note also that he can apply on his own earnings record or one of his spouse's earnings record. In fact, SSA should calculate both and give him the greater benefit. Benefits on spousal records are also decreased for the years before full retirement age, but they do not enjoy the 8% per year increase beyond full retirement age up to 70.

[irisblue]

45. thanks for this far center^^^^

very interesting info there

[Demit]

4. I would do it in a heartbeat.

I just read recently, on a blog where somebody ran the numbers for himself, that in taking early retirement you would be ahead on the deal until age 80. So, if you think you will live well past 80, you have to decide if the differential (what extra you would collect post-age 80, if you worked another 4 years now, keeping in mind all the stress, etc that entails) is worth it. I wish I could locate the guy's exact argument, but it was a comment in a thread on another subject entirely. These are smart people who comment on this blog, tho, so I would value his reasoning. Hope that helps you to be able to further research the details.

[Ikonoklast]

8. This is the correct answer.

You are actually making the bet that you will die early and come out ahead financially if you take SS at the earliest you can.

More money now, or less later is the basic decision to be made.

[valerief]

14. More money doesn't win you anything. The answer lies in quality of life and that means enough money.

Issues:
> Normal living expenses until end of life, whenever that is.
> Cost of health care between 62 and 65
> Stress of not-working vs. stress of working
> Costs when health issues affect normal living

What are the nickel-and-dimers controlling our lives going to do to affect our living expenses? Will energy costs be out-of-hand? Will we need to set aside exorbitant amounts of money for water? Food? Will property taxes become unafforable? Rent? We don't know these things, and it's hard to budget for them.

How will you spend ages 62 through 65? If it's worth not saving up a bit of money you probably won't need, because (a) you'll already have enough or (b) you'll never have enough anyway and if you'll get enjoyment from not working, then go for it!

[Ikonoklast]

21. More money today means a great deal if you need it.

More money today comes in handy when one is hungry today.

[Horse with no Name]

26. yes...Very true.

Not only that...my train of thought was that if the rules get changed in the next few years and the retirement age gets extended...that going early might be a really good thing--especially if your health is sketchy.

[valerief]

47. Uh, the point was more money if you don't need doesn't win you anything.

I should have kept the post to under 140 characters.

[MineralMan]

9. Good point about life expectancy.

That played a part in my decision, too. I'm a smoker, so odds are I may not make it to 80. Hell, I could die next week of a heart attack, I suppose, although there's no sign of that. But that is an important part of the calculation.

[longship]

5. I did precisely that in 2010

I literally had no other choice. My winter heating bill alone dictated this choice. I may not have survived the next winter here in MI without the means to heat my house. And don't me started about the necessity of electricity in a rural area, given that it also means no water.

I am still profoundly poor, but I have food on my plate, heat when it's cold, and potable water and flush toilet because I'm on social security. Still, it really sucks to be poor.

[Wounded Bear]

10. I will probably have to 3 years hence. nt

[abolugi]

11. My husband turned 62

last year and yes, he is collecting his SS.
He was on disability for a few years before that but he was getting help with SSI.
When he turned 62 he switched to SS.
No regrets. We need the money now. Its made the difference between barely getting by and doing OK

[LiberalEsto]

12. Early SS will likely be the only income for me since 2008.

I turned 60 a few months ago and can hardly wait to sign up at 62.
I'm a writer; my steady part-time job writing energy case studies came to an end in 2008.
Since then I've only been able to find a small amount of freelance work.

I have no hope of getting a writing job in the foreseeable future, nor can I stand on my feet long enough to do retail work.
We live on my husband's income but we're struggling to pay off our kids' student loans.
Whatever I receive from SS would make a huge difference for us, as we have no savings. We have 18 years to go on the mortgage.

[panader0]

13. I'll be 62 in Sept and I'm going for it.

It is my understanding that I can earn up to 14 grand a year on the books and still qualify for benefits. Most of my construction income for a few years has been under the table (I report all income at tax time, in order to keep my benefit amount as high as possible). If you are able to land a really good paying job while you are on SS, you can "put it on the shelf" and re-retire at a later age, and a higher benefit. For lower earning people like myself, this seems to be the best course.

[MineralMan]

17. The SSA sees your annual income as you report it in your taxes.

So, under the table income will show up every year, and they'll catch it. Worse, if they find out you've earned more than the limit at the end of the year, they'll cut your payments for the entire next year, despite your actual income.

Under the table work that gets reported to the IRS is in the SSA records. On the books or off the books, if you report it for tax purposes, the SSA knows about it.

That's what I meant when I said you'd be surprised how much information the SSA has on you when you show up to file for benefits early. There's quite an interview you get to go through.

Do it straight, or you risk a lot.

[Buns_of_Fire]

15. That's exactly what I plan to do in another five months or so.

My own numbers were pretty easy to run, since I'm not UNDERemployed -- I'm UNemployed. And have been so for pretty much all of the last ten years (my highest-grossing year was around $3800).

I took a lump-sum payout of my pension from a previous employer a few months ago, and that's what I'll be living on until then. I'll run the numbers again around September, and see if it's worthwhile to put off applying as long as I'm comfortable putting it off (you get a little more per check for every month you delay applying past your 62nd birthday). (Actually, you don't apply ON your 62nd birthday -- you need to apply roughly three months previous.)

In my case, it'll keep me from having to change my address to the nearest I-81 underpass, but you'll really have to crank up the ol' spreadsheet and run your own set of numbers. Good luck.

[hobbit709]

16. Go for it.

I did.

[CreekDog]

18. There was a study that said the earlier you retire, the longer you live

i don't know if retirement was a causal link, but there it is.

[Honeycombe8]

19. Yes.

That's because I've read that if you start receiving benefits at 62, you are more likely to RECEIVE MORE MONEY IN THE LONGRUN than waiting to get the full benefits.

If you don't need the $ at 62...great. Put it in a savings account to get the most interest you can, or put it in a conservative allocation mutual fund, and make it grow until you need it. Then you can add THAT money to the bigger benefits you start receiving a few years later.

The govt wants you to wait to get full benefits. Why? It's because that saves the govt money. That means it costs the recipients money and they get less in the long run.

There is a break even point...where the $ of benefits you receive starting at age 62, breaks even with the amount of $ yu'd receive if you start receiving larger benefits later. My dad is 80. Several years ago he hit the break even point, he said. He said it regretfully, as if he wished he had waited to get bigger benefits. But think of all the years he had been rfeceiving benefits! If he'd put that in an account to grow (and he could have, I think - or at least some of it), he would've hit the breakeven point later. Something like that.

I plan on receiving benefits at age 62,unless I'm still working full time, so the taxes taken out of SS would be too big a hit for me. I'm 58. I'll have to see what my situation is at that time. But if you're underemployed and are in a low tax bracket, you may not get hit too hard on the taxes taken out of your Social Security.

[Greybnk48]

22. I did that in 2010

it brought my income up after my hours had been cut. I have not regretted it, but we have another income coming in.

[retread]

23. You say you are underemployed. Would you quit your present job? Does present job have any benefits?

If I were 62 and unemployed chances are I would. If underemployed it would depend on circumstances.

[Bigmack]

24. I was a high school teacher...

... a good one! I loved my job... I loved the kids. I retired the first day I could. I wanted to retire before I became those old, confused teachers who can't get it on in the classroom.

Never regretted it one single minute. Not working is the busiest job I ever had. I volunteer, I do odd jobs... sometimes for money, even. I take care of me ... and my wife... better than I ever did when I was working. Great job!

And then there's the fishing!

I took SS at 62. I found that retirement is, in many ways, cheaper than working. Little wardrobe expenses, no commute... Lots easier on the body and mind, too. I gave teaching a helluva lot of energy.

If you can... take the money and run!

[Buns_of_Fire]

29. "Take the money and run"

That has also figured in to my thought processes.

What the government giveth, the government can also taketh away. (They can't do that! I hear. This is a sacred covenant! I hear. I paid for it! I hear. Fine. But a couple more Paul Ryans in Congress and who knows what mischief might ensue.) Perhaps I'm way too cynical, but I want on that list now, please and thank you.

Similarly, what your previous employer giveth, your previous employer can also taketh away. In my case, I was lucky enough to have a defined pension. But would it still be there this time next year? Maybe, maybe not.

I just felt a lot better about having the cold, hard cash in my hot little hands than I ever felt about any reassurances from my former erstwhile employer or the administration au jour.

[CTyankee]

28. I waited, but when I retired at 65 I was making the highest salary of my

entire life. But my job was being threatened and I knew it would be just a matter of time. To avoid unpleasantness I announced I would retire on such and such a date and then proceeded to plan for my retirement. I lined up a part time job, starting the month after I retired. My mother died 4 months later, so I inherited some additional income. It ain't a lot but I can live modestly and do some traveling.

[PlanetBev]

30. It's good to hear other people's opinion on this

I'll be 62 in November. If you're born in 1950, does the higher bracket start at 65 or is it 66? I've good a pretty solid job at the present moment, so it's probably in my best interest to keep working right now.

I'm on temporary (three weeks) disability for foot surgery. Let me tell you, I wish I could retire. I never felt better or more rested with my time off. I'm a commerical property manager, and it can get pretty stressful. Forty years of working is enough. I don't think I'd every get bored being able to own my own time.

[Lydia Leftcoast]

31. It starts at 66 for people born a few years on either side of 1950

I'm hoping to hold out till then, because I come from a long-lived family (all the women on my mother's side have lived to 89 or more as far back as we can trace, and I'm stronger and healthier than my mother was at my age), but if I experience another bad year in my self-employment like summer 208 to summer 2009, I'll reconsider.

[bornskeptic]

33. I could have started collecting a year ago, but my monthly benefit would be $0.00.

If I had retired last year when I turned 62, I could have collected about $700 a month, or $8400 per year. The rule is that if you begin collecting early while stull employed, you have to pay back $1 for each $2 you make over the threshhold, which is about $15,000. My salary subject to SS is about $37,000, so that would leave me paying back about $11,000 out of $8400. I don't believe they would make me actually pay the difference, but I wouldn't get anything until I retired or turned 66.
Taking early benefits often makes sense for people who are able to actually retire, but it seldom does for people who need to continue working. If the person you are concerned about is making $23,000, he or she would get about $4000 less per year less than the amount shown on their annual statement, in addition to collecting 25% less from age 66 on than if he or she had waited. In some cases, it might make sense to go that route, if the immediate income is needed that badly.
Everyone needs to evaluate their own situation carefuly, understand the law, and consider all the relevant factors. There is no easy rule that applies to everyone.

[dixiegrrrrl]

34. I took early Soc sec.

Because of the economy.
At the time, the plan/idea was that with annual COLA raises, any "loss" of monthly SS income would be caught up by the time I reached 65.
Well, we all know what happened..no Colas for 3 years.
Plus, once I signed up for Medicare, I am losing money from the SS check, so it is smaller than the planned on numbers.
However, once I reached 66, any money I could earn from a job is not counted for SS purposes.
And Medicare is very cheap insurance to buy...so far.
Also, Mr. d has an income...we need both incomes to make it here.

No regrets, the situation when I was 62 made the decision easy.

[Horse with no Name]

35. So can you get Medicare once you start getting SS or do you have to wait? n/t

[The Velveteen Ocelot]

37. Medicare is separate from and unrelated to SS.

You are eligible for Medicare at 65 regardless of whether you are collecting SS.

[Horse with no Name]

40. Thanks! n/t

[FarCenter]

46. Also note that his Medicare Part B premium will be deducted from his SS check beginning at age 65.

Medicare Part A is hospitalization -- it has no premium.

Medicare Part B is medical, doctors -- it has a premium, which SSA deducts if you choose to take Part B.

Medicare Part C is the Medicare Advantage plans offered and administered by insurance companies, and it requires that you take and pay the Part B premiums as a prerequisite.

Medicare Part D covers drugs, and it is available through insurance companies, separately or as part of Medicare Advantage.

There are also Medigap plans offered by insurance companies to pay for some things that Parts A and B do not pay for. They are an alternative to Part C.

All of this is designed by Congress to challenge the cognitive abilities of seniors and to delay the onset of Alzheimers (although, I think it probably brings it on). However, Congress does not eat its own dogfood.

[dixiegrrrrl]

41. Medicare usually licks in at age 65.

So, usually, if you take early Soc Sec. at 62, you still have to wait till 65 to get Medicare.

Caution: do NOT get this confused with Soc. Sec. disability....you can get Soc. Sec. disability before age 62 AND get Medicare after ....I wanna say 24 months of being on Disability, but I think the rules have some differences depending on what your disability is for.

[aint_no_life_nowhere]

43. If you're getting social security disability at 62, it takes one year after the date of

adjudication of eligibility for medicare to kick in. It's not one year from the date of disability but from the decision date.

[L0oniX]

39. 25% less ...nope. I will work to 65 ...maybe 70 if I still have good health.

[magical thyme]

42. absolutely

I'm sitting here wondering how I'm going to hold out in this crappy, shit-pay job that I absolutely hate until I am 62. I'll be 59 in October.

I'm working per diem as it is, so all I'd have to do is limit how many days/week I'm available to work.

I will be in better shape collecting SS and earning an additional $14K than I am right now being jerked around and earning all of $20K or so.

I remember the good 'ol days when I made some good money back when I was a high tech marcom writer/program manager. I had saved for retirement, but lost most of it to unemployment when my career crash just before I turned 50. I do own my house outright, although I made the mistake of taking out student loans to retrain in healthcare, and my car has 215K miles. I've been out of work more than in for the last 10 years, but my most recent SS statement still has me getting $1200/month at 62, $17 or 1800 at 66 and 2400 at 70. That was with exactly 35 years in the workforce, and hopefully the current shitty job will make up for a few early years when I had really low income. There was one year when my father listed me as an employee at the company where he was a district manager, and took the income (stuck me with the tax bill). And a couple years of part-time work in college. So these few years of lower income should replace those really sucky income years when they figure my average.

I had originally planned to hold out until 70, but I never expected the new work environment to be so horrible.

I also will have a teeny -- and I do mean teeny -- pension from DEC, assuming HP doesn't abscond with the entire thing. I don't expect to inherit anything, but you never know.

I was on Craigslist last night and realized if I stay in Maine, I can downsize my location and still own my own home. Maybe even get off-grid. I found a couple homestead type places in central Maine I can trade this place for if I give up being near the coast.

If I keep working at jobs I hate in sick work environments, I won't last to 70, or my life won't be worth living by then. I'd rather take my SS sooner, reduce my stress. Maybe even start a small home side business that brings in some extra money.

That was always my gut feeling, and I recently read an article or blog about how it really is a gamble and it actually is a better payoff to take the money sooner, rather than gamble that you'll live long enough -- and be healthy enough -- to enjoy your retirement.

My needs are simpler than many. Except for my animals, and that expense will lower by attrition. Eventually, I may stick to just volunteering at a nearby shelter.

[dkf]

44. So many considerations...

http://www.forbes.com/sites/janetnovack/2011/02/15/the-big-decision-when-to-take-social-security/

Your biggest current consideration may be the penalties of working while taking SS if you were thinking of doing so:

"Until you reach the full retirement age, for each $2 you earn above $14,160, you lose $1 of your annual Social Security benefits. (Update: In 2012, you’ll start losing benefits above $14,640.) After 66, benefits don’t get cut no matter how much you earn.  If you reach 66 in 2011 you can earn $37,680 in the months before you reach 66, without affecting your benefits. (Update: If you reach 66 in 2012, you can earn $38,880  in the months before you reach 66, without losing benefits.) For each $3 you earn above those ceilings, you will lose $1 in benefits.   Note that if you take early benefits and then earn too much, your check will be increased some at your full retirement age to take account of what you lost. But when all the different adjustments and taxes are considered, Richardson says, it just doesn’t pay to take benefits while you’re still earning a decent salary."

Then your life expectancy:

"If you don’t need an early check to make ends meet, and particularly  if you’re single, this could be a significant factor in your decision. A calculator on the Social Security site will give you average life expectancy, without regard to your health or family history. It shows  a woman turning 62 next month will live to an average of 85.1 and a man to 82.6. But when TIAA-CREF sells annuities —and people who buy annuities tend to live longer—it assumes a 62 year old woman will live to 89.4 and a man to 86.6.  Play around: Numerous sites on the web will calculate your life expectancy taking into account your health, family history, exercise, eating, drinking and driving habits and even social relationships. If you’re in poor health, and you want to get some of your tax dollars back, it can make sense to claim Social Security as early as possible."

And if you are married:

"Here’s where claiming strategies can get really complicated—and where understanding the Social Security rules is even more important. Remember that supposed actuarial equivalence of early and delayed benefits? It doesn’t take into account the favorable way Social Security treats married couples. If one partner dies, the survivor can claim the deceased spouse’s check instead of his or her own, assuming the dead spouse’s check is bigger. This is crucial because of something known in the actuarial and insurance businesses as joint mortality: With two individuals, there’s a greater chance that at least one of them will live to a ripe old age and collect that bigger check. The upshot: At least one partner (usually the higher earning one) should delay benefits well past 66, to buy that higher lifetime “second-to-die” annuity for both of them."

"And there’s this: Once you reach full retirement age, you can choose to take benefits as a spouse, while deferring your own earned benefit until later. So in a two-income marriage where the partners  are the same age, one might claim benefits at 66. The other could then claim 50% of those benefits as a spouse, while allowing his or her earned benefit to build until 70, buying  longevity insurance  for both of them."

Read the part about marriage very carefully. This is where you can really optimize things. You really should consider this is unique and specific to you.

Lastly maybe SS will be cut after the trust fund dries up. That is the reason quite a few people I know decided to take it early.

[WillyT]

48. This Might be Helpful !!!

Link: http://www.aarp.org/work/social-security/social-security-benefits-calculator/

[Honeycombe8]

51. Excellent sites. According to the SS site, I can't receive ANY benefits before age 65....

if I keep my current full time job. Boy, that was an eye opener!

[former9thward]

49. If you have to do it then you have to do it.

But you lose 25% for the rest of your life.

[RebelOne]

50. Fortunately, I was employed and started collecting Social Security benefits at 65. n/t