Questions and Answers: Social Security
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Now or Later?

Now or Later?

I'm 63 now. what is the advantage to waiting till age 66 to collect SS or is it better to start withdrawing my SS at 64?

Barbara from Austin,TX

Answer

Answer

Hello Barbara,

If you are currently age 63, you were born in 1947, and you will be able to retire with full benefits when you reach age 66.  As a wage earner if you begin receiving benefits at age 63, the retirement benefit you will receive will be reduced to approximately 80% of the amount you would normally be entitled to.   There is actually a table at  www.socialsecurity.gov/retirement/1943.html  which goes into detail about the reduction, such as "63 + 1 month it would be 80.6%, at 63 + 2 months it would be 81.1%, at 63 + 3 months it would be 81.7%, etc.  The advantage of waiting until you are age 66 is that you will receive approximately 20%  more in income for the rest of your life.

If you are still working, you might want to check out some of the other options on the ss website, which allows you to calculate how much you can receive and still work.

Good luck,

Jan Jaffin
SS for Fed Retiree

SS for Fed Retiree

Hi - I am going to be 65 in May. I am currently a fed retiree and I also qualify for a social security benefit but am covered under the GPO law. My question is should I draw it now?

At 66 - I qualify for $799 but will only get $426 because of offset. Now - I qualify for $590 but will only get $390 because of offset.

I understand there is a bill in Congress to repeal the GPO, but it looks unlikely that it will pass anytime soon.

Thanks,

Diana from Fairfax, VA

Answer

Answer

Diana: I know this is a difficult decision for you to make, but due to the uncertainty of your GPO benefit and the small difference in the amount you will receive if you retire now or wait a year, it appears to make sense to go ahead and begin your payments now. At age 65 using the "single life expectancy table," your life expectancy would be 21 years. The difference in your net payment would be $36.00 per month (I am assuming the $390 and $426 you referenced is monthly income) would yield a difference of $432 per year. Over your life expectancy of 21 years that would be a difference of $9,072. Of course, you could live much longer than the expected 21 years, which would mean a greater difference in your total payout. However, since that is an unknown, we can only deal with statistical data. In addition, you will have the use of the additional $432 this year.

If we were talking about the amount you "qualify" for, there would be a difference of $2,508 per year or $52,668 over 21 years. That would make a significant difference in the total amount you would receive and would be worth waiting an additional year. However, since you will receive the lower amount, there is not a large difference in the amount you will receive by waiting the year.

Good luck in making your decision and in your retirement.
Social Security Outside the States

Social Security Outside the States

Jan,

I'm an American citizen working abroad for over 20 years.I have heard that I can't get Social Security benefits unless I spend 6 months in the US every 5 years.Is this true?If so is there any way around the rule?I was told that missionaries make a point of spending 6 months in the US every 5 years because of this.

An American Abroad

Answer

Answer

I am happy to tell you, you have been misinformed. United States citizens can receive the social security benefits they are entitled to regardless of where they live, unless, of course, it is a country where the United States does not send money, such as Cuba and a few other countries. But there is no six month rule.
Age 61 1/2 and Laid Off

Age 61 1/2 and Laid Off

Jan,

I am 61 ½ years old and just received notice that I will be laid off on December 30, 2009. I believe that the Social Security Administration averages the last few years of your employment in order to determine your monthly benefit. For the past 3 years I have made about $77,000 and I am worried that if I find a new position it will not pay that much and if I wait until I am 66 ½ to retire my monthly benefit will be reduced substantially. Should I retire now while my income is high and work part time to supplement my income or take a lower paying job? I currently have roughly $220,000 in all of my retirement accounts.

Coy from Mineral Springs, NC

Answer

Answer

Coy: You are facing a difficult decision. According to the Social Security rules, your social security benefits are actually based on your lifetime earnings. Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most money. They then apply a formula to those earnings to arrive at your basic benefit, and that is the amount you would receive at full retirement age. There is a worksheet on line at www.socialsecurity.gov to help you determine your benefit amount. This means if you continue working past age 62, the additional earnings could actually increase your benefit.

I Need More Money

I Need More Money

I am 63 years old and I have taken early retirement from Social Security.  I work part-time to supplement my income, but I am only allowed to make so much a year, and that can get tough.  If I were to participate in the 401K at my job, would I be able to take what I contribute off of my earnings to stay under the SS cap?

George from Accokeek, MD

Answer

Answer

George: That's a good question, and I certainly empathize with your situation.  I had to go to my tax advisor to get the answer.  I am sorry to have to tell you that contributing to your 401(k) will not reduce your earnings for social security purposes.
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