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Investor Guide PDF Print E-mail
Written by Dr. Harold Wong   

When you start Social Security matters!

Let me cover the dramatic difference in taking Social Security at age 62 instead of 70. Waiting until age 70 really matters if you are married and both have long life expectancy.

Your life expectancy is one of your key factors in deciding when to take SS.

Let’s compare taking 100 percent of SS benefits at age 66 versus 132 percent at age 70. Mathematically, it takes you 12.5 years (if you take SS benefits at 70) to make up the difference of not collecting four full years of SS from age 66 to 70.

Here’s where many baby boomers make a mistake: They plan by average life expectancy instead of the life expectancy of the longest-surviving spouse.

On average, baby boomers will live until 83. However, in the year 2000, the Society of Actuaries study showed some startling statistics. If a married couple is 65, there is about a 50 percent chance that at least one will live until age 92 and about a 25 percent chance that at least one will live until 97.

Example 1: You are a single baby boomer born in 1950 who earned $50,000. When the Great Recession started in 2008, you looked at your SS monthly benefit choices: $1,070 if you took benefits at age 62, $1,489 at 66 or $2,047 at 70. If we ignore any future cost-of-living increases, here’s the total SS benefits you would have by age 83: $269,640 if you took SS at 62, $303,756 at 66 or $319,332 at 70.

One argument for taking SS early is that you can invest the money and so your total income is the same, no matter what age you chose to take SS. That’s a logical argument, but it assumes there is no risk from stock market crashes and being victims of scams. However, you can take the position, “I’ll live or die with the consequences if I lose money with my investments.”

Example 2: You are a married baby boomer husband and don’t worry about your spouse. Suppose you had consistently earned the higher income and your wife is six years younger. Suppose you decide to start SS at age 62 and get $17,000 a year versus $32,000 at age 70.



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Holyoke Enterprise July 31, 2014