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Despite what you might expect from the title, this is not an article about volunteer work. Rather, it’s a perspective on my current situation as a so-called paid employee. You see, tomorrow I turn 62. My Social Security benefits, which until now have been only a theoretical future payout, are now fully accessible to me with a few clicks of a mouse. Once I elect to take my Social Security benefit, my wife will be eligible to begin receiving hers as well. Because much of her career was spent working for the federal government in a position exempt from Social Security, she’s only eligible to receive a spousal benefit.
As I’ve mentioned before, when I input our specific personal information to Mike Piper’s Open Social Security calculator, the results point me to taking my benefit early, well before I turn 63. For us, waiting until I turn 70 or even 67 would be somewhat foolish, based solely on that model.
There seems to be little downside risk to me starting Social Security early. The total benefit my wife and I could be receiving is roughly equivalent to what I expect to earn this year from my part-time job. Essentially, rather than working 15-20 hours a week, I could be working zero hours a week and bringing home the same amount of money. I might as well be working for free.
What should I do? For now, I’m not changing anything. I really receive satisfaction from my job, as I’ve written about previously. It feels more like a well-paid hobby. As long as I have that sense, it will be hard to give it up completely. Another option would be to take Social Security but reduce my hours so I could stay under the Social Security earnings limit, currently $22,320. That could work, but then I wouldn’t be able to be as involved in certain projects where I feel I have a key role.
One other data point: my pension and our combined Social Security benefits will easily cover our monthly expenses, which are relatively modest given that our house is paid off.
Based on what you’ve read, what would you do if you were in my shoes?
Be realistic in your evaluation of your and your wife’s longevity expectations as delayed filing has a longer break even point assuming a reasonable rate of return than many people think
Sounds like you’re saying that if one expects (along with spouse) average longevity, the bias probably should be toward taking SS earlier rather later.
Unless I am mistaken don’t you get back any reduced SS for working at some point after you fully retire or reach FRA?
Dick, see my comment to David Lancaster below.
I started receiving Social Security at 64. It was a mistake. I should have waited to age 70. I did not need the money. I will be age 85 in October. So if you can wait until 70, it will be better to wait.
Why was it a mistake? Did you invest the six years of SS payments you didn’t need?
If you think it is better to invest SS payments that aren’t needed then I assume you think it would have been even better if he had started receiving benefits when he was 62.
You assume incorrectly. Unless truly needed I don’t see starting before FRA. But in this case he said he started at 64 anyway and the money was not needed. As you see below he did invest it.
On the other hand I don’t see the great advantage of delaying from FRA to age 70 even with a higher monthly payment. I’d rather have cash in hand and eventually generating income too.
As usual. I’m in the minority.
To each their own. My wife and I both waited until 70 because we prefer the greater sense of security we get from the larger inflation-adjusted income stream.
Yes I invested the money. I believe I would have received more if I had waited until 70 in guaranteed income.
Hi Ken! Did you enter any alternative scenarios in the OSS calculator? You might not be leaving as much on the table as you think. If you are enjoying your work, maybe consider staying and file at FRA? Also agree with what Rick said about survivor benefits. Chris
Chris, I did…and you’re right, if we both live longer than expected, the effects of passing on the early payouts will be diminished.
I keep Mike Piper’s book on SS on my desk and have used his model. But I would always suggest that your overriding rule should be, don’t take SS before FRA unless you need the money. As you may have noticed in the Open Security Calculator, with your wife claiming a her spousal annuity 2 years early she will take a 17% reduction of a 50% benefit, and you would receive a 30% reduction in your benefit.
Is there anything magical about the FRA as a claiming age versus any other age? Aren’t benefits claimed at other ages simply smaller or greater?
You’re right about claiming your own benefit. But FRA does matter for spousal benefits — a spouse’s check is no larger if he or she delays beyond his or her FRA.
Good point. I think that does indicate that the FRA is irrelevant if the lower earning spouse’s benefit is greater than his or her spousal benefit.
Harold, you make some good points. Currently, my thinking is to take both of our benefits in about 2 years, when Lisa reaches FRA and gets the full 50%. That’s akin to taking the middle way, as Adam has wisely advocated. And by that time, the thrill of my encore career may have worn off.
Ken, I don’t know what’s best but my advice would be to wait until you’re sure you know what you want to do. Once you know for sure, it’s easy enough to leave relatively quickly. But if you leave and later realize it’s a mistake, it might not be possible to get back to where you’re at now. Plus, the longer you wait the more your and your wife’s social security creeps up. So since you’re not sure what you want to do, it seems like there’s less downside risk to staying the course versus shaking things up. Just my 2 cents. Best wishes whatever decision you make.
Good advice, thank you.
Ken, it sounds like (from the alive and your responses) that you have a good handle on the rules and how they impact your specific situation. I’ve worked with a few folks who claimed SS early, then came back to work. One gentleman turned his on at 62 when he was let go. He came back in a few months and worked enough to have his entire benefit reduced until his FRA of 65. He regretted turning on his SS at 62. Sadly he died of stomach cancer shortly thereafter but his wife received his pension and SS survivor benefit.
Another employee was an expert in a unique discipline (scintillation impacts on radio waves). He wanted to retire at 62 and turn in his SS. But we needed him and his expertise. His solution was to ask for a raise (above his pre-retirement rate) equivalent to what he calculated would be his lost benefit (including taxes) in each year he worked. The government customer was willing to pay a higher rate so we went with it. I never knew if he actually turned on his benefit or waited to his FRA.
I’m sure you’ve thought of this , but I would think considerations of a survivor benefit and your personal satisfaction would be my two main keys.
And Happy Birthday.
Rick, interesting situation with the radio wave expert. I’ll bet he was happy to be able to continue to share his expertise. Survivor benefit situation should be good in that I elected 100% for my wife (it’s a little more complicated than that but I won’t bore you with the details unless you insist). Thanks for the birthday wishes. I’m still trying to figure out how my 25 year old brain ended up residing in a 62 year old body.
“what would you do if you were in my shoes?”
Essentially what you’re doing: scratching my head, thinking things over, and doing nothing–at least for the time being. But that’s not very helpful. So…in the interest of discussion, to make sure I understand your circumstances:
–Your wife, because of her employment in a non-covered Social Security job, will have her spousal benefit reduced or eliminated by WEP. But she has her own inflation-adjusted pension, which will start upon her retirement. So, a spousal benefit isn’t really much of a consideration, in your case. But a survivor benefit might be, which is your most important consideration. So…a couple of things to consider: Age difference between the two of you; whether or not WEP will reduce your survivor benefit to her (I assume it will, but am no expert when it comes to WEP).
–Another point: So what if you flunk the earnings test? It just means that your benefit will be larger once you reach FRA. Unless, of course, your part-time employment is large enough to wipe out your entire benefit–which would make it pointless to claim early.
–Either way, it seems like the most important point here is not the math, but how you feel about it. If you really like what you do, and have no other plans or demands on your time, then keeping on doing what your doing seems like the best course of action. And if you wake up one day, and feel otherwise, well, there’s an easy fix.
Thanks for your input. As to your first question, my wife’s spousal benefit will not be subject to WEP. She doesn’t have a government pension. She had eight years of service. Shortly after we were married, the government sent her a buyout check. As to your second point, my understanding is that any earnings beyond the limit would reduce both the primary and the spousal SS benefit, so each extra dollar earned would be completely wiped out by a corresponding benefit reduction. And your third point does accurately describe how I currently feel.
My understanding is any decreased benefits you receive while exceeding the income allowance are added to your check amount once you are no longer earning in excess of the allowable amount.
The excess earnings are indeed factored back into your monthly benefit at FRA, but the enhanced benefit is annuitized over your expected life.
Yep, the spousal benefit in your case makes all the difference. I’m guessing that in your circumstances it actually ends up being more than half of your early benefit, which means you’d be leaving a lot more money on the table by delaying than would otherwise be the case.
You’re correct-it’s the spousal benefit aspect that makes our case a bit unusual. My wife is three years older than me (though she looks much younger, I might add).
I too have used Mike Piper’s Open Social Security site. It’s interesting that the results did show the typical advice of the higher wage earner waiting until 70 to claim, and the spouse basically claiming whenever.
Do you have any inkling as to why this is?
Your Forum post is a great example of how so many different situations exist in retirement. I don’t have the pension that you do. I assume there is a survivorship arrangement for your wife. But as an alternative to your pension, my goal with Social Security was to maximize my benefit. I’m five years older than my wife, so it’s reasonable to expect she’ll live as much as ten years longer than me. So I waited to file for Social Security until I was 70 even though I retired at 67. My wife will begin her FRA in 2025.