Social Security Has Arrived For Aging Baby Boomer
Posted on March 7, 2008
Well, I finally made it! Yep! I never thought I’d see the day when I would draw Social Security, but here I am, just getting my first check at age 62. I know you’re probably looking at my picture and thinking, “No way a young man like that could be old enough to draw Social Security.” I’m thinking the same thing, especially since I’ve had no earned income for the last twelve years. It’s like found money.
I fall into the group born between 1943 and 1954 who will have to wait until age 66 to get full retirement benefits. Like many of you, for several years I’ve been getting an annual statement from the Social Security Administration telling me how much I could draw at age 62, age 66 and age 70. Naturally the longer I wait, the higher the amount is, and no doubt that larger amount looks better to people who will have to rely primarily on Social Security for their retirement income. According to my most recent statement, I could draw an additional $979 per month if I waited until I was 70 instead of starting at age 62.
Fortunately, I planned well for retirement and was able to stop working twelve years ago. Since then, I have lived entirely off the income from my investments. What I learned from the process I encountered when I starting my Social Security brings me to the purpose of this article. I spoke with a number of aging Baby Boomers and was amazed at their lack of knowledge about deciding when to retire. I functionally retired in 1997. (That means I got to the point where when I woke up in the morning I could do what I wanted instead of what someone else wanted me to do to keep a roof over my head, food on the table, etc.) At that time, I was like many others in that I knew little about the best time or how to sign up for Social Security.
I waited until about six months before I turned 62 and then visited the local Social Security office to see what I would need to do to get started early. After taking a number and sitting around for about an hour I discovered that I was wasting my time and theirs coming in this early. I was told that there was nothing I could do until the month before my 62nd birthday. I said, “But all I want to know is should I sign up at 62 or wait until 65?”
The representative was very pleasant. She entered my birth date and Social Security number along with a bit more information into her computer and soon produced a printout of my employment history showing what I had paid into the system. Then she said, “The only thing I can tell you now is that you can’t start full benefits at age 65, you have to wait until you’re 66. If you will come back the month before your 62nd birthday and bring your birth certificate, I’ll tell you everything you need to know.”
When I returned the next time, it was totally different. I was taken to a private area where I was first asked for my birth certificate and a government issued photo identification. Once I produced the documents, they were photocopied and I was asked a number of questions concerning my marital status, children, work experience, criminal history, whether I planned to work in the coming years, etc.
Once all of the particulars were out of the way, the lady was very helpful in showing me exactly how much I would get at age 62 and age 66. She showed me how much I would collect between ages 62 and 66 if I started at the earlier date and how many years it would take me to break even if I waited and drew the larger amount at age 66. She even printed a copy of the information for me to take with me if I wanted to study it before making a decision. Many of my experiences with government employees have left a lot to be desired, so I was pleasantly surprised by the concern and helpfulness of the Social Security staff person.
Even without seeing the analysis, I had planned to draw my Social Security at age 62, but what I learned really reinforced this decision. It showed that if I waited until age 66, it would take me 16 years at the higher amount before I would reach the break even point with what I would have received at the lower amount starting at age 62. This calculation didn’t take into consideration the fact that I intended to invest the money rather than spent it since I didn’t need it for living expenses.
Here’s a tip! I was born in the first month of the Baby Boom Generation. Millions of younger Boomers will follow me through the doors of a Social Security office so I’d like to offer this bit of advice. Don’t assume anything. Visit an office and get the numbers. Find out exactly what you can draw at age 62 compared to waiting until you qualify for full benefits. If you are born in 1955 or later the age gradually increases to 67.
Once you know the numbers, you should determine whether or not you will be relying on Social Security for monthly living expenses. If you will, you may want to continue working, possible all the way to age 70, in order to maximize your monthly income. If not, and you plan to invest the money, you’ll have to live a very long time to end up with more than what you can have by starting at age 62.
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