Baby Boomers and Social Security
Current law states that if you were born between 1943 and 1954, your full retirement age is now 66—not 65—and your wait would be four years, not three.
Today, every age group has an alias—you know—an also know as (a.k.a.) of some kind. For instance:
- Traditionals born before 1946—value loyalty, discipline and respect authority.
- Baby Boomers or just Boomers (1946-1960)—gave birth to the "Yuppie" phenomenon.
- Generation X (1961-1979)—best academic training and international experience in history.
- Generation Y (starting in 1980)—first to live their entire lives with information technology.
- Sandwich generation—caregivers for parents while they still have kids at home.
And, there are plenty of other a.k.a. monikers, but you get the idea.
Now, anyone is allowed to read this, but it's addressed primarily to Boomers. You know who you are and, even though you may not want to admit it, many of you are pushing the age envelope for Social Security. You are on the verge of turning 62 (born in 1946), remember.
What about Social Security for Boomers?
A typical Boomer question about Social Security goes something like this:
"I know that I can begin drawing Social Security if I retire this year at age 62. But, the monthly amount I receive will be less than if I were to wait until I turn 65. Would it be better for me to wait three more years and then draw more each month at age 65?"
Well, first of all, current law states that if you were born between 1943 and 1954, your full retirement age is now 66—not 65, and your wait would be four years, not three years.
But, let's say that this year, at age 62, you decide to retire and your current annual earnings are $40,000. Your monthly Social Security benefit amount would be $860.00.
If you were to wait until age 66 and 6 months, your estimated monthly benefit amount (beginning in 2012) would be $1,363.00. This figure uses the present Social Security calculations and assumes some future earning increases.
You would draw about $500 more every month if you were to wait until you're 66 years old.
So, is the decision a 'no-brainer'?
Five hundred more dollars a month—that's a much better deal, isn't it? Maybe it's not, because here's the hitch. If you wait until age 66 to retire, it would take approximately 13 years of full Social Security income, beyond the age of 66, to compensate for the money ($41,280) you could have drawn during those four years between the ages of 62 and 66.
As they say, "Do the math!" And, as a matter of fact, to be sure that you make the wisest decision for yourself, you can calculate your own financial situation by using the Social Security online calculator. You'll find it, and other helpful information at http://www.socialsecurity.gov/ Close to the top center of their home page, you'll see "Retirement" and just below it you can click on the "calculate your benefits" line.
Did you know?
Not everyone is aware that you can actually continue to work while you receive Social Security retirement benefits. If you do, it could mean higher benefits for you in the future, because you'll be paying into the program while you're drawing out.
However, the thing to consider here is that the benefits you receive while working will be reduced, but only until you reach your full retirement age (66 for Boomers), using Social Security's formula to determine how much your benefit would be.
For example, if you are under the full retirement age (62-65) for the entire year, Social Security would deduct $1 from your benefit payments for every $2 you earn above the annual limit, which is $13,560. But, once you reach your full retirement age of 66, this reduction would no longer apply.
This may sound complicated. However, again, Social Security has online calculators that you can use to help you make an accurate and informed decision, using your own financial figures.
Don't leave God out of the equation
Here's something very important to consider. Every family situation is different, and there are many factors that enter into making the decision of when you should retire. But the most important consideration is this: What does God want you to do?
You should definitely be certain to take God into account in this important choice. "The heart of the prudent acquires knowledge, and the ear of the wise seeks knowledge." (Proverbs 18:15)
Were you aware that the Bible never really speaks of "retirement" as we know it? In fact, the only mention of the concept to "retire" is found in Numbers 8:25.
"Now the LORD spoke to Moses, saying ‘This is what applies to the Levites: from twenty-five years old and upward they shall enter to perform service in the work of the tent of meeting. But at the age of fifty years they shall retire from service in the work and not work any more. They may, however, assist their brothers in the tent of meeting, to keep an obligation, but they themselves shall do no work.'"
So, unless you're a Levite, you may want to assess, or perhaps reassess any retirement considerations very carefully—and be sure they line up with God's plan for your life.
I'm a Boomer and I'm ready, now what?
Okay, let's say you're married and you've gone through the process of discussing this thoroughly with your spouse. You have sought the counsel of a trusted financial planner or friends who have good financial sense. You've prayed seeking God's guidance, and you believe that He has given you the go ahead to retire. But, how do you go about signing up for Social Security?
Well, on that same Social Security online home page mentioned above, click on "Apply for Benefits" in the left hand navigation bar. You'll find all the information you need. The Social Security site will take you step by step through the application process, all the while asking appropriate questions as you complete the forms.
Your completed online application will be forwarded to your local Social Security office. Then, a determination will be made to be sure that they have all the information they need to make an appropriate decision. Of course, you can also visit your local Social Security office and fill out the application forms in person if you wish.
There definitely are pros and cons involved in making this retirement decision. Whatever you determine, before rushing off to apply for Social Security benefits, the most important consideration is to be sure you're satisfied that you have God's approval in the matter.
"How blessed is the man who fears the Lord, who greatly delights in His commandments . . . wealth and riches are in his house" (Psalm 112:1, 3), because "He who trusts in the Lord will prosper." (Proverbs 28:25)
Harvey Nowland is a freelance writer living in Gainesville, Ga.
Copyright 2008 Harvey Nowland. Used by permission. All rights reserved.