Liz Weston: My adviser says to start Social Security at age 62; what say you?


Dear Liz: I retired in 2013 at 55 years old. I bought an annuity, which will pay $ 1,000 a month for life for me and my wife too. That starts in February of 2020. Meanwhile, my retirement fund became an IRA and I am withdrawing approximately 10% of that annually. The balance is approximately $ 650,000.

My counselor wants my Social Security to start at age 62. I received $ 1,800 a month and could reduce my withdrawal rate to 4%. I have also been told, however, that it would be better to wait until my full retirement age (66 and 6 months) or 70, when my benefit is maximum. At full retirement age, my monthly benefit would be approximately $ 2,500, and at 70, it would be $ 3,000.

I am not sure what to do. My wife will retire next year and her monthly pension will be approximately $ 3,700. We still have a debt to our house and we also have other debts. What is my best option?

Reply: There is a lot of research that shows that single people and "primary wage earners," who earn a higher salary in a married couple, it is better to delay the start of their Social Security benefits. (The article "How to Understand Social Security Claims Decisions Using Evidence from the Survey" in the November 2018 edition of the Journal of Financial Planning does a good job in summarizing the research).

Longer life expectancies mean that most people will live beyond the point of "equilibrium point" where the larger benefit more than outweighs the checks that pbad in the first years. These larger checks are also a type of longevity insurance. The longer you live, the more likely it is that you have spent your other resources and end up depending on Social Security income to live.

Having the delay in primary income is especially important for married couples because on the first death the number of checks received by the household will be reduced from two to one. Because the survivor receives the larger of the two checks, it is generally prudent for the check to be as large as possible.

The benefits of delay are so important (a study shows that the sustainable living standard is 30% higher for people who start with 66 instead of 62) that advisors often recommend taking advantage of other resources, including retirement funds , if this allows people to postpone by starting their checks.

Your situation may be a bit different, even if you mention that your wife has a pension. If the pension is a job that was not paid to Social Security, it would affect your ability to receive the benefits of survivors of the Social Security system. Something known as compensation from the government pension would reduce your survivor's check by two-thirds of your pension amount, which could completely eliminate your survivor benefit. If that is the case, it would not be so crucial that it be delayed.

However, given what is at stake, you may want to get a second opinion from another counselor who can review the details of your situation.

Liz Weston, certified financial planner, is a personal finance columnist for NerdWallet Questions can be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or using the "Contact" form on Distributed by No More Red Inc.

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