OLDER WORKERS AND SOCIAL SECURITY BENEFITS

You’ve seen your paycheck hit every pay period with money pumped into the Social Security black hole, while hearing that the Trust Fund isn’t going to be there after the Baby Boomer tsunami. His impulse is to take the money at 62 and run. But maybe you should resist that urge.

WHY OLDER WORKERS SHOULD WAIT

For every year you delay receiving Social Security benefits after age 62, your benefits increase 5% to 8%. Reason enough to delay early retirement? Remember, we are talking about lifetime benefits. Hopefully it will be a long stream of income with a 5% to 8% increase. This is especially important since you are living longer and will likely rely primarily on your social security payments to survive.

Your benefits are tax-free until your annual earnings plus one-half of your annual benefits exceed $25,000.00. If you work full-time or even part-time after age 62, you expose your benefits to taxes. [Think of “tax-free” as a return on investment – it would be hard to do better in the market.]

So why do slightly more than half of retirees choose to take their benefits at age 62? Who knows for sure, but maybe their “payment” fatigue, coupled with pessimism, the Trust Fund will survive. I suspect that illness, disability, and job loss are factors. But if you can avoid early withdrawal from Social Security, do so. Immediate losses from early retirement are safer than long-term speculation on the Trust Fund.

AGE DISCRIMINATION HARMS THE FLOW OF SOCIAL SECURITY BENEFITS.

A sad consequence of age discrimination is that older workers without a large retirement portfolio may be forced to retire early. Those losses can be significant. Those losses can be calculated against the older worker’s retirement plans if the age discrimination had not caused an early termination of employment. More insidious is that age discrimination burns at both ends of the age candle. Finding a new job with comparable pay is also hampered by age discrimination in hiring.

CONCLUSION

Get sound financial advice to assess the role of Social Security payments as part of your total retirement payments. And, if you’re fired because of age, when younger workers without greater talent, work ethic, or reliability replace you (or avoid selection for firing), then consider legal advice as well. This legal analysis must include in the calculation of your losses the flow of tax-free social security benefits that are reduced by early retirement and included in taxable income due to the need to continue working in a higher wage job. low.