My Decision to Start Social Security Benefits Early

by Joe Plemon on August 4, 2009

My Decision To Take Social Security

I had planned to hold off drawing my Social Security benefits until I was full retirement age, but things changed and I signed up two months ago at age 62 ½. Am I wishy-washy? Do I lack backbone? Well, maybe, but let me explain. Some of you may be going through the same struggle and, whether you agree with my decision or not, following my thinking process may help. I hope so.

A little bio here:

I was fortunate, after working 30 years as an engineer, to retire 10 years ago with a life pension and mostly paid health insurance benefit. I have continued working in a part time capacity as an engineer ever since.

Three years ago I began my own financial coaching business, also part time. Then, four months ago, my part time engineering job came to a close as my firm had to cut back and started with their part time employees.

My knee-jerk reaction was to find another part time engineering job, but Janice (my wife) encouraged me to reconsider. Did I really want to continue to be on the road a couple of days a week? Did I really want to continue in a career that had long since lost its luster for me? What about starting a new phase in my life doing one thing (helping others with their finances) I am passionate about?

But what about the lost income? Of course Social Security was an option, but I had two reservations:

  1. If I start now instead of waiting I will be locking myself into a lower income for life.
  2. If I earn too much money, Social Security will penalize me $1 for every $2 over the maximum allowable income set annually by the SS Administration.

Social Security and Some Simple Math

Some simple math showed me that I will be 78 years old before the greater income I would get by waiting will catch up to the smaller income I get by starting now. Of course I plan to live much longer than 78, but I needed to weigh the quality of life I could achieve today with what I might need later. This is a dicey thought process and perhaps I rationalized a bit, but it helps knowing that I have some IRA funds that I don’t currently need and plan to leave alone until RMD starts at age 70 ½.

A bigger concern was the penalty. I never want to subconsciously (or consciously) cap my earnings because of a penalty. But studying the Social Security web site revealed that this is not a penalty at all. Yes, the deduction of $1 for every $2 earned over the max will take place, but the deducted money is credited to my account and will show up as higher earnings later on.

My First Social Security Check

So I am now a Social Security recipient. My benefit was more than I expected and actually replaced all I was earning with my part time engineering job. Because Janice and I are debt free, we have a great cash flow which allows us to save, spend and give more than we ever anticipated. I wake up every day knowing that I will be doing what I love to do. This fact alone validates my decision. Life, for Janice and me, is very good. I think I made the right decision.

Readers: how about you? Any similar experiences? Are you happy or not happy with your Social Security decisions?

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{ 3 comments… read them below or add one }

Grace August 4, 2009 at 10:39 am

I do understand your particular reasoning, given your situation. But I think that if one earns a regular income at a fulltime position at age 62, it makes much more sense to delay getting Social Security. Personally, I don’t plan to collect until I leave employment, which, if my plans work out, will be at age 69.

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Janette February 18, 2010 at 7:25 pm

My thought is that your wife must have a good job with a pension as well. The reason my husband is putting off filing until he is 65 (or older) is because I am a teacher who has moved with his career (meaning- low salary with no real pension). I will, most likely, outlive him. He is seven years older and the women in my family live a LONG time. His higher social security will be important for me in the elder years (that is IF SS is still intact).

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joeplemon February 18, 2010 at 10:52 pm

Janette,
No, my wife was a stay at home mom. If she outlives me she gets half of my engineering pension and all of my SS pension. Of course if I had waited until full retirement age, her survivor’s pension would have been more. We talked about this, and she wanted me to go ahead and start my SS. With no debt and a paid for house, she will still be very comfortable if she outlives me. As I mentioned in my article, we also have some IRA funds that won’t be tapped until RMD at age 70 1/2.

I am not saying that our decision was the best way to max out SS. But, for our lifestyles, we are both happy that I went ahead and started early.

In your case, I think it is important that your husband wait until full retirement age, especially since you are seven years younger and don’t have a great pension of your own. As you said, his higher Social Security will be important for you in elder years. If he waits to get a max benefit, you could go ahead and start yours before your full retirement age and bring in that extra money now, expecting that if you outlive him, you will get his full benefit at that time anyway.

You might want to check my post on Social Security Strategies Part Two for some ideas that might further benefit you and your husband.

I wish you and your husband well as you plan for your retirements.

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