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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