Social Security at 62 - where to deposit funds?
YodaRules
11 years ago
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Comments (20)
sushipup1
11 years agolast modified: 9 years agoYodaRules
11 years agolast modified: 9 years agoRelated Discussions
Social Security
Comments (14)rosalynd, SS is a "pay as you go system". That means that the money taken out of your paycheck every week is spent to fund THOSE ALREADY RECEIVING SS checks every month. You seem to be operating under the misinformed belief that whatever money you are presently required to pay into the system is somehow being earmarked for YOU at a future point in time. It's not. When you retire and are eligible to collect SS benefits it will the younger working population's tax contributions that will fund your checks. And there's the rub... there is a large population "bubble" of retirees hitting 62-65 and that means a LOSS of people contributing weekly and an increase in the number of people withdrawing benefits! SS was originally set up as an INSURANCE policy against a catastrophe like the Great Deperssion; never was it ever intended to solely fund someone's retirement. But over the years, a large segement of the population has presumed just that. It was designed to be part of a "three legged stool"... SS, pensions from worker's companies, and personal SAVINGS. Additionally, the age of retirement set at the inception of the system (65, I believe) was actually beyond the average age of death of most Americans. My parents withdrew every dime they'd contributed to the system within 18 months of receiving their first check! Mum is now nearly 80, so she's been on the dole for nigh on 15 years now. Roll forward to 2006... companies are defaulting on defined pension plans, the age of retirement has been increased only a bit (is many years below the average age of death; about 15 years for me!), and the average American doesn't SAVE a dime. The IRA was introduced to stimulate retirement savings... the contribution one may make has increased from $2K at its inception to nearly $4500 now. Additionally, they've sweetened the pot for lower earners by permitting you to pay taxes "up front" (presumably when you are earning less and paying less), allowing the nut to grow and compound TAX-FREE until you decide to withdraw funds from it. In light of the loss of company pension plans this is a nice deal... but only for the disciplined. Taken in total, this is an impending disaster. The "cures" are not going to be popular, but they are necessary. Let's hope more politians find the stomach to stand up and state "the emperor isn't wearing any clothes". Payroll taxes will HAVE to go up. The retirement age MUST be raised to more closely reflect increased life spans, and (I believe) we will have to means test. The very wealthy will have to say good bye to their "cut" for the greater good. After all, that's how an INSURANCE policy works, more people with "safe" histories pay to cover the losses of unluckier policy holders. This isn't something for the courts, this is something for the voting booth....See Moresocial security benefits
Comments (23)That's exactly what I thought, kudzu. You refuse to accept the math simply because you don't trust the government. That's fine if it makes you feel good because, you think, you've managed to outsmart those sneaky old federal bureaucrats. I sincerely hope you're enjoying your retirement and the SS checks you've been receiving for these past years . What bothers me is that you're misleading others with bad advice about something that's very important for their futures. For example, you claim that the math is so complicated that neither you nor I can figure it out and that the breakeven point may somehow really be later than 78 because of "the time value of money" -- the fact that a dollar today is worth more than a dollar some years down the road. That's certainly true but a deferred SS benefit grows at the guaranteed rate of 7% interest each year for four years -- the rate is 8% for those who hold off four more years until they're 70 -- PLUS whatever rate the COLA is for that year. COLAS have averaged 2.5% for the last 10 years, BTW. Since the deferred benefits is larger each year, the COLA on the growing benefit will also be larger than the COLA for the static early benefit. Considering that, the real breakeven point is probably somewhat less than 78 years not more. The real truth is that the government knows that, no matter what it tells people about waiting to take SS, most (about two-thirds) will take it as soon as they can. Many of them have no choice because they truly need the money. Others may have serious medical problems that are likely to shorten their lives. But many just can't wait to finally get something back from SS after paying in for so many years. Or they're afraid SS will run out of money. Or, like you, they refuse to believe that the government's advice to wait could possibly be true. Of course, each one of the 66% who start taking at 62 costs the government less in lifetime benefits than any and all of those who hold off. The relatively few who hold off until 66 will cost it more and the even fewer (like me) who hold off until 70 will cost it the most. That's why the breakeven point can be set at a lower age than actual life expectancy. The majority who take early collectively create a large enough surplus to fund those of us who hold off taking until later. So I thank you for the contribution, however tiny, you will likely make to help fund the later stages of my retirement....See Moresocial security
Comments (7)It's advisable to apply for Social Security benefits 3 months before you want benefits to begin. If you meet all requirements for entitlement, you can receive benefits beginning with the first full month you are age 62. Naturally, if benefits begin before age 65, they are reduced to account for the longer period over which they will be paid. When you apply, you will need the following: your Social Security number; your birth certificate; your W-2 forms or self-employment tax return for last year; your military discharge papers if you had military service; your spouse's birth certificate and Social Security number if he or she is applying for benefits; children's birth certificates and Social Security numbers, if applying for children's benefits; proof of U.S. citizenship or lawful alien status if you (or a spouse or child is applying for benefits) were not born in the U.S.; and the name of your bank and your account number so your benefits can be directly deposited into your account. You will need to submit original documents or copies certified by the issuing office - you can't just go to the UPS store and make your own copies. Maybe during your recouperation period you could pay your local SS office a visit. It can be a bear sitting and waiting to speak to someone, but worth getting good information directly from the source. Quite a bit of info on the internet, too. But as for time frame, you probably ought to start the ball rolling now for a February or March start date. Good luck to you. I'm getting close to having to start thinking about when to begin taking SS myself. I'll be 62 in the not so distant future and it's a difficult decision to make. Even if there was no pressing need to start taking SS, I'm beginning to think it wise to take it at first opportunity. Get into the system before the Govt. does something foolish with one of the few things that actually works!...See MoreSmall Social Security COLA this time
Comments (11)chisue, take another look at how Social Security benefit amounts work, it's not how you say. As an example, just to keep the numbers simple, let's say a person qualifies at age 62 and starts then. They get 75% of the amount they'd get at 66. Real numbers, let's say it's $7500 at year at 62 and it would have been $10000 at 66. By waiting, they're getting a higher amount, yes, but that's not "a return on their investment". What they passed up getting was $7500 per year for 4 years = $30,000. It takes a lot of years with that $2500 increase (which will get cost of living adjustments) to equal the $30000 they passed up. If you factor in interest cost, for someone who isn't working, unless they feel confident to live to a ripe old age, taking it sooner can be better. See what I mean?...See Moresushipup1
11 years agolast modified: 9 years agoazzalea
11 years agolast modified: 9 years agoYodaRules
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