Submitted by: Maryanne Dailey, Senior Vice President Better Business Bureau of Southern Piedmont
Article written by: Katherine R. Hutt, Director of Communications and Media Relations with the Council of Better Business Bureaus
Usually when BBB reports on a headline like this, it’s to warn you that it’s a scam and you shouldn’t believe it. But this time, it’s true! Our good friend Elizabeth Leamy, consumer reporter for ABC News, used the Social Security Administration’s online calculator to figure out the advantages of waiting to draw government benefits (Canada has a similar tool for crunching OAS pension numbers). Here’s what she found:
“We’re allowed to start taking Social Security as early as age 62. But if you take the benefit that early you get a seriously reduced benefit… 30 percent less. By contrast, if you wait until full retirement age, or beyond, you get way more money.
“Let’s say your birth year was 1965 and your annual income was $40,000. Here’s what you would receive in Social Security, retiring at different ages…
“Those are jaw-dropping differences. In this case, waiting until your full retirement age of 67 gets you an additional $1,122 a month. Even more astounding, hold off just 3 more years and you’ll get an extra $2,173 a month!
“Delaying Social Security is a decision with a ripple effect that can last 20 years. Thinking of it as “a 20-year decision,” I originally did the math for that same hypothetical person born in 1965 and making 40 grand, but stretched out over 20 years:
“If that were you and you waited until age 67, you would get an extra $269,280 over 20 years. And if you were to wait until age 70, you would receive an extra $521,520. (Actually, you’d get more than that, because these figures don’t take into account cost-of-living adjustments over the 20 years.)”
Elizabeth explains all the variables in detail in her article online. I noticed that some of the comments are from people who confuse retiring with collecting Social Security. There’s a difference. You can retire from a job earlier but wait to collect Social Security later. Some people work part-time, do consulting, or switch to a job that isn’t as intense as their primary career.
Of course, it’s a bit of a gamble that you’ll live long enough to enjoy the benefits, so take into consideration your health, family history, lifestyle, etc. As one commenter put it, “Now people have another reason to eat healthy, exercise vigorously, and save for retirement.” Works for me!