Work­ing, Earn­ing And In­vest­ing

Escalon Times - - PERSPECTIVE - By RUS­SELL GLOOR So­cial Se­cu­rity Ad­vi­sor

Dear Rusty: I am 63½ and work­ing full-time with a salary of $125,000/year. Given the early col­lec­tion rules I be­lieve it would not make any sense to start col­lect­ing So­cial Se­cu­rity now but tell me if I am wrong. Also, when I reach full re­tire­ment age (born in 1955) I plan/ hope to still be work­ing full­time.

At that point I plan to start col­lect­ing So­cial Se­cu­rity be­cause there is no earn­ings cap (cor­rect?) and put that ben­e­fit money into in­vest­ments. Would that be the best plan or are there other op­tions? Signed: Plan­ning Ahead

Dear Plan­ning: Your plan is a rea­son­able one and your as­sump­tions are cor­rect. If you earn as you now are and have taken So­cial Se­cu­rity ear­lier than your full re­tire­ment age (66 years plus two months) you’ll be sub­ject to So­cial Se­cu­rity’s an­nual earn­ings limit. If you ex­ceed the an­nual earn­ings limit ($17,040 for 2018) So­cial Se­cu­rity will with­hold $1 in ben­e­fits for ev­ery $2 you are over the limit, so at your salary level you’d need to give them back all the ben­e­fits you were en­ti­tled to any­way, es­sen­tially re­sult­ing in no net ben­e­fits. In the year you reach your full re­tire­ment age the earn­ings limit goes up and the with­hold­ing is less, but your earn­ings would still cause the “penalty” to largely eclipse the ben­e­fits you are due.

And you are cor­rect that once you reach your full re­tire­ment age the earn­ings limit goes away and you can earn as much as you wish with­out it af­fect­ing your So­cial Se­cu­rity ben­e­fits. As for tak­ing your ben­e­fits at your full re­tire­ment age and in­vest­ing them, that is a rea­son­able strat­egy if you think you can find a bet­ter in­vest­ment re­turn than the 8 per­cent you’ll get an­nu­ally in So­cial Se­cu­rity de­layed re­tire­ment cred­its (DRCs) by wait­ing beyond your full re­tire­ment age to claim your ben­e­fits (you ac­tu­ally earn DRCs at the rate of twothirds of 1 per­cent per month of de­lay, or 8 per­cent per year). DRCs con­tinue to be ap­plied un­til you reach the max­i­mum at age 70, at which point your So­cial Se­cu­rity ben­e­fit when you claim it will be 30.7 per­cent more than it would have been at your full re­tire­ment age.

And you’ll get that higher ben­e­fit amount for the rest of your life. But whether to take that guar­an­teed 8 per­cent an­nual in­crease in your So­cial Se­cu­rity ben­e­fit amount, or to claim your ben­e­fits at full re­tire­ment age and in­vest them is an in­vest­ment choice only you

The in­for­ma­tion pre­sented in this ar­ti­cle is in­tended for gen­eral in­for­ma­tion pur­poses only. The opin­ions and in­ter­pre­ta­tions ex­pressed in this ar­ti­cle are the view­points of the As­so­ci­a­tion of Ma­ture Amer­i­can Cit­i­zens Foun­da­tion’s So­cial Se­cu­rity Ad­vi­sory staff. To sub­mit a ques­tion, con­tact the Foun­da­tion at info@amac­foun­da­

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