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Friday, October 28, 2016

I find it rather curious that baby boomers, many of whom, in their youth, decried the accumulation of wealth and the materialism of their parents, are the first generation in history to regard Social Security not as the safety net it was intended to be but rather as a pot of gravy to pour over their already meaty investment portfolios.

I’m not saying this is a bad thing. In fact, it is just the opposite. People have always been encouraged to plan for their retirement. And baby boomers have, by and large, done a good job of that. Social Security was never meant to be a person’s sole source of income in retirement. Instead, it was meant to be one leg of the proverbial three-legged stool that should prop up your retirement nest egg — the other two legs being a pension or IRA account and whatever savings or other investments you are able to accumulate throughout your working life.

It’s just that all this focus on Social Security as an investment, sometimes even as a gambling stake, is still a relatively new phenomenon — especially to a guy who spent most of the last 40 years helping folks sign up for Social Security. And almost all of those people simply applied for benefits at 62, or maybe 65 — and just let the checks start rolling in without giving it too much thought. A Social Security check was simply something you got in your old age, and you used that check to pay the rent or buy groceries.

Today, more and more folks are trying to “game” the system — doing their utmost to squeeze every last nickel out of their Social Security investment. They are putting off taking Social Security until age 70 in order to get a 32 percent “delayed retirement bonus.” Many are claiming benefits as a “dependent” husband or wife off of their spouse’s Social Security account at age 66, and then living off that smaller amount until age 70 when they switch to their own retirement account — with that added bonus. Until the law was recently changed, others were filing for reduced Social Security benefits at 62 and investing every dime of that money while they lived off of other retirement accounts. Then at age 66, they would pay back all the benefits they received and file a new claim to get full benefits from that point on. They came out ahead of the game because they were able to pocket whatever interest they earned on the benefits received between age 62 and 66. The government real ized they were essentially providing interest-free loans to wealthy retirees, so they put a stop to that practice.

Again, I am not saying that treating Social Security as an investment is bad. Whatever you get from Social Security is your money, after all. And if you want to work within the rules to get the highest return out of that money — well then, more power to you.

But I have been more than a little taken aback by the obsession some people seem to have gambling with their Social Security benefits. People who delay their Social Security until 70 are throwing away tens of thousands, some approaching one hundred thousand dollars, in Social Security benefits, betting that they will live into their mid 80s to “beat the system.” But I’ve got to wonder, even if they live that long, will they really be able to enjoy their Social Security “winnings?” Lots of folks are taking that chance. And I can tell from the tone of their emails that they’re really not sure they are making the right wager.

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  • wayneonly

    You are obviously dealing with a clientele that has been wealthy and smart enough to save for their retirement. Not all have , in fact there is probably a majority of elderly who have not gotten enough in their IRA, 401Ks, or savings to retire comfortably. Many lost money in the recent recession and were not fortunate enough to have time to recover before retirement. For that majority Social Security can mean the difference between existing and starvation. And for a government to try to balance the budget on the backs of the elderly while continueing to give tax breaks to the top 1% and big business is unconscionable.

    • Great post. Consider this and you stated it twice in application, the saving/401k’s ira’s, all took a big hit after the housing market tanked so really two of those 3 legs of the SS stool have been close to wiped out as far as providing income for seniors leaving I believe many more than usual relying on SS as their only means of income. Medicare has not been diced into at least 3 parts that you are required to purchase, Part A which is free, Part B which costs everyone $100.00, and then Part D which is the drug option that is no option since it is mandatory. To keep from having to pay too much deductible per year most people have to also purchase part C supplemental insurance. So for most seniors whatever they draw from SS it is minus at least $150.00 per month for life ad for some it can be well over $400.00 per month. When the average SS is a little over $1100.00 per month that is a huge amount. To attack seniors as the Republican party does constantly when it is now like robbery to take 1/3 of what a senior should expect to receive from their contributions from a lifetime of labor and then denigrate the recipient just boggles my mind and shows the state of twisted logic we are at today.

  • Anything can happen to you inbetween 62 and 66….Iwould take SSI as quick as I could qualify to do so…If you have had a $14hr Job most of your working years or averaged 35yrs your SSI check would be close to $1200 a month after the Penalty….

  • Jon

    I took mine at 62 because what little I was able to save and invest in turned sour and as I calculated, it would take ten years (give or take) in order to make up the money I received at 62 before I could break even at 70 meaning in order to start at square one I would be in my 80’s, then the higher amount would be beneficial. I am like most Americans, I almost need to live on S.S. because of the lack of investments one could do then compared to now.. Not that they weren’t available back then but in order to participate you had to have a large amount of start up cash but now it’s not as difficult to raise such amounts.