Five Things You Need to Know about Social Security

Kiplinger lists five things you need to know about Social Security as follows:

1. Patience pays off. The longer you wait, the bigger the check.

2. Marriage has its perks. Couples have the most flexibility.

3. But you can collect if you decouple. You may be able to collect on your former spouse's benefits, as long as you were married for at least ten years and are 62 or older. (If you remarry, however, you can't collect based on your first spouse's record -- unless your second trip to the altar ends in divorce, annulment or death.)

4. Bide your time. Get a bonus. If you wait until age 70 you can collect even more, thanks to the delayed-retirement credit, which is worth 8% a year.

5. Ask for a do-over. If you started collecting Social Security and wish you had waited in order to get a higher benefit, you can press the reset button. You'll need to pay back what you've received -- which could be $100,000 or more -- but the government won't charge you interest.

Personally, I'm not counting on Social Security being around when I retire -- and I'm saving accordingly. Then if it does pay me anything, I'll consider that a bonus.

So, as you might imagine, I'm planning on waiting as long as possible to withdraw funds (I shouldn't need them, so I'll wait for a bigger payday.) Then again, if the whole thing appears to be collapsing, I might jump in and get as much as I can before it topples.

Oh the joys of dealing with a government-run retirement program. ;-)

Update: Sometimes I post articles in advance without looking at what was just before and after them. This one is a case in point. Didn't we just discuss SS yesterday? :-)

Comments

[Traciatim]

Wait . . . so you could take the benefit early, invest all that cash and make money, then pay back the amount you've received and also get the patience bonus?

[JM]

I'm sure as heck not counting on SS to be around when I retire. No one, unless they are retiring in the next 5-10 years or less, should even include it in their calculations for retirement.

[John @ The Financial Ladder]

Hm, I'm curious to hear your thoughts about privatizing social security. I think it would be great to be able to at least kind of control my money after it's taken by the government.

[Jeff]

FMF-

"Personally, I'm not counting on Social Security being around when I retire" I really dislike seeing this. If enough people say and think something, it just might become fact by virtue of desensitizing the issue.

If we paid nearly 15% to a system for decades then we should receive benefits. Period.

[FMF]

Jeff --

I'm not saying we shouldn't receive benefits. Believe me, I've paid a ton into the system and would like to have it back.

But with the government running it and things looking worse from a borrowing standpoint every day, I think it's foolish to count on it being around. It's better to me to plan for the worst case and be covered than to count on it and have the possibiliy of being left without.

[Josh]

I think SS will always be around. We might have to raise taxes or lower benefits for a period of time to "fix it" but by the time I retire (around 35 years from now) most of the baby boomers will be dieing off and there will be more young people than old people again, so thinking super long-term eventually the system will fix itself.

We just need to figure out how to fix it in the short-term.

[Lillie]

Currently, I am also playing the waiting game as far as Social Security. As I plan for retirement, I realize more and more that it's great that I will have some other means of support to rely on other than that source which may or may not be around. My only regret is that I didn't focus earlier on planning for when retirement would be a reality. But that's something that can't be undone, so it's full speed ahead to capitalize on goals that will reap me maximum benefits in the future.

[Budgeting in the Fun Stuff]

Jeff,
I'm planning our retirement without taking social security into account, but I will show up to rallies if they really do take it away. Just because I want to plan safe and don't expect much, doesn't mean I support the decision to take my money for 40 years and give me nothing when I hit retirement age. Planning and acceptance are two completely different issues.

[Daniel]

If they do take SS away, our kids are going to be mighty happy about having bigger paychecks. I think I'm responsible, I'd rather have the money now and put it in savings for 40 years than give it away and probably not get my money's worth.

[Credit Card Chaser]

Nope, I am definitely not counting on receiving anything from Social Security. Anything I happen to get I will just consider as a bonus.

[Mark C]

Social Security has morphed from social "insurance" into an "entitlement". A retirement fund that allows people to make stupid financial decisions because most people end up getting more out of the fund then they ever paid into. Read your history regarding original intent and restrictions of the SS program of 1935, and how it has expanded to a $650 billion annual expense for the government in 2009. Social Security was invented in the 1930s to provide a minimum income to keep poor widows and others from going homeless and not having enough to eat, to provide enough for burial and disability. It helped prevent mass migration to cheaper locales, and shorten the stress on soup kitchens and charitable organizations. It was never intended to replace savings or maintain a carefree lifestyle that people looked forward to during their working years. Alas, "I've been paying into it all these years, so I'm ENTITLED to get it all back" is what we hear from every following generation. It has made reform and means-testing nearly impossible to debate. A minimum dollar amount every month to cover basic needs is not a retirement fund. We've come to expect SS to do much more than it could ever do based on the "premiums" we pay with every paycheck. A good way to see if you're serious about retirement is to compare your FICA taxes to what you defer to 401ks, Roths, HSAs, and other true retirement vehicles. Mine is nearly 10x FICA!

[mbhunter]

I just took a class and the instructor told us about a client who had FOUR SS checks coming in: a previous husband's who passed away, an ex husband's, her current husband's, and hers. That's hard to top.

[Rod Ferguson]

Speaking of:

http://news.yahoo.com/s/ap/20100314/ap_on_bi_ge/us_social_security_ious

[Tim Davis]

Why is it that in the private sector if monies dissapear from a fund it's Embezzelment and peopel go to jail? But this is goverment run and it keeps disapearing. S.S. was and should be self funded, but our goverment has spent it on wars, and other projects. Stealing Taxpayers money.