Travails of a Baby Boomer

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I admit, begrudgingly, that I am a baby boomer and will turn 62 this year. Like many of my generation, I have no intention of retiring. Some are making that decision as a matter of necessity. Others, like me, are continuing to work because they like what they do.

In any case, age 62 (and then 65) requires some real important decisions.

The first decision is whether to start taking Social Security. This decision is laden with fear about the financial soundness of Social Security. You can start at 62. Right out of the box, many will say, “I am going to take Social Security now because Social Security is bankrupt and I want to get as much of my hard-earned money back as I can.” Understandable, but for some this may not make sense. There are other things to consider. If you take Social Security at 62, you get less. How much less? About 20 percent as compared to the amount received if you wait until your full retirement age.

Social Security earning limitsAnd this reduction affects more than just you. If your spouse will receive Social Security based on your account at your death, then your spouse will also get less.

Social Security benefitsIf you continue working like me, there is another consideration. There is an earnings penalty. If you earn more than a certain amount (It changes, but in 2009 it was $14,160), you lose $1 of every $2 above that amount. There is a different penalty in the year you would have been entitled to get full Social Security benefits. Once you reach full retirement age (66 for me), you can earn any amount without penalty. Besides the penalty, Social Security may be taxable to you. It’s complicated but it depends on your income.
I’ve decided to hold off on Social Security until age 69. The amount I will be entitled to will grow by eight percent between now and then. Plus, my income would wipe out my getting Social Security before the year I turn 68 anyway. And, taking it earlier would hurt my wife in terms of the amount she might receive after my death.

Next topic… Medicare.

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