Don't Do It!

Even though I am a financial planner by trade, I don’t expect that this blog or the Platinum Years Network will spend that much time discussing financial topics. There just isn’t that much of a correlation between wealth and “authentic happiness.” And I’ll give you the stats on that some day. All in due time…

But this recent news item just begs to be commented on:

“At an event hosted by Michael J. Astrue, Commissioner of Social Security, the nation's first Baby Boomer, Kathleen Casey-Kirschling, today filed for her Social Security retirement benefits online at www.socialsecurity.gov. Ms. Casey-Kirschling, who was born one second after midnight on January 1, 1946, will be eligible for benefits beginning January 2008.”
Commissioner Astrue went on to gush about Kathy’s “personal milestone – she has made the transition from the workforce to retirement.”
Now I know a social security commissioner has to say such things as a matter of public relations, but if at the end of my life, I count as a personal milestone the day I signed up for social security, somebody please just put me out of my misery right now. But I digress.
What actually got me all worked up was that Ms. Casey-Kirschling is IN THE MAJORITY! It turns out that OVER HALF of those who are eligible to sign up for social security at age 62 do so. People, I’m shocked at your indiscretion! Have you thought this through? Do you need the money that badly? Most of the people I talk to just WANT to start getting their hard earned money back. But does it really make sense?

At Platinum Years, we’re going to cover this topic in some detail over the coming months and years, but let me just give you some major points:

The main reasons you should not normally begin collecting social security until you absolutely need them is:

1. Flexibility. By starting to collect right away, you eliminate lots of potentially positive events - What if a great opportunity arises? - Right after my mother in law signed up for her social security, she was offered a job caring for a 90+ year old woman 3-4 nights a week. She was basically being paid $15/hour to prepare dinner, watch a little TV, sleep and then prepare breakfasts. It worked out to over $500/week. At least before they started taking back her social security payments. The fact that she had started to collect made a mess out of what should have been a great opportunity. And at the Platinum Years Network, we’re all about opportunity!

2. A Lower Payment for Life – Sure you can receive social security before your “normal retirement date,” but you will be docked an 8% penalty per year. Now this payment is actuarially calculated so it’s sound based on your life expectancy. If you are healthy and have a normal life expectancy, you should break even on the early payments.

Which brings us to one very clear exception to the “Don’t Do It” Rule. If you are in poor health or have a questionable family health history, then by all means take as much as you can as soon as you can. Otherwise, you gain a lot more flexibility by waiting.

Let’s leave it there for now. There’ll be a lot more to say on this topic in the future, when we open up a web site section on Platinum Finances.

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