Brickworks - A Brick Looks At Life

Saturday, February 6, 2021

Why I Took Social Security -- Early

So why did I do it?

The Brick has been retired for about 5 1/2 years now. Our post-retirement income started as:

*His pension (a bit more than $2,000/monthly)

*Whatever my work brings in...which is variable. Sometimes it's:

--personal property appraising

--judging for craft competitions (this dried up in 2020/21)

--teaching for various conferences (pretty much ditto)

--writing articles and books (fees & royalties)

--any little jobs I can pick up, including catering, surveys, errands, etc.

Since we'd already learned to live on less income, it wasn't too bad...but meant, as in the past, we had to live carefully. When we needed income, helping out with Daughter #2 and Son #1's wedding, for example, we had to take on work -- or sell something. (That's why our 'extra' vehicle, our Outback, was sold, and the Brick drove a schoolbus for some months.)

A big change came last year, when the Brick turned 65, and applied for Social Security. That magically added even more money monthly, and eased up any rough spots. We had the profit from the house, true -- but decided to put that into two annuities that would not only cover medical expenses as we grew older, but would also allow us to draw out money in small regular payments.

We had a third annuity that was ready to pull, using savings we'd gradually saved up over the years. (We could have used it previously, but managed to keep it intact. Thanks, Lord & Richards, for setting this up and managing it for us!) But I had a different plan --

Why couldn't I start Social Security, as soon as I qualified?

Here's why:

*The pension would not go away if the Brick died. He optioned to take less, so it would continue for me. (Yes, he's that kind of wonderful guy.)

*The pension is through Colorado's state government. I pretty much doubt it's going to go bust anytime soon.

*The Brick's Social Security payment was cut anyways, thanks to "double-dipping." According to Ye Olde U.S. government, if you work for the state, even after you've been working for private companies for decades, you will be penalized. Big-time. The only exception is if you put in 30 years or more. (The Brick put in a little more than 25 years.) That meant a BIG cut in benefits.

I still think it was cut way too much -- and shouldn't have been cut at all. But no one's listening. (State and religious institution employees, brace yourself. It will happen to you, too.)

*My Social Security payment wouldn't increase that much if I waited a few years. (We double-checked.)

*We had a solid emergency fund -- and some extra savings, in addition to what we had deposited with Lord & Richards.

*We could start pulling payments from the annuities -- but if I took SS instead, that money could continue to grow.

Our advisors at Lord & Richards thought it was a good idea. (They double-checked the numbers, too.) After five-plus years following their/our plan, our current funds are holding steady -- and actually slowly increasing. So why not?

Not only is my Social Security payment "extra," as far as our needs go, but it's allowed us to help out with causes and people we care about. It's given an extra cushion for unexpected costs. (Like that $1000 we paid for November truck repairs -- aargh.) True, the monthly payment is less than it would have become in three or four years -- but it's helping, at a time when that little bit of help means more.

It was worth it.

If you're considering applying early for Social Security, it's not a bad idea to run it by an investment advisor. (Good ones like Lord & Richards are precious assets. And no, I'm not getting compensated for saying this. They really are.) You can also do a check by using Social Security's "quick calculation" exercise.

It also means you should be doing what was important, anyways, before you actually retire: go through EVERYTHING.

-- how much do you owe?

--how much do you own? (Should you sell one or more of those things to pay off what you owe?)

--what income can you count on during retirement?

--can you work part-time or pick up another "stream of income" to help out?

Something else is important: Your Social Security payment can be penalized by earning too much income. You must be careful not to make too much until full retirement age. As of 2021, that amount is $18,960. Full retirement age depends on your year of birth; for me, it will be around age 67+. (I turn 63 this year.)

The final important thing to consider: think LIFETIME payments.

--Does your DNA argue for only a medium life, instead of a long one? (Neither the Brick nor yours truly come from particularly long-lived families.)

-- Do you have another source of income (like a pension, retirement fund or annuity) that could help flesh out the Social Security you do get?

--I am not sure what other countries do in this regard, but know that Canada has a similar program. (Medicare, which you qualify for at age 65 in the U.S., is also a big help.)

--If you're married, will you have enough income to keep you going, if your partner dies -- and that SS payment disappears?

It takes about a month, so the authorities say, to apply -- so you should do it the month before your actual birthday. You can start considering this at age 62, and if you're married, your payment can be based on what your spouse made, as well as your income. (However, in this Age of Covid, my actual payment took more than two months.) Your money comes via automatic deposit in your bank account.

You might also consider applying early. At any rate, it's worth looking into.