Denver Colorado Reverse Mortgage ‘s Certified Professional talks about an impossible Social Security question
Denver Colorado Reverse Mortgage
I’m turning 62 in a few months and will be able to begin drawing Social Security. Should I turn on Social Security now or wait? thx, Robert
Ooof…
That is the $64,000 question that every senior asks themselves and the right decision can easily be worth much more than this. Of course, this means that the wrong decision could cost you more than this as well!
- A senior receives 33% more money each month if they begin to take SS at 66 instead of at age 62.
- A senior receives 76% more money each month if they begin to take SS at 70 instead of at age 62.
As an example:
- $1,500 at 62;
- $1,995 at 66; or
- $2,640 at 70
Without considering Social Security’s cost of living or adjustments for inflation, that is an extra $1,140 per month!
However, by waiting and not collecting $1,500 for those 8 years or 96 months means that you’ve passed on receiving $144,000 over that period! Just to break even, it means that you must live to be about 80 ½ years old.
So, you can see that your health and family history should play a role in your decision-making process.
So you can see…
For every person that wins and benefits more, there is a person that loses in the Social Security system. Economists call this a Zero-Sum Game. It’s designed so the total benefits received are the same (meaning a difference of $0) no matter when you start collecting… ON AVERAGE. Checks that start arriving at age 62 will be considerably smaller, but you’ll receive many more of them. So, for most people, it’s close to a wash.
But even if you expect to live to be 100, other factors should influence the age at which you begin to receive SS benefits. Economists call these other factors “Opportunity Costs”. Since every resource (land, money, time, etc.) can be put to alternative uses, every action, choice or decision has an associated “Opportunity Cost” (another economic term).
Opportunity Cost
If you live to be 100, what opportunities did you miss out on by not having the extra $1,500 each month for the first 8 years?
If you’re carrying credit card debt with an average rate of 15%, it may behoove you to take your SS at an earlier age. This assumes that you use the money to pay off your debt and keep your balances at zero. (That’s important!!!)
What if you took your $1,500 and invested it? You could realize an enormous benefit if you are lucky. Then again, you may have a negative benefit if you invested your extra money with Bernie Madoff or Enron.
You may miss out on other opportunities that can be difficult to put a dollar value on. For example, you may wish to travel or have other adventures at age 62 that you’re unable to have at age 72! Or, do you perceive a benefit to assisting your grandchildren or being able to visit them more often? Only you can put the value to these experiences.
I’ve seen a popular strategy that married couples implement is for one spouse to take SS at an early age. Left untouched until age 70, the other spouse’s Social Security is untouched until age 70. Thereby enjoying some extra money during the first 8 years. Later after one of the two dies, the larger Social Security benefit will remain for the remaining spouse. Read more here.
As Denver Colorado’s Reverse Mortgage expert…
Some folks in Denver and other parts of the state will implement a Colorado Reverse Mortgage into their decision making. What many do is to leave the Social Security benefit untouched in their younger years. During that period, they rely on Colorado Reverse Mortgage to supplement that benefit over the 8 years. Turning on Social Security at age 70, the homeowner can turn off the Colorado Reverse Mortgage monthly income. Then, the difference is converted into a LOC to access if needed at a later date.
Unfortunately, the correct answer to when you should begin taking Social Security is only known after you’ve passed away and other factors considered. Anyone that tells you otherwise is blowing smoke.
So when should you begin to take your Social Security benefits?
I don’t know. But I knew going in that I couldn’t answer your question. My intent as Denver Colorado’s Reverse Mortgage certified professional was to educate a little and have you thinking about your current situation, needs and what is important to you.
Denver, Colorado Reverse Mortgage
In Denver, Colorado Reverse Mortgage is more than just a Reverse Mortgage company and feel it is important to look at and address a bigger picture. We discuss Reverse Mortgages (of course) but will be happy to share our knowledge and input on a variety of “senior-centric” topics. Mace visits about the importance of Trusts, Social Security, Home Safety, Power of Attorney documents, Senior Abuse (financial, physical and mental), and many other areas. Remember we’re not just a reverse mortgage company, we’re your neighbors.
Use this Reverse Mortgage calculator. This is a safe site and the calculator will give you a rough estimate. However, an experienced Certified Reverse Mortgage Professional will not only be more accurate but will also know ways to maximize the benefit to a consumer and will do a better job than a generic calculator.