Rivers can provide us answers to our questions. All too often rivers prompt us to ask better questions. Should some retirees take their pension, Social Security benefits later rather than sooner?
I’m reminded ours is a nation of work as I slide back into my hammock hung between two ancient pines. Turning on my side I ask my question directly to the river. Should I perform creative work and delay and maximize my pension or Social Security benefit? A mosquito buzzes in my ear. Huge Brown Trout work their way downstream. Many would argue it could be a good strategy for some retirees. I agree especially when a retiree is faced with reasonably good health and a family history of living a long time.
Many retirees performing creative work for compensation may opt to delay their enrollment in their pensions and or Social Security to maximize the size of their monthly check. For example Social Security taken later rather than sooner results in a significantly larger monthly check. Retirees in reasonably good health may decide to take their Social Security benefits at age 66 or even 70.
This strategy enables retirees to earn money without reducing their benefit. Due to the fact Social Security reduces a retiree’s benefit one dollar for every two earned over 14,160 in 2011 for example; a retiree earning $50,000 annually would wipe out their entire benefit. This issue is eliminated for those who begin taking benefits at age 66. Taking benefits at age 66 – 70 also provides one with higher cost of living increases. Some couples may opt to have their spouse collect at age 66. Using this approach they can claim 50% of their own benefit which allows their benefit to grow 8% a year until age 70. Bottom line, these strategies significantly increase one’s retirement income.
The following is another strategy worthy of consideration for retirees who continue to work in their traditional careers while in their 60’s. They may opt to stop their 401k, 301B or SEP nest egg contributions in their 60’s. This assumes their reasonably appropriate sized nest egg is growing at 4-5% annually at that time. One’s final contributions make little impact on one’s nest egg and are perhaps better invested in one’s bucket list adventures. This money can also be used to help one’s transition into creative work. Individuals attacking their bucket list while working full-time find it can be a great way to make one’s sixties both exciting and fulfilling.
Staring intently into crystal clear, braided pocket water, I smile, recalling how yesterday I was getting lost in what I love doing. Tomorrow I will awaken excitedly to the prospect of creatively filling one of my 6,000 blank pages. A significantly bigger Social Security check every month, sometime down the road, sounds good to me. Patience is a virtue. A bigger benefit check is a just reward.