Transcripts

"Money File"-Save Social Security For Old Age

SUSIE GHARIB: In the "Money File" tonight, why collecting Social Security early is often a mistake. Here's Jonathan Pond, author of "You Can Do It: The Boomer's Guide to Retirement."

JONATHAN POND, THE BOOMER'S GUIDE TO A GREAT RETIREMENT": When should you begin collecting Social Security? The prevailing wisdom seems to be: take the money as early as possible and most people are heeding that advice. The Social Security Administration reports that almost 75 percent collect early. But for most people, it's a mistake to collect Social Security benefits before full retirement age, which may be as high as age 67, depending on your birth year. Collecting early makes sense for some people, including those who simply need the money to pay their bills, those in poor health and, of course, those delusional souls who are convinced that Social Security benefits are going to be terminated so they'd better get in under the wire.

Otherwise, though, it pays to wait and enjoy higher lifetime benefit checks, particularly if you're still working or may return to the workforce, because if you collect before full retirement age and earn more than a pittance of money, you'll sacrifice some or perhaps all of your benefits. Also, if you're married and one spouse has a higher earnings history, experts urge the higher earning spouse to delay benefits. Then, if the higher earning spouse predeceases, the surviving spouse will be entitled to a bigger benefit check. So before you decide when to collect Social Security, do some homework. You'll probably find that collecting benefits later, rather than sooner, is the better choice. I'm Jonathan Pond.