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Color of Money: The great Social Security benefits debate - Take it early or wait?

Michelle Singletary on

"Unless you or your husband don't expect to make it to your late 70s, I sure wouldn't take [your retirement benefits] at 62, which would also require that you not have meaningful employment income, because it would reduce the benefits," Sloan wrote.

We hadn't factored in this point. You can still work and collect Social Security. But if you haven't reached your full retirement age, your benefits are reduced by $1 for every $2 you earn above the annual limit. For 2018, the limit is $17,040. If you reach your full retirement age this year, Social Security will deduct $1 for every $3 you earn above $45,360 until the month you reach your full retirement age. Starting with the month you reach your full retirement age, your benefits won't get docked no matter how much you earn.

What counts as earnings? Social Security considers wages you make from a job, or net earnings if you're self-employed. Income from annuities, investment income, pensions, interest, capital gains and government benefits do not count. Read more about this issue at Social Security's website, ssa.gov. Search for "How Work Affects Your Benefits."

I've been hearing a lot from readers on this issue. Robert Meisel of Alpine, California, who turned 70 last year, took into account the very point Sloan made. And he waited. He claimed his benefit at 69.

"I was self-employed, working and earning my normal income," Meisel wrote. "If I had taken Social Security at 62, I would have been penalized by 50 percent of each benefit dollar until my 66th birthday."

Fortunately for Meisel, he and his wife had ample savings to help make their choice easer. "I'm pleased with my decision," he added, "but only time will tell if it was the best financially."

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In the case of this great debate, there's a lot to consider -- cash needs, health, family longevity, taxes and your working status. Sure, you'll have to guess on some things. But at least make it an educated guess.

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Readers can write to Michelle Singletary c/o The Washington Post, 1301 K St., N.W., Washington, D.C. 20071. Her email address is michelle.singletary@washpost.com. Follow her on Twitter (@SingletaryM) or Facebook (www.facebook.com/MichelleSingletary). Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.

(c) 2018, Washington Post Writers Group

 

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