Social Security Retirement Benefits
Tips on Navigation 9/26/2018 | Harvey Mackler, Banking on Harvey
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Sooner or later, you will need to navigate the uncharted waters of your social security benefits. It is a good idea to get started now, regardless of your age. Each of us participates, albeit unwillingly. (This column is not about Medicare; only retirement income benefits from the plan.)

First step – Find your annual benefit statement which is sent to you by the Social Security Administration (SSA). Check it for accuracy. Make sure that you understand each of the line items; to wit

Your Estimated Benefits:

             Retirement  (Full Retirement Age benefits; age 67 if born after 1959

                             If you start at age 70 

                             If you start at age 62




             Medicare (not covered here)

If you want to validate the calculations, good luck. As long as the earnings shown per year are accurate, trust the calculation. It is based on the highest 35 years of indexed earnings. If you don’t have 35 years of earnings, it treats those other years as zero for the purpose of the calculation. And the definition of “indexed earnings?” Good luck understanding that one, too!

Second step – Now is a good time to register for your online account with SSA. Don’t wait until you approach certain time benchmarks, as you may encounter challenges in registering. If your local office is anything like ours, you would rather accomplish it online and with self-help, not waiting for hours to speak with someone. PLEASE NOTE – When you attempt to register, SSA uses one of the credit bureau agencies to validate your identity. If you have frozen your credit reports (as I did before I attempted to register), you will need to unfreeze them in order to let the system work properly and validate your identity.

Now let’s take a step back and talk about some myths and facts regarding social security.

There is a fund, at least from an accounting perspective. (Our Federal government uses these funds for any budgetary purpose. The fund itself is more of an “IOU” from the government.) At present three employees pay into the fund for every one person who takes from the fund. As a result, there is a huge surplus at the moment. However, eventually there will be more taking out than those paying in. It is forecast that by 2022 it will begin to deplete and by 2034 there will be nothing left in the fund if there are no changes to the system.

Your monthly retirement benefits can start as early as age 62. However, for each year that you start before Full Retirement Age, you forfeit 6.25% in the monthly payment. In addition, if you have other earned income above $17,040 during those years, monthly benefits are reduced by 50%. At Full Retirement Age, you can get 100% of your monthly benefits.

A good strategy is to wait until age 70. Your benefits will increase by 8% per year until the maximum at age 70, which is a 132% benefit as compared to your Full Retirement Age.

For presentation purposes, if your Full Retirement Age benefit is $2,700 per month, your benefit at age 62 is $2,025 and your benefit at age 70 is $3,564.  If you started at age 62, the crossover (point at which you would have received more if you waited until age 70) is age 78. And if you started at age 66, the crossover is the late 80’s.

If you are married, the odds of one of you living long enough to benefit by the delayed start is much better.

As you can see, it can be very complicated. But the proper strategy can earn you hundreds of thousands of additional dollars. 

To translate this monthly income stream to a present value, if you are earning the maximum social security payment ($32,000 per year) that cash flow equates to the yield on a $1,100,000 current bond portfolio. Not a bad addition to your retirement plans.

There are many intricacies, and unless you are “plain vanilla,” you are best served by a professional’s advice. And please remember, your social security benefits are considered income and are taxable in the year you receive them.

Here are some helpful links:




A 1975 graduate of the Wharton School at the University of Pennsylvania, Harvey enjoyed a 20+ year career in commercial banking, exercising his “golden parachute” in 1996.  In his volunteer life, he is a past chair of the Small Business Banking Unit of the American Bankers Association, Easter Seal Society of New Jersey, the SAAGNY Foundation, PPAF EXPO, and Supplier Committee of PPAI.  He is also a past President of PPAF.  PPAI awarded him the H. Ted Olson Humanitarian Award in 2013.

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