The $125,000 Social Security Decision

A Few Small Choices Can Add Up

Lee and I are both over 65 and have already taken our Social Security benefits. Deciding when to take Social Security depends on individual circumstances, such as career earnings and additional income. For Lee, starting at 62 made sense because his prior career earnings provided a higher benefit, and he could still earn additional income without significant penalties.

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Transcript:

Social Security.

You and I are both over 65.

I’m not going to say how old I am, but I’m over 65.

I am as well.

I’ve taken my Social Security already.

I have as well.

Good.

Okay, so 62, 65, 67.

Obviously, the longer you wait… the bigger the payout is, the more you get.

How did you make your decision?

Well, number one, interestingly enough, I was writing for this platform when I turned 62.

And so I did some checking in, because basically I had worked on Wall Street for 20 years.

I was an institutional sales guy at Bayer and Lehman Brothers and Morgan Stanley.

And so I’d had a good career.

And then I went to work for 24/7, and I turned 62 maybe five years after that.

So I kind of checked on the numbers.

And when I took it because I’d had a good career, it was significantly higher than most people get anyway, even if they wait to 65.

If you’re earning.

Right. Yeah.

And then I checked to see like, well, how much can I earn where I don’t get penalized.

And I think that number was something to somewhere between 28 and 40,000 you could earn.

So when I did the math for me personally, it made sense to go ahead and grab it because I figured I would get five years of payments that were right around $2,000 a month at that time.

I would get, so call it 24,000 a year times five.

And so I would already be up $125,000, give or take some, which I could invest or I could use as ancillary passive income.

But for me, it made sense.

But for many people, it didn’t.

I want to take people back to part of what you just said.

You have to look at your income.

I’m going to take Social Security.

It doesn’t matter.

What is it you just told people about earning stuff?

In other words, once you’ve made that decision, if you’re earning money someplace else, I don’t know that everybody gets that.

Well, you can continue.

Let’s say you’ve left your job.

Well, I was working for a family office in Houston.

And when that job ended in 2012, that’s when I talked to somebody at 24-7 who was your partner at the time.

And he knew that I’d had a blog and I’d used WordPress and all that.

So I got a job.

And I was making decent money, but I wasn’t really tripping that penalty area.

So for me, it made sense because I could take the money.

I could also make money.

Plus I had, you know, they don’t, Social Security doesn’t count any sort of ancillary investment money against you.

It’s only money you make as a 1099 or a W-2 employee that can go against it if you take Social Security early.