Bloomberg columnist John F Wasik has a good article outlining the benefits of delaying retirement, based on a new brochure published by SSA (that, full disclosure, I'm proud to have worked on during my time at the agency). This is the kind of follow-on publicity we were hoping to generate as the new pamphlet, "When To Start Receiving Retirement Benefits," was being developed. Both the pamphlet and Wasik's column are worth a read.
Monday, April 13, 2009
Ensure Your Retirement Bliss by Working Longer: John F. Wasik
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2 comments:
I understand that you can take early retirement. If you can save that money, you can then repay it later on and revert to the standard (66) or late (70) payment.
"Here is how this works: after you reach full retirement age, we will recalculate your benefit amount to give you credit for any months in which you did not receive some benefit because of your earnings. In addition, as long as you continue to work and receive benefits, we will check your record every year to see whether the additional earnings will increase your monthly benefit."Ah, this is a good one. Because the benefit formula relies on the highest 35 average indexed wage years, the amount of these "earned" wages during retirement would have to be higher than any of the 35 average indexed wage years to increase your benefit. The chances of this would be very low for the average wage earner. Exceptions would be those who do not have 35 years of work history and/or those with very low wage years. Keep in mind the that the wages you earn while collecting SS have to be below a particular level or you loose the entire benefit (which means you are not really retired). How much can a part time worker make that would be higher than previous indexed years?
One more important thing to remember;
“There has been a temptation throughout the program's history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit. Under this reasoning, benefits under Social Security could probably only be increased, never decreased, if the Act could be amended at all. Congress clearly had no such limitation in mind when crafting the law. Section 1104 of the 1935 Act, entitled "RESERVATION OF POWER," specifically said: "The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress." Even so, some have thought that this reservation was in some way unconstitutional. This is the issue finally settled by Flemming v. Nestor.”
“Workers and beneficiaries have no legal ownership over their Social Security benefits. Instead, what they have is a political promise that can be changed at any time, by any amount, for any reason. In any retirement system a lack of legal ownership is a source of insecurity. In one that is under-financed in the long run by 25 percent, it is a serious problem.”
http://www.ssa.gov/history/nestor.html
With SS-OASI's being able to pay 73% of promised benefits without COLA under current law, you would be betting that the young do not just vote to get rid of it.
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