May2015

BUSINESS
Retirement
Planning:
Should you
take early
Social Security
payments?
by Cynthia MacGregor
Social Security is a lifesaver for
many South Floridians in their 60s
and over. This is particularly true
for those who have little or no savings,
those whose retirement funds have
tanked, those without pensions — in
other words, those whose other forms
of financial fallback are minimal or
nonexistent. Social Security is spelled
“security blanket” for these people,
especially when they choose to retire, or
if they are self-employed and business is
not so hot these days.
The money you and
your employers
paid into Social
Security all those
years can be
almost literally a
lifesaver now.
But the question arises: Is it worth taking
early payments, which are lower, at age
62, or waiting till you’re full retirement
age, (currently 66), at which time you are
entitled to a larger payment every month?
The Parklander talked with Merrill Lynch
financial adviser Mitch McLendon. He
said that it’s difficult to judge whether
you’re better off taking early benefits or
not because the answer depends on
many factors. He advises that you look
at two things:
• What is the history of longevity in
your family? Have your close relatives,
ancestors and siblings, lived to
a ripe old age or “died on the vine”?
This can help predict the likelihood of
your longevity.
• What is your state of health? Do you
have any serious illnesses or conditions
that are likely to shorten your
lifespan, or is your overall medical
condition generally good?
Additionally, you should look at whether
you really need the earlier money. If not,
it might be prudent to hold off on putting
in for benefits, so that when you do,
they are larger.
The government not that long ago raised
the age at which one becomes eligible
for full benefits. Asked if he thought
it was likely the government would
do so again, McLendon answered in
the affirmative. People work past the
nominal “retirement age” for a variety
of reasons. The top three, though there
are no metrics to delineate the order of
importance, are: financial need, love of
job, and avoidance of boredom
In fact, McLendon was quick to point
out, there are plenty of people who retire
only to return to the workforce thereafter.
Whether motivated by a shortage of
funds, by boredom, or simply by a longing
for their former job and the feeling
of productiveness or the sociability that
went with it, these individuals reinsert
themselves into the workforce after
thinking they were ready to put themselves
out to pasture. Some go back to
their former fields or even their former
employers. Others embark on a whole
new career in their 60s (or even beyond).
McLendon cautions that Social Security
was never intended to be a person’s
sole source of income. The assumption
always was that someone facing
retirement did so with other resources at
his or her disposal. These might include
IRAs or other retirement accounts, pensions
from an employer, CDs or other
savings, or income from a trust fund,
royalties, or other source.
So what is the best course of action? If
you want to retire early and can’t make it
financially on your other resources alone,
drawing early Social Security is a pretty
obvious answer. If your desire to retire
is nonexistent, but money worries are
eating at you, early Social Security may
be just the buffer you need. If your family
health history or your own health history
predicts a likelihood of early demise, early
Social Security is a pretty sensible move.
On the other hand, if you are happily
working, not interested in retirement,
not being forced into it by a mandatory
retirement age, likely to live a good while
longer, and not in a difficult position
financially, it’s prudent to hold off on
drawing benefits.
Now that you know the variables, it’s
your call to make the best decision. P
124
MAY 2016