When One Retires

To understand the change, it's necessary to realize that one can apply for Social Security benefits as early as age 62. Yet if you do, your benefits are reduced. On the other hand, if you wait until your full retirement age, you will receive a bigger monthly check.

The Social Security Administration gives this example on its website:

Let's say your official full retirement age is 66 and your monthly benefit starting at that age is $1,000. However, if you choose to start getting benefits at age 62, your monthly benefit will be reduced by 25% to $750. The reduction is to account for the longer period of time you receive benefits.

On the other hand, if you choose to not receive benefits until age 70, you would increase your monthly benefit amount to $1,320. This increase comes from the delayed retirement credits you get for your decision to postpone receiving benefits past your full retirement age - 66.

The benefit amount at age 70 in this example is 32% more than you would receive per month if you chose to start getting benefits at full retirement age.

$TIP: To get an accurate estimate of your benefits, use the "Benefits Calculator" at: http://www.ssa.gov/.

The Initial "Wealthy" Rule

The option which was eliminated this week, allowed seniors to file for benefits at age 62, take those benefits for several years, then file with the Social Security Administration to actually stop all benefits.

Then, after paying back the initial benefits received, seniors could re-file at an older age and thus land higher benefits.

In other words, seniors who filed at 62 could invest their benefits (in a bank CD or other safe place) until they wanted to start receiving benefits again.

Mark Lassiter, spokesman for the Social Security Administration, explained that this was essentially giving seniors an interest free loan while costing the Administration in both time and money.

To read the entire rule, go to the Federal Rulemaking site at: http://www.regulations.gov/. In the search box, type SSA-2009-0073. 

And, pass this column on to family and friends you feel may be affected by the new ruling.

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