Saturday, August 28, 2010

WSJ: "Gaming Social Security"

Checking out what monthly Social Security benefit will come your way is an essential first step in retirement planning. But it doesn't have to be a one-step deal. There's a way to apply for benefits before your full-retirement age then increase the monthly benefit amount by paying back what you collected earlier. The Wall Street Journal deals with this subject this week in an article interviewing Larry Kotlikoff, a Boston University economics professor, on the subject. Click here.
The idea is that you start taking Social Security benefits at a lower rate of payout per month, then pay the money back at say, age 70, then begin collecting at a rate greater than your full-retirement rate. It may mean belt tightening to start, but the payoff is "better than any annuity investment," says Kotlikoff.
Of course, you've got to come up with the lump sum cash payback, but it's something to think about. The WSJ article written by Jeff Opdyke hints that the Social Secruity Administration may be considering some sort of modification of this policy, so it's not a sure thing. But what is?

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