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We're Getting Our Financial Acts Together: Stressed About Social Security

It's a complicated topic, and after much research, we've decided to seek advice

By Andrea King Collier

Editor’s note: This is the final installment of Andrea King Collier's series about how she and her husband are getting a handle on their finances. The previous articles are "We're Getting Our Financial Act Together in 2021 — Step 1: Trimming Expenses," "We're Getting Our Financial Acts Together in 2021 — Step 2: Applying for Medicare and "We're Getting Our Financial Acts Together in 2021 – Step 3: Aging in Place."

When I started this series at the beginning of 2021, my husband and I were preparing ourselves for our "big" 65th birthdays in November and December. It was all straightforward. We made a list of things we needed to tackle and went after it. And now, just like that, we have hit that milestone, and our next step is figuring out Social Security. It has me stressed.

An older couple, dressed up and smiling. Next Avenue, finances, social security
Andrea King Collier and her husband Darnay  |  Credit: Andrea King Collier

Note, this is not a look at all of our retirement investments and money. It isn't about pulling out the crystal ball to estimate how long we will live. We are taking the first small bites out of this and are dealing only with the maze that is Social Security benefits. My heart can't take much more right now.

I have researched the right moves over the past 12 months; I am still confused and feeling my way through. The big question for us, and for most Americans, is when we should take our Social Security payments and what the long-and short-term impacts will be to our quality of life.

I have researched the right moves over the past 12 months; I am still confused and feeling my way through.

Last year we both decided to keep working until at least after we each turn 66 and four months, which is our Social Security full retirement eligibility age. Then we started carefully looking at our Social Security statements that gave us estimates on what our monthly checks might look like.

I don't know that we really processed what all those numbers meant to us until last year. Note that until you actually apply for benefits, those statements don't give you a definitive dollar amount. This number is calculated based on a very complicated (to me) formula based upon the amount that each of us earned over the last two years that we worked before applying for payments. Technically that means that the more money you earn before you start receiving payments, the bigger your payments will be.

Differing Views on Retirement

Why did I think we could go it alone? Several years ago, we could look to friends who had retired from their jobs as role models for retirement. They either got a chance to retire early, or they waited until they were fully vested in their employer pension plans and fully eligible for Medicare. They took the leap and never looked back — or so it seemed.

But now it's hard to find people who retired and stayed retired. Some needed something new to do, others found that they wanted or needed more money. One told me that the time they looked forward to was being taken up by everybody else's needs and wants.  Literally, everybody we know who is "retired" is not. More people are doing a "phased retirement" from their current jobs by reducing their work hours.

We were able to kick the can down the road a little while because we decided that we were not ready to leave the workplace for at least the next 12 months. I am a writer who works from home. I set my own flexible schedule and love what I do on most days. My husband is a middle school teacher who also enjoys what he does, but has been weighing his options with COVID-19 challenges in the classroom. He has the benefit of having summers off.

Where We Are in Our Process

The first steps were deciding how much money we needed to live on and for how long. We looked at our retirement plans, investments, savings and monthly expenses. In one of the earlier columns, I wrote about saving money by cutting our budget, and paying down any debt we had. I saw ways that we could be smarter with our money. This month I looked at everything again to see what else we could carve out and still not impact our quality of life.

One of the realities of hitting retirement age is that income is probably going to be reduced. But so are expenses that one might incur around work, like commuting, work clothes and lunches.

For someone like me, who is self-employed, I am interested in how much money I can earn once I start receiving Social Security benefits. It's complicated.

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According to the experts at Social Security, I won't reach my full retirement age until 2023. But if I wanted to start claiming Social Security before that, we can each earn a limit of $51,960, with $1 in benefits withheld for every $3 earned over the limit.

The good news is that after April of 2023, we would have no benefit reduction on the amount of money we earn. According to the Social Security website, after we reach our full retirement age, they will recalculate our benefit amount to give us credit for any months we did not receive a benefit because of our earnings.

And according to the current Social Security rules, once we turn 66 and four months, if we decide to wait until we turn 70 to start claiming benefits, we will bring in 32% percent more benefits than if we started at our Full Retirement Age. It's a lot to think about.

There's No Clear Cut Choice for Everyone

Choosing when to start receiving your Social Security retirement benefits is an important and nerve-racking decision for us. There's no one choice that works for everyone because people's lifestyle, finances, and goals are not the same.

According to the Social Security website we could get reduced retirement benefits and work at the same time before we hit our full retirement ages. However, it says, "your benefits will be reduced if you earn more than the yearly earnings limits."

In the end, the best decision we made just this week is to sit down with a financial planner who specializes in retirement to guide us.

Here's more from the website: "After you reach your full retirement age, we will recalculate your benefit amount to give you credit for any months you did not receive a benefit because of your earnings. We will send you a letter that explains any increase in your benefit amount.

If you delay filing for your benefits until after full retirement age, you will be eligible for delayed retirement credits that would increase your monthly benefit. If you also continue to work, you will be able to receive your full retirement benefits and any increase resulting from your additional earnings when we recalculate your benefits. Once you reach full retirement age, your earnings do not affect your benefit amount."

Where to Get the Best Information for You

The best first step resource is Social Security. Call the National Social Security line at 800-772-1213 to talk to a representative, but be prepared for a long wait time. Or go to ssa.gov to get your basic questions answered and to set up your account.

I also got a great resource from Boston University economics professor, Laurence Koltikoff, called Maximize My Social Security, a software tool designed for the overwhelmed people like me. And there are other solid software tools that can be helpful.

My best advice is to get real human help. Real help. I read books and talked to people. I even listened to podcasts on finances. Some days the advice was clear and other days it just fed my anxiety.

In the end, the best decision we made just this week is to sit down with a financial planner who specializes in retirement to guide us. She will also be able to connect us to an accountant who understands tax law for retirees. Just setting up the appointments gave us a sense of calm. I feel like I can breathe.

Photograph of Andrea King Collier
Andrea King Collier is a journalist and author based in Lansing, Mich. Read More
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