Friday, January 30, 2015 05:55am
North Adams, MA now: 28 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
SIGN IN | REGISTER NOW   

Home About Archives RSS Feed
The Independent Investor: Retire Later Rather Than Earlier
By: Bill Schmick On: 09:37AM / Thursday October 28, 2010
Important
0
Interesting
0
Funny
0
Awesome
0
Infuriating
0
Ridiculous
0

Over the last year, a number of baby boomers I know have explored the option of early retirement. Between the financial crises, the recession and the volatility of the stock markets, burnout has hit the over-60 crowd. They yearn for a less stressful life and believe that early retirement is the answer. My advice is don't do it.

The first factor to consider is whether you can afford to retire. The last two years have put a large dent in most tax-deferred savings plans. Some of that damage has been repaired, but by no means all, with most savers still down 20-25 percent from the peak value of their portfolios. All indications are that it will take several more years before the value of our investible assets fully recover.

"I still have my Social Security to fall back on," argued a 62-year-old engineer from a large Berkshire company, headquartered in the center of the county.

"Yes," I said, "but if you wait another eight years, you could pull in a heck of a lot more."

It is true that retired workers can begin collecting Social Security benefits at 62. But your benefits are reduced by as much as 30 percent if you do. Those born between 1943 and 1954 receive full benefits at age 66. The full retirement age increases gradually after that and for those born after 1960 the retirement age is now 67.

Take me for example: I'm 61, born in 1948, and plan to retire sometime after 70. Why?

Well, I could tell you I love my job, (which is true) and that I also love to write. Beyond that, it does not make any economic sense for me to retire before that. For every year I postpone retirement my Social Security benefits increase by 8 percent. A 32 percent increase in benefits over four years is not pocket change.

I also plan to continue working after I start claiming my benefits. Let's say Joe planned to retire next year, at 62. He can earn up to $14,160 without paying a penalty. Any more than that, however, and Social Security deducts 50 cents on every dollar from his benefits. If Joe waits until his retirement age of 66, his earnings limit climbs to $37,680 and the penalty for earning over that is reduced to 33 cents on the dollar. If Joe were to wait just one year longer, there would be no limit or penalty at all.

Since Social Security benefits are calculated based on your 35 highest years of earnings, and many of us are in our highest earnings years right now. It pays us to continue to earn more and bump up our earnings as much as we can.

There are also advantages if you are married. Spouses are entitled to Social Security payments of up to 50 percent of the higher earner's check provided they wait until full retirement age. Since it's still a man's world, I have made more than my wife throughout our working careers. Since we both work, we can claim spousal payments and individual payments and do so at different times.

My wife Barbara is 10 years younger than me. So let's says I retire at 70 percent. She can then claim a spousal payment of 50 percent at that time and then switch to payments based on her own work record a decade later. Those payments will be much higher because she chose to delay her own retirement until she was 70.

Today's boomers are in better shape, have less physically demanding jobs and higher salaries than any preceding generation before them. By working longer, we oldsters increase the productivity of the American economy, provide the workplace with leadership and creativity and reduce the burden of Social Security deficits and the high cost of Medicare on younger generations. Putting off retirement as long as you can makes a great deal of sense both individually and for the country overall. Who knows, you may live longer as well.



0 Comments
Tags: retirement      
News Headlines
Williamstown's Spruces Reuse Committee Seeking Input, Funds
Adams Planning to Sell Old Community Center Building
Pittsfield Implementing New Pavement Management System
MCLA Men Win in Dramatic Fashion; Women Get First League Win
'Mortdecai': Of Moustaches and Men
Clark Art Wagers Homer Masterpiece on Patriot's Win
Adams Selectmen Review Potential Tax, Fee Hikes
Protect Your Online Data With These Tips
New Doctor Joins BMC's Physical Medicine & Rehabilitation Team
BFAIR Sets Family Night Fun at Greylock Bowl

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (158)
Independent Investor (214)
Archives:
January 2015 (9)
January 2014 (1)
December 2014 (7)
November 2014 (4)
October 2014 (9)
September 2014 (5)
August 2014 (7)
July 2014 (2)
June 2014 (6)
May 2014 (9)
April 2014 (8)
March 2014 (6)
February 2014 (6)
Tags:
Economy Energy Selloff Metals Fed Rally Pullback Crisis Federal Reserve Debt Ceiling Stock Market Deficit Currency Oil Recession Stimulus Congress Interest Rates Taxes Retirement Markets Commodities Bailout Election Europe Fiscal Cliff Stocks Japan Greece Euro Banks Europe Debt Jobs Housing
Popular Entries:
The Independent Investor: Understanding the Foreclosure Scandal
The Independent Investor: Don't Fight the Fed
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: Will the Municipal Bond Massacre Continue?
The Independent Investor: How Will Wall Street II Play on Main Street?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
Recent Entries:
The Independent Investor: College Savings Accounts Are Not Risk-Free
@theMarket: More Stimuli Equal Higher Markets
The Independent Investor: The European Central Bank Delivers
@theMarket: Tail That Wagged the Dog
The Independent Investor: What's Happening to the Movies?
@theMarket: What Will the New Year Bring?
The Independent Investor: Think twice Before Co-Signing Student Loan
@theMarket: What Will the New Year Bring?
The Independent Investor: Could Greece Upset the Applecart?
@theMarket: Santa Comes to Town


View All
Alpine Ski
Multiple teams at Slalom, Bousquet
Hockey: Mt Everett vs...
The Wahconah hockey team defeated Mount Everett, 3-2,...
Berkshire County UCP Telethon
United Cerebral Palsy of Berkshire County held its 52nd and...
Girls BB: Athol vs Hoosac...
McKenzie Robinson dished out nine assists to help the...
Swimming: Wahconah vs St....
Liz Bernardy won the 100-yard freestyle and 200 individual...
Boys BB: Drury vs Hoosac...
Friday night basketball, Drury boys win over Hoosac Valley...
Girls BB: Lee vs Mount...
Barrett scored a game-high 27 points in Thursday's 57-44...
Boys BB: Smith Academy vs...
The Pittsfield boys' basketball team defeated Smitch...
North Adams Chamber @...
The North Adams Chamber of Commerce held its first...
Hockey: St Mary's vs Wahconah
The Wahconah hockey team defeated St. Mary's Wednesday...
Berkshire Chamber @GFCU
Berkshire Chamber of Commerce held its January networking...
Boys BB: Wahconah vs Drury
The Wahconah boys basketball team was able to pull away and...
Boys BB: Hoosac Valley vs...
Jerry McDonough scored 14 points and went 4-for-6 at the...
Girls BB: Wahconah vs Lenox
The Wahconah girls basketball team got back on track with a...
Girls BB: Hoosac Valley vs Mt...
Hoosac used 25 points and 11 rebounds from Emily Rosse to...
Co-ed XC Skiing
The Mount Greylock cross country ski team had the home...
Alpine Ski
Multiple teams at Slalom, Bousquet
Hockey: Mt Everett vs...
The Wahconah hockey team defeated Mount Everett, 3-2,...
Berkshire County UCP Telethon
United Cerebral Palsy of Berkshire County held its 52nd and...
Girls BB: Athol vs Hoosac...
McKenzie Robinson dished out nine assists to help the...
Swimming: Wahconah vs St....
Liz Bernardy won the 100-yard freestyle and 200 individual...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings
Advertise | Recommend This Page | Help Contact Us | Privacy Policy| User Agreement
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2000 Boxcar Media LLC - All rights reserved