Forced to Early Social Security, Unemployed Pay a Steep Price
While many are delaying retirement because of financial concerns, the weak job market has led others to draw social security early, seeing no other way to make ends meet.
The Bulletin reported that about 200,000 more people filed initial claims in 2009 and 2010 than the agency had predicted before the recession, and that those trends seemed likely to continue, most likely because of unemployment.
While drawing social security early does get a claimant a monthly check, it comes with a price. Those who draw before retirement age will receive 20-30 percent less per month for life that those who wait until the retirement age, which varies based on date of birth.
According to the Philadelphia Inquirer, virtually all financial planners suggest waiting until later to draw from social security in ideal cases.
Many who draw an early social security payment can still work. Social Security recipients younger than full retirement age can earn up to $14,640 a year without sacrificing any of their monthly benefit.
With so much to consider when it comes to issues like retirement savings and social security, one might almost feel as though the deck is stacked against them, and Austin Nichols, senior research associate at the Urban Institute, a Washington, D.C., agrees to a point.
U.S. News reports that a recent paper, Nichols questions the traditional notion that people should try to achieve retirement incomes that are roughly 80 percent of their pre-retirement incomes.
Rather, Nichols argues that such a number is impractical, and that a more balanced approach to considering spending and income makes more sense.
“You want to equalize your spending before and after retirement, not compare your draws from retirement savings with your pre-retirement income,” Nichols told U.S. News. “You want your spending the year before you retire and spending in the year you retire to be roughly equal.”
Nichols’ acknowledges some people will have tough retirements though, as those forced to draw social security early already know.
(Image courtesy of U.S. Daily Review)