Another story is out in the Wall Street Journal about the “claim and suspend” measure of Social Security benefits for retirees.  The author brings up the fact that a retiree, who is receiving Social Security benefits, can suspend their benefits and return to the work force, and in the meantime, their future benefit cap will rise, as though they had not yet filed for benefits.

Interestingly, the article somehow tries to tie the country’s current economic condition to the idea that retirees are returning to the workforce.  While the text and the message of the article hold true and is generally good information, I seriously doubt that the recession is forcing retired folks back into the workforce.  With more unemployed workers competing for fewer jobs, it seems to me that there is little incentive for a retiree, who is already drawing and living on Social Security benefits, to temporarily suspend those benefits for an opportunity to jump back into the hunt.

Conversely, if the economy were booming and jobs were plentiful, wages were good and hope was on the rise (as opposed to our being mired in a recession), then I would expect Social Security benefit recipients to at least consider whether they could make a fresh start in the hopes of finding lasting, high-paying employment.

Again, the point of the Wall Street Journal article is true.  If a retiree takes a few years off of retirement to rejoin the workforce, then while the retiree is working, his or her monthly benefit amount will increase as though the retiree never received benefits in the first place.  That being said, it’s up to each retiree to decide what’s best in the long run.

David McPherson of ABC News recently ran an editorial column wherein he discussed the “right” time to begin collecting Social Security benefits.  He was talking more about retirement benefits, and how waiting longer to apply for and receive such benefits may be in your best interest.   McPherson pointed out what most of us already know; that if you start collecting benefits at an earlier age, you lock yourself into less money per month, as opposed to waiting until you’re older in order to receive more money per month.

While that sounds good at face value, I’m afraid that his math simply doesn’t add up.  For example, McPherson correctly stated that at today’s rates, a retiree that begins collecting Social Security at age 62 only earns $19,665 per year, but if the same retiree waits until age 66 he or she will receive will receive $26,220 per year.

Sounds ok, right?  Wrong.

What McPherson fails to point out is the lost $80,000 total receivables between age 62 and age 66.  To make up the difference in earnings, the worker who retires later will have to wait until his or her 69th birthday to make up the deficit.

Clearly this may be ok for some, such as the retiree who fully expects to live a happy, active lifestyle until he or she is at least 80 years old.  As for me, I would recommend taking the money earlier and using it to my own benefit during the years in which I am fully able to make the most use of it.

On the other hand, if the retiree is otherwise financially able to live comfortably well without the supplemental earning of Social Security retirement benefits, and the retiree is in excellent health and fully expects to live an additional twenty years or more, then he or she may well consider waiting until a later age, so that the inheritance of his or her posterity may be increased.  If this paragraph describes you, then I say follow McPherson’s sound advice.

But as for me, I’ll take my money as soon as I can get it.