Social Security 101

Most of the Baby Boomers we know, ourselves included, aren’t 100% sure that Social Security will be around for our whole retirement. If you’re younger than the Boomers, you should definitely save as if you will have little or no Social Security to help you out in your golden years.

For now, though, Social Security is holding strong, so let us help you understand the basics – for you or someone you know.

When should you start drawing Social Security benefits?

The age at which you may start collecting Social Security has gone up. Those born after 1959 will not be able to collect full benefits until they are 67 and the scale slides for those born before 1959. (To find more specifics about your situation, go to the Social Security Administration Web site at http://www.ssa.gov/retire2/agereduction.htm)

The minimum age for collecting benefits is still 62, but the penalty for early collection is now steep—anywhere from 20% to 30%! The stiffest penalties apply to those who were born after 1959, meaning your benefits would be reduced by 30% if you retire at 62.

Ah, but there’s good news as well. If you wait to collect benefits, you get paid for your patience. If you wait until you’re 70 to retire, you will be able to add as much as 8% for each extra year you work to the monthly benefit you’ll eventually collect.