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Social Security advice deserves a closer look

While I agree completely with the recent letter that there are many good reasons to start to collect Social Security benefits at age 62, there is a serious flaw in the writer’s computation. And that flaw is a direct result of inaccurate information in the original New York Times article that appeared in The News’ Money Smart section.

The article states that a $1,000 benefit at age 62 would increase to $1,320 at age 70. That is incorrect. It does not agree with the earlier statement that deferring the benefit results in a guaranteed growth of 8 percent per annum. The $1,320 benefit is the amount that could be collected at approximately age 66. The benefit at age 70 is closer to $1,800. If the letter writer had used the correct benefit, he would find that there truly is an advantage to delaying Social Security.

However, there are several other factors that are never mentioned in this type of economic advice article.

First, the break-even point is approximately 78 years old, no matter which option you choose. If you pass away before that age, there was an advantage to your estate for collecting early.

Secondly, although timing the market is never a good option, a person who retired in 2008 and invested the early benefit would now see his/her money grow 100 percent in six years, rather than the 48 percent growth offered by the government.

Finally, collecting early reduces the cost to the Social Security system and thus reduces the national deficit. Some may consider that a patriotic duty.

Martin Besant

East Aurora