Tuesday, October 09, 2007

USA Today / AARP reports on baby boomers starting social security next year

Today, Tuesday, Oct. 9, 2007, USA Today has a major front page story by Richard Wolf, “Social Security hits first wave of boomers: Drain on the system picks up in January, when millions born in 1946 start taking benefits,” here:

That’s because in people born in 1946 turn 62 next year, and the way many corporate retirements are set up (with social security offsets), retirees often feel pressured to start social security as soon as possible, when actuarial formulas have them collecting 75% of what they could collect if they waited until full retirement age. Waiting until age 70 can mean a collection of 32% additional monthly benefit over the full benefit, so the difference between an age 62 and age 70 benefit is a 176% increase at 70. The demographics could become less favorable for early retirement as people live longer. Early retirees also have to be careful about the tricky rules of earnings limits (and as to what counts toward them, written about in this blog before) until they reach full retirement age. Those rules harken back to the FDR days when social security was regarded ideologically more as a welfare program than as a retirement system that one pays into over life and then collects from.

The article has a subheading, “a retiree for every couple,” as we head for the day when every retiree is supported by only two workers. According to the article, Medicare will get into fiscal trouble sooner than Social Security itself.

Update: Oct. 10, 2007: The AARP Bulletin for Oct. 2007 has an excellent sidebar by Stan Hinden on p 23, "Your Money: The Question Everyone Asks: When Should I Take My Social Security Benefits?" Hinden points out that the arguments for postponement are becoming more critical than anyone expected a few years ago. Here is the link.

Barbara Basler has an important story on understaffing for customer service at the Social Security Administration, "The Line Starts Here," p 30, here. She recommends calling the 800 number later in the day or later in the month. My wait at the Arlington VA office in March 2006 was about an hour.

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