Retirement benefits

A Heritage Foundation study shows three cases where a low, middle and high income worker would have a much higher monthy retirement benefit by investing in a personal savings account versus a Social Security retirement benefit.

1. Social Security will cover my income needs

2. It's better to take Social Security benefits early

3. I'll receive full benefits at 65

4. Once I start benefits, I can’t work anymore

5. I won't pay taxes on Social Security

6. Once I start Social Security, I have to continue receiving it

7. My divorce will reduce my benefits

These are pretty basic, but the three ways are :

1. Delay initiation of benefits

2. Ensure your earnings record is correct

3. Work a few extra years.

Recently, the US Consumer Financial Protection Bureau (CFPB) released a "warning" against using a reverse mortgage to delay initiation of Social Security retirement benefits.

This opinion piece says that the CFPB used flawed analysis.

Excerpt :

According to May, 2017 survey, only 28 percent of 61-year-old respondents said they would receive Social Security retirement benefits as soon as possible (age 62).

This is a big decline from 2008, when 45 percent of 61-year-olds said they would file as soon as possible.

There are probably two reasons for this.

One, in 2008, many seniors could not find worthwhile employment, so getting Social Security was perhaps the only option.

MATH translates to :

* Market
* Affordability
* Taxes
* Health

Health -> Take Social Security early if your life expectancy is limited

Affordability -> If you NEED the money now, maybe you need to start benefits

Taxes -> If you're still working, your up to 85 percent of your Social Security benefits may be taxed

Market -> If the stock market is way down, maybe you need to start benefits soon

Here are five Social Security "secrets" according to Motley Fool :

1. Your benefits increase each month you wait

2. Your benefits are taxable (at higher income levels)

3. You may be able to claim benefits based on ex-spouse's work history

4. You may be able to claim benefits despite no work history (ex. spousal, surviving child)

5. Social Security is not going "bankrupt" (but benefits may be cut)

Lately, some financial advisers have suggested that seniors delay taking Social Security retirement benefits. Instead of taking Social Security at age 62, for example, these advisers suggest using a reverse mortgage to "fund" your retirement and delay initiation of Social Security benefits until later. Delaying benefit initiation means a larger retirement benefit.

However, the US Consumer Finance Protection Bureau (CFPB) has cautioned that this strategy has drawbacks. The CFPB says the best way to increase future benefits is to keep working past age 62, if possible.

With today's relatively low inflation, combined with the fact that your Social Security benefit will grow if you delay benefits, it makes sense to delay benefits because (or if) :

1) You'll get higher inflation-adjusted benefits for life

2) If you're in good health

3) If you don't need the money

YES.

You can sign up for Medicare even though you haven't yet signed up for Social Security. In fact, delaying Social Security retirement benefits may work to your advantage.

However, you do not want to delay signing up for Medicare benefits. But, if you fail to sign up for Medicare during your initial enrollment period, you'll face a 10 percent increase in your Part B premiums that could raise your healthcare costs for life.