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www.privateairny.com Private Air | Fall 2023 72 FINANCE M ost retirees are giving the government a costly gift by taking Social Security too early. ey may lose a whopping $180,000 in benefits, according to a new study published by the National Bureau of Economic Research. "Virtually all American workers age 45 to 62 should wait beyond age 65 to collect. More than 90 percent should wait till age 70," write the authors, David Altig with the Federal Reserve Bank of Atlanta and Victor Yifan Ye and Laurence J. Kotlikoff of Boston University. If you don't put some thought into your decision about when to accept your benefits, you and your family may lose out big time. Don't cheat yourself ! Taking benefits early assumes you'll have a short lifespan. Delaying them is betting you'll live long enough to make up for the years you delayed taking benefits. It's usually a less risky bet because you don't want to outlive your savings. If you have a terminal illness or pressing financial needs, you may, however, need to tap your benefits early. e numbers are compelling. If you were born between 1943 and 1954, your full retirement age is 66, meaning you'll receive 100% of your monthly benefit then. At 70, the maximum age for starting benefits, you'll get 132% of the full benefit. If you start at 62, you may get only about 70% of your full benefit. Furthermore, if you take payments early and die before your spouse, he or she may get lower survivor benefits. Another potential drawback is that if you're working even part-time when you start receiving payments, you may be in a higher income-tax bracket (federal and state) than later on when you're fully retired. If want to retire early, you'll need a plan to close the income gap you may have until you start receiving Social Security. Fortunately, interest rates are much higher than they were a year or two ago. Today, your savings can create much more income, and that makes delaying Social Security more feasible. ere are many ways to generate income: money-market funds, bonds of various types, dividend stock, bank certificates of deposit, and various types of annuities. e latter, often overlooked, have distinct advantages. DON'T GIVE AWAY MONEY BY TAKING SOCIAL SECURITY TOO EARLY Here's how to plug the income gap caused by retiring early without jeopardizing full benefits. Words By: Ken Nuss

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