Congress is still dithering while Social Security runs out of gas.The newly released trustees' report says the old-age program's tank will be bone-dry by 2037.
That's no better, no worse than last year's projection.
With nothing in the trust fund, trustees say benefits then would have to be paid solely by tax revenues. So bennies would have to shrink to 78% of what's promised.
Perhaps Congress will restore Social Security's financial health before that happens.
Meanwhile, what if you retire and want to start drawing benefits? You can take steps to boost the size of your monthly check.
• Delay your start. The most basic strategy is to postpone tapping into the program.
You can start collecting at age 62. But if you wait until your full eligibility age, your benefits will be higher.
Depending on your age, waiting until you reach full eligibility age — which the program calls normal retirement age, or NRA — can expand your monthly check by up to 30%.
NRA is 66 for anyone born in 1943 through 1954. It's 67 for anyone born in 1960 or later.
The table nearby shows NRA for people born between 1954 and 1960.
Aside from resulting in a smaller check, starting benefits early also exposes you to an earnings cap penalty.
Basically, for every $2 you earn in excess of a certain threshold — which is $14,160 in 2010 — you lose $1 in benefits.
• Reward for extra delay. If you wait until after your NRA, your starting benefits are even higher.
This is due to the delayed retirement credit. It can be worth up to 8% a year, until age 70, depending on when you were born.
Anyone born in 1943 or later gets the 8% annual premium. If you were born in 1933-34, it's worth only 5.5% extra a year.
Suppose you were born in 1944. Your NRA would be 66. Let's say your monthly check would be $1,000, given your earnings history.
If you wait until age 70 to start benefits, your check will be 32% bigger. That's 8% times four years. Your monthly support would be $1,320.
The additional benefit you gain by waiting until 70 vs. 62 is striking. The extra monthly benefit is typically 75% higher, says Alicia Munnell, director of the Center for Retirement Research at Boston College.
"Almost everyone benefits by delaying the start of benefits," she said.
By PAUL KATZEFF, INVESTOR'S BUSINESS DAILY August 13, 2010
How To Boost Social Security Benefits - IBD - Investors.com
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