Social Security Trilemma

Deciding when to start collecting Social Security isn't the easy question it used to be. We'd work until age 65, retire, and apply for Social Security. Not anymore.

Now the options are:

+ Collect early at age 62, but at a reduced benefit.

+ Work until regular full retirement age, which now depends on the year of your birth.

+ Delay collecting benefits until age 70, after which there is no addition to the benefit amount.

About 70 percent of us choose early Social Security. That's because 70 percent of us don't have enough retirement saved and we need supplemental income, or there are health issues and we can't work.

Quite a few people collect at age 62 and keep working. Those who keep working, and still collect Social Security, will lose $1 for every $2 earned over $12,480 per year.

So, do we collect early at a reduced benefit, or keep working and take the full benefit later? The answer to that depends whom you ask.

Some experts say:

+ It's better not to take early Social Security because you'll pay what amounts to a 50 percent penalty if you earn over the limit.

+ Before you sign up to collect benefits at age 62, calculate whether it's to your advantage to keep from touching your savings, considering that your Social Security benefits will be permanently reduced for the rest of your life.

+ There is a good reason to wait and take the full benefits: Your benefit is calculated using the highest 35 years of earnings. If you had years with no income but are now earning good income, that additional income could add to your benefit when the final calculations are made.

And yet other experts say to take the benefits as soon as you can get them and invest the money.

There are no easy answers.

Matilda Charles regrets that she cannot personally answer reader questions, but will incorporate them in her column whenever possible. Do not send any material requiring return mail. Write to her in care of King Features Weekly Service, P.O. Box 536475, Orlando, FL32853-6475, or send e-mail to letters.kfws@hearstsc.com.