Age discrimination causes loss of social security benefits
OLDER WORKERS AND SOCIAL SECURITY BENEFITS
You’ve seen your paycheck hit every pay period with money pumped into Social Security’s black hole, while hearing that the Trust Fund won’t be there after the Baby Boomers tsunami. Your impulse is to take the money at 62 and run. But maybe you should resist that urge.
WHY OLDER WORKERS SHOULD WAIT
For every year it takes you to receive Social Security benefits after age 62, your benefits increase by 5% to 8%. Reason enough wouldn’t you say to delay early retirement? Remember, we are talking about lifetime benefits. Expect it to be a long stream of income with an increase of 5% to 8%. This is especially important since you live longer and are likely to rely primarily on your social security payments to survive.
Your benefits are tax-free until your annual earnings plus half of your annual benefits exceed $ 25,000.00. If you work full-time or even part-time after age 62, you are exposing your benefits to taxes. [Think of “tax-free” as a return on investment – it would be hard to do better in the market.]
So why do just over half of retirees choose to take their benefits at age 62? Who knows for sure, but maybe your “pay” fatigue coupled with Trust Fund pessimism will survive. I suspect that illness, disability, and job loss are factors. But if you can avoid early withdrawal from social security, do so. Immediate losses from early retirement are safer than long-term speculations on the Trust Fund.
AGE DISCRIMINATION DAMAGES THE CURRENT OF SOCIAL SECURITY BENEFITS.
A sad consequence of age discrimination is that older workers without a large retirement portfolio may be forced to retire early. Those losses can be significant. Those losses can be calculated against the older worker’s retirement plans if age discrimination had not caused an early termination of employment. More insidious is that age discrimination burns out at both ends of the age candle. Finding a new job with a comparable salary is also hampered by age discrimination in hiring.
CONCLUSION
Get good financial advice to assess the role of social security payments as part of your total retirement payments. And, if you’re being laid off due to age, when younger workers with no greater talent, work ethic, or dependability take over (or avoid picking layoffs), consider legal advice as well. This legal analysis should include in the calculation of your losses the flow of tax-free social security benefits that are reduced with early retirement and included in taxable income due to the need to continue working in a lower-paying job.
