If your options were to get a little now, or wait a while and get a lot more later on, which would you choose? Immediate gratification or more of a good thing down the road?
To paraphrase a former president, the answer depends on what it is.
Say it’s money. In the form of a Social Security benefit.
When you retire, are you going to apply for Social Security as soon as you are eligible? Or are you going to delay getting it for three, four or five years? And why would anybody wait?
Think about this: Your Social Security benefit will increase about 8 percent a year, for each year you delay getting it. The compounding effect means that by waiting you can get a lot more money, a much bigger benefit that is indexed to inflation for life.
If you won’t need the money immediately after you retire, it might be smart to defer getting your benefit. But feds retiring under the FERS program (who are automatically covered by Social Security) will get much smaller federal civil service annuities than people retiring under the old CSRS and CSRS offset programs with the same salary level and service time. If the FERS retirees have a sizable TSP nest egg (which most should) they might be able to delay getting Social Security to boost their future lifetime payments. So how do you tell whether to take it now or take it later?
Today at 10 a.m. EDT on our Your Turn program, benefits expert Tammy Flanagan will talk about the pros and cons of delaying your Social Security benefit. (The deadline for married couples to defer one spouse’s Social Security benefit while allowing the other to collect at age 62 was last April 29). But you can still decide when to take your benefit and she’ll talk about how to make that decision and who should wait and who should take it now.
Also on the show she will talk about the different ages when FERS-covered employees are eligible for full benefits. In government lingo it’s the FRA (full retirement age). Example: People born between 1943 and 1954 have an FRA of 66. Those born in 1957 have an FRA of 66 years and 6 months. For those born in 1960 or later it’s 67…
It’s complicated stuff but not rocket science. She explains it in a way most people get. Check out the show and tell a friend.
Tammy will also be doing a webinar Thursday at 2 p.m. for the National Active and Retired Federal Employees. The session is free to NARFE members at www.narfe.org. People who aren’t members can sign up at www.narfe.org.org/join and thfen participate in the webinar on May 26.