NCPA - National Center for Policy Analysis


January 14, 2008

Taking Social Security benefits early could mean a smaller payout, hefty taxes on retirement savings and a heightened risk of outliving their money for baby boomers.  In fact, the roughly 50 percent of the oldest boomers who the Social Security Administration (SSA) estimates will tap their benefits starting this year will absorb a permanent 25 percent cut in benefits, says USA Today.


  • Retirees who take reduced benefits at 62 and live to 90 would lose $39,000 in benefits; those who live to 95 would give up $54,000, the SSA says.
  • There's a 41 percent chance that a 62-year-old woman today will live to 90; a 62-year-old man has a 29 percent chance to live to 90.
  • For a married couple, there's a 58 percent chance that one of them will live to 90 and a 29 percent chance that one will reach 95.


  • Retirees with income other than social security, including withdrawals from most retirement plans, could owe taxes on a huge chunk - 50 percent to 85 percent -- of their benefits.
  • Married couples with $32,000 in combined income face taxes on half their Social Security benefits.
  • Couples with a combined income of at least $44,000 could owe taxes on 85 percent of their benefits.

Despite the lure of larger benefits, many retirees can't resist passing up the opportunity to file at 62, in part because they're worried about the future of Social Security.  Yet even if retirees are convinced their benefits are safe, most of them will continue to file claims before full retirement age, says David Certner, director of federal affairs for AARP.  Many who are in poor health or have been pushed into early retirement don't have the option of waiting until 66 to file for benefits, he notes.

Source: Sandra Block, "Boomers' eagerness to retire could cost them," USA Today, January 14, 2008.

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