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Ins and Outs of Social Security

SEPTEMBER 2006 - Editor’s note: The article “Retirement at 62: Is Receiving Social Security Early Worth It?,” by Thomas M Dalton (The CPA Journal, June 2006), generated a greater number of responses from readers than any other article in recent history. Some readers appreciated the focus on a topic that was personally very important to them. Others disagreed with the author’s conclusions, or described different outcomes based upon varying individual circumstances. The editors forwarded readers’ comments and inquires to the author, Thomas Dalton, who responded to two of them.

How Social Security affects the spouse

Professor Dalton’s article did not consider the effect of the decision on when to start receiving Social Security on an individual’s spouse. The spouse’s age and life expectancy would impact the decision (i.e., it impacts the benefits that would go to the spouse upon the death of the retiree).

Harvey B. Caspari, CPA (Retired)

Agreeing to Disagree

Sorry, but I disagree with the article. I attended a seminar in November 2004. One speaker was Michael Saglinbeni, who started working at the Social Security Administration in 1966 and is still working as a supervisor. He stated that it takes, on average, 14 years to collect Social Security benefits when starting at age 65 that would equal the money collected if you started collecting at age 62. So collecting early is better!

Your article says that there is a one-dollar deduction for every two dollars earned. This old rule is no longer valid; it was changed during the Clinton administration. There are no longer reductions in Social Security payments for money earned from employment while collecting Social Security. Although the Social Security payments become up to 85% taxable, it is still more money in your wallet.

Harlan S. Kahn, CPA
Rego Park, N.Y.

The author responds:

The effect on a spouse regarding the decision of when to begin Social Security benefits is an important point. My calculations consider only one person, not a husband and wife together. When a spouse is involved, the choice becomes more complicated and requires a more sophisticated analysis. I appreciate the insight offered by the readers’ comments.

Mr. Saglinbeni’s estimate (that it would take 14 years of collecting Social Security beginning at age 65 to equal the benefits one would receive if benefits began at age 62) is consistent with my analysis in the article. I estimated that it would take 14 to 15 years to reach equality if the normal retirement age is 66 (i.e., 81 years less 66 years). Certain assumptions (such as COLAs), however, can significantly influence this estimate.

Although the reduction in benefits for working and collecting Social Security was modified in the Clinton administration, it was not eliminated. The rule still applies to all who receive benefits before their normal retirement age. The rule is correct as stated in the article.

Thomas M Dalton, PhD, CPA
University of San Diego, San Diego, Calif.

An Online Reader Says ‘Thank You’

I am an attorney and an investor, with just enough math and spreadsheet ability to talk coherently (I think) to my accountant. For the past week, I’ve been teaching myself about IRC sections 1031 [regarding like-kind exchanges] and 121 [regarding the exclusion of gain on the disposition of a principal residence] for investment purposes. Four of the six articles that have been most useful to me have come from The CPA Journal website []. Thank you for being here and for sharing your work with the general public!

Ardyth Eisenberg
River Forest, Ill.





















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