A good primer on collecting Social Security

By Michelle Singletary 

 

I’ve read a lot — and I mean a lot — about when to take your Social Security benefits. It’s a decision you should think about long before you have to make it (meaning even if you’re young, you should read this stuff).
The thing that makes the decision about when to take Social Security so hard is that you have to guess when you might die. But you have to make that guess, and financial columnist Alan Sloan has done a good job of explaining the pros and cons of taking Social Security at age 62, at your full retirement age or after you hit 70.
“The longer you wait to start, the bigger your monthly benefit — but the fewer years you have to collect it,” Sloan points out.
Simple, right?
Not really.

[How to get the most out of your Social Security benefits]

As Sloan writes: “Conventional wisdom is to wait until 70 if you can afford it and are in good health, because higher benefits offset the risk of outliving your money — that’s longevity risk. However, unless you live to your mid-80s, you don’t come out ahead by waiting: It takes 12¹/₂ years of a 132 percent benefit to make up for the four years of 100 percent benefit you gave up. Should you die at 69 and 11 months, you and your spouse are out of luck. That’s what’s called mortality risk.”
But you might consider a middle ground in collecting. It’s a strategy called file and suspend. Read what Sloan says about it and why it may be taken off the table for retirees.
Young Money
At the other end of the financial spectrum are young adults starting out in life with, for many, their first full-time paycheck.

[A college graduate’s guide to managing money in the real world]

So, what should they do? How should they handle their money? What financial moves will help them prosper?
The Washington Post’s Jonnelle Marte has some answers.
Color of Money Question of the Week
What one piece of financial advice would you give a young adult starting out? Send your comments to colorofmoney@washpost.com. Please include your name, city and state. Put “Young Money” in the subject line.
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Getting the Goods After Goodwill Gestures
Last week’s Color of Money Question generated a lot of comments. I asked you to comment on the situation surrounding a New Hampshire police sergeant who broke departmental rules by accepting $2.7 million in property and stocks bequeathed to him by an elderly woman he met while on duty. (http://www.washingtonpost.com)