Retirement strategy and taxes

I am 64 years old and receive $30,000 per year in maintenance for 7 more years. I only have $170,000. in a 401k and about $8000. in various investments. I feel I need to save more but have been struggling financially at a low paying commission based job. If I retire now I’ll get $15,150 per year from social security. They said I can earn up to $15,720. per year with no penalty. If I do this I can save $18,750 per year, allowing me to invest approximately $131,250 in the next 7 years. Doesn’t this make more sense than not being able to invest anything to gain $193.50 per month? I’m interested in your thoughts. Oh according to livingto100.com I’m supposed to live to 101. Are there taxes involved in this scenario? Thanks, Terry

Terry Says:  OK, this is not just simple math.  If you take SS before your full retirement age — another three years or so — your benefits are permanently reduced, along with future cost-of-living increases that would apply to those benefits.  Believe it or not, that is a HUGE difference over your projected long lifetime.  (If you don’t believe me, look at the T. Rowe Price Social Security calculator listed on the home page at TerrySavage.com.)

SO, you definitely should NOT start taking SS now just to accumulate savings — because your savings can’t possibly earn as much as your loss of future SS income.

Would you like to hear my REAL suggestion?  Well, I’m going to give it to  you anyway.  You need to EARN MORE NOW!  (Sounds like one of those ads that has you addressing envelopes in your home, I know!)  But be creative.  Turn a hobby into income.  Or become a babysitter for one of those services like SitterCity.   Rent out one of hte room in your home to a college student (get references!) or work through your church. Every bit of extra income you pick up can be used to add to your savings.  That’s the real way out of this situation.