Here is something the AARP will not tell you that may help older folks afford the high cost of cigarettes.
Gary K.

May 9, 2008

Dear Mr. Berko: Don and Judy, friends of ours who read your column in the Columbus (Ohio) paper, told me that you gave them the following advice in 2003 to increase their Social Security income. You told Don who would be entitled to full benefits when he turned 65½ to wait until he was 70 to apply. You told Judy, his wife, to apply for her lower benefits at 62 (she just became 62 then) and that Don should apply for benefits under Judy's earnings until he becomes 70. And at 70 Don would stop taking benefits under Judy's wages and he becomes entitled to the much higher benefits under his earnings. Well, Don turned 70 a few months ago and is now getting $2,448 and Judy, who was getting $591 a month and now gets $1,324 a month. This is confusing to me and I hope I'm explaining it correctly. Can you explain to us how this works? My wife is 62 and I will retire at 66 in December. We don't get Social Security right now because we have a mortgage that pays us $3,400 a month in principal and interest until June of 2013 when we will really need Social Security because the checks stop cold. We have very little savings, two modest pensions, no Individual Retirement Account or investments.
S.R., Lady Lake, Ohio

Dear S.R.: I think it was Milton Friedman, the distinguished professor of economics, who in 1992 determined that 87 percent of Americans who reach 65 by 2015 will depend upon Social Security to pay an average of 71 percent of their living costs when they retire.

Lots of folks neither understand nor comprehend the importance of the enormous benefits that accrue if they postpone taking their monthly checks.

For each year you decline to accept your Social Security benefit beyond your full retirement age (let's assume it's 66), your Social Security income will rise by 8 percent until you reach 70. For those of you born prior to 1943, the magic number is 7.5 percent. So if you intend to live a long life, the postponement of your Social Security benefits could make a very positive addition to your retirement income.

OK, now pay close attention because here's how it lays:

Judy at age 62 applies for reduced Social Security benefits and receives $750 a month instead of $1,000, which she would have received if she waited till age 66. Don, who turns 66 in December, decides to wait until age 70 to claim his benefits, but applies for spousal benefits based on Judy's work record. In this instance, Don would be entitled to 50 percent of what Judy would have received if she had waited until full retirement age of 66. So Don gets half of $1,000, or $500 a month. Hmm ....

Now, here's the magic. The monthly benefit Don is entitled to receive at age 66 ($1,800) continues to accrue and compound at 8 percent till he's 70 and computes to a monthly income of $2,448. So at age 70, Don applies for his own benefits and the $500 he received from Judy's work record is discontinued. Since Judy is entitled to 50 percent of Don's Social Security income, her monthly check also increases from $750, to $1,224 a month. And that's a combined Social Security Income of $3,672 a month, or $44,064 a year plus an inflation multiplier. Wow!

Visit with the folks at Social Security. When I spoke with several of the Social Security people in 2003, one of them told me that he recently (then) gave the same advice to his parents. That was good enough for me. They're great people, pleasingly respectful, knowledgeable, with the patience of Job and anxious to help. And if they don't have an answer they will get back to you lickety-split with the information you need. Darn comforting, that.

The down side is, you're dead. Sorry, I went early @ 62. Enjoyed myself immensely for 3 years until my health started to fail. Had I waited, I wouldn't have had those three wonderful years.