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Balancing act: Social Security has a reader considering return to work

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Even when the market is going crazy — or maybe because of its nutty roller-coaster ride — people have questions about when they should retire.

One such person wrote to me a couple of weeks ago.

Nancy wrote that she is 52 years old and her husband is 54. A recent Social Security statement she received in the mail indicated that she has 22 "credits" toward receiving her benefits, and she is wondering whether she needs to go back to work.

"I do have the option of being employed by my husband at his (incorporated) insurance agency, but he really doesn't need any extra help, and the thought of that bores me to tears," she wrote. "Another option that I have is to somehow pay myself through our rental homes. I take care of these homes and all the paperwork, and it is quite time-consuming, but I've never drawn a salary.

"Obviously I want to do the smartest thing economically, and I have no desire to work longer than I need to ... Do you have any advice for me?"

Well, Nancy, to make sure my advice is good, I turned to Sharla Jessop at Salt Lake City-based Smedley Financial Services.

First, Sharla says, Nancy needs to understand how Social Security works. Regardless of whether or not she has enough credits, she will be able to receive benefits based on her husband's earnings.

In other words, a nonworking spouse can receive benefits based on a working spouse's income.

For example, Sharla says, "If, at full retirement age, her husband was going to receive $1,500 (a month), at her full retirement age, she would be eligible for $750. And that's not a survivor benefit ... It's a living benefit for both."

That means the real question Nancy faces is not whether she should go to work to earn Social Security credits, but what she is going to do now to provide money for retirement.

"What can (Nancy and her husband) set aside to live on in retirement, and can they do it without her working?" Sharla asks. "They should look at what they've got in savings and investments as their main provider of (finances) in retirement and look at Social Security as a supplement."

After all, Sharla adds, Social Security could change.

"At some point in time, they're going to run into a problem with paying out benefits at the level people anticipate and at the age people anticipate," she says.

The government could easily decide to raise the age at which a person can start receiving full benefits, Sharla says, and that would damage some people's retirement plans. "She should be focusing on, 'What do I need to set aside for retirement, and how am I going to do it?"'

Taking a salary from running her rentals probably is not the answer, Sharla says, because Nancy would have to pay all of the Social Security taxes on that income.

"It's not giving them any additional income," Sharla says. "It would probably be better to take the money they are receiving and set it aside for retirement, or get a job outside of (the rentals)."

Sharla says Nancy's question is one she has heard often during the last few weeks, as the stock market's woes have many baby boomers thinking about staying in the work force longer than they had planned.

That's good, Sharla says, because some people need to give their investments time to rebound.

"That's kind of scary for people right now, especially those near retirement," she says. "For the rest of us, there will be plenty more of those (market ups and downs) before we retire."

That's comforting ... I guess.

Nancy, I hope this gives you some ideas to work with as you consider re-entering the job market. Please drop me a line to let me know what you decide and how it turns out.

If you have a financial question or comment, send it to gkratz@desnews.com or to the Deseret News, P.O. Box 1257, Salt Lake City, UT 84110.

E-mail: gkratz@desnews.com