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The unemployed who turn age 62 are caught between a rock and a hard place: Jobs are scarce, but if they take their Social Security now to supplement their unemployment it will permanently reduce the benefit. The rules changed in 2010 for retirees who take their Social Security but then find a job or their circumstances change. In the past, they were allowed to pay it all back and then collect the higher benefit for life. No longer. The Social Security Administration now offers a window of one year to pay back Social Security benefits or their benefit amount is set (which of course means reduced ) for life. On the other hand, if they don't take the early Social Security and ultimately don't find a job, they may deplete other assets that they desperately need to fund their retirement. By delaying, early Social Security recipients can lose out on thousands of dollars.

My friend Harry Bristow, from Northern California, faced this problem. He was in the construction industry, specializing in large-equipment sales and management. When the real-estate crisis hit and new-construction projects dried up, he knew he was in trouble. No one was going to build when, as Harry said, "The $10 million buildings are now worth $5 million. Who is going to build new?" He was laid off right before his 62nd birthday, putting him smack dab in the middle of a 12% unemployment rate in the Sacramento area. The major employer in the region is the state of California, and it was furloughing existing employees to make ends meet. Like many other prospective employers, the state was not focused on hiring new employees. And even if it was, it certainly was not opening any jobs that fit Harry's skill set.

Unfortunately, my friend Harry was not able to find any type of sales or management position. His experience had been large-equipment sales in construction and farming, and he was also a former company president -- difficult skills for him to transfer in this environment. A headhunter looked for him within an hour-commute radius and found nothing. To make matters worse, Harry was not ready to retire. He had planned to work an additional five years, but he decided right away to supplement his 99 weeks of unemployment with his Social Security payments until he found a job, and he is very glad he did. He didn't find one, and he is still looking.

The conventional wisdom to delay retirement -- work until you are 70 and then collect Social Security -- just doesn't apply here. Surely, you've heard it: "For every year you delay Social Security, the benefit increases by 7% to 8%." So the question often is, "Where else can you get 8% these days?" Taken cumulatively, the increase equals at least a 25% increase in benefit by waiting four years. This sounds great at first glance, but the problem is that while you may be willing and able to work, you may not have a job. The recession and subsequent economic slowdown brought with it a tight job market. Though the unemployment rate as of December 2011 for those age 55 and over is 6.2%, that figure may be artificially low because many pre-retirees may have given up looking for jobs.

No one can predict if and when the job market will open up, but if you are looking for a job, there are some factors to consider on whether to take Social Security early. Ask yourself these questions:

How good is the job outlook in your field and in your area?

Not everyone can move to the booming state of North Dakota or has the skills to work as a heavy-equipment operator or registered nurse -- not to mention the ability to handle cold weather. Check your state's projected job growth as well as the unemployment rate to get a realistic idea of whether you'll be able to find something in your field. If you are trained in an industry that is on the bottom of the list, consider taking Social Security benefits early while you continue to look for a job in your industry or retrain for a crossover career.

However, retraining is a stretch in many situations. An employer is going to want the time, effort and cost put into training a new employee to pay off, so the tendency may be to hire a younger worker over an older one. Unless the older worker has skills that far surpass those of the younger applicant, an employer may favor the younger applicant. An older worker might actually end up staying longer and being more loyal than a younger one, but perception is reality, especially when job hunting.

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Will you have to deplete assets to meet monthly expenses?

If you aren't making ends meet with unemployment and are depleting assets, taking Social Security now is the right option. For every month you don't take Social Security, you fall further behind. Based on an $80,000 salary today, a 62-year-old would receive a monthly Social Security benefit of approximately $1,400. Six months of payments would be $8,400, and a year's payments would be $16,800. If that retiree doesn't take Social Security benefits for the full four years and waits to hit the full Social Security age of 66, he will miss out on just over $67,000 in income, which would take 14 years to make up by earning an "extra" $400 per month. Sometimes a bird in the hand is worth two in the bush.

Does longevity run in your family?

If you don't need the income now and have longevity in the family, waiting may be better. My mother-in-law recently passed away at age 97; she is survived by a 99-year-old sister. My husband's family obviously has longevity. My family does not, though. Both my mother and my maternal grandmother passed away at age 71, so the genes are stacked against me. If I am faced with the choice of whether to take payments early, I would easily choose the "bird in the hand" option, whereas my husband would probably choose to take benefits later. Consider your family history and your own health when making your decision.

In 2008, when the financial crisis hit and the stock market dropped almost 40%, it hit just about everyone in this country hard. Our financial helpline was buzzing with calls from people who no longer got the overtime they'd regularly had for the past five years or had their house payments increased drastically. Executives had their pay cut 15% to 25%, and workers were being furloughed. We noticed a growing commitment to making budgets work and getting out of debt across all income levels. Imagine being on the cusp of turning 60 at that time. My friends who have hit 60 this decade tell me it is a tough birthday anyway, but seeing jobs dry up and wealth built up over a lifetime suddenly disappear added salt to the wound. That certainly couldn't have been easy, and the tough decisions needed today in the aftermath are just as hard.

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