Retirees Regret Claiming Social Security Early

Many Retirees Wish They Had Delayed Taking Social Security Benefits

"MassMutual says a married couple that lives into their 90s but decides to begin their Social Security benefits at age 62 as opposed to age 70 could be leaving as much as half a million dollars on the table, or forfeiting $2,000 to $4,000 a month for life."
By Lee Barney

https://www.planadviser.com/many-retirees-wish-delayed-taking-social-security-benefits/ 

 

"MassMutual says a married couple that lives into their 90s but decide to begin their Social Security benefits at age 62 as opposed to age 70 could be leaving as much as half a million dollars on the table, or forfeiting $2,000 to $4,000 a month for life. Furthermore, a surviving spouse will receive $1,000 to $2,000 less a month if the couple filed at age 62."

 

Check out the many posts on this blog about deciding on when to claim Social Security Retirement benefits using the search function. 

How safe is Social Security in a Republican-dominated Congress?

"There's no way to predict with certainty what might happen to Social Security, but here's what we know now," by Matthew Frankel. "If you watch or read the news on a regular basis, chances are you've seen a headline or two to the effect of "Social Security is going broke." If you're a retiree collecting a Social Security check, or if you're a worker hoping Social Security will still be around when you get older, then the question of "how safe is Social Security?" is an important one. Here's the reality of Social Security's finances, what we can do to solve the problem, and what to expect from the new Republican government."
"Social Security is not broke. Social Security had more than $2.8 billion in reserves in its trust fund at the end of 2015, and it was expected to run a small surplus in 2016. In fact, Social Security's income from payroll taxes, taxes on certain Social Security benefits, and earnings on its invested reserves are expected to exceed the program's expenses through 2019." By 2020 payout are likely to exceed tax revenues; the trust fund (accumulated surpluses) are likely to be depleted by 2034... IF Congress fails to act. Frankel explains ways to fix the shortfall problem and notes that Trump has pledged not to mess with Social Security. However, there are moves among Republican legislators to severely reduce SS retirement benefits. Get the details at: https://www.fool.com/retirement/2017/01/16/how-safe-is-social-security.aspx

How to get 88% more from Social Security

Benefits of delaying Social Security retirement by Kelli B. Grant: "Someone who retires and begins claiming Social Security at age 70 would receive a benefit that's 76 percent higher than the one he or she would receive at age 62. Factor in late-career earnings replacing a zero-income year and the increase becomes as much as 88 percent for women and 82 percent for men."(emphasis added). A study by the Center for Retirement Research at Boston College reveals the benefits of working longer because of replacing years of zero earnings with a high earning year. SS calculates benefits based on 35 years of earnings. Many women in particular have fewer than 35 years of earnings history. Working longer only benefits singles or spouses who have a substantial work history. Many women who did not work for pay for most of their marriage are better off claiming a spousal benefit.
http://www.cnbc.com/2016/12/01/how-to-get-88-percent-more-from-social-security.html

Understanding Social Security: 35 years of earnings

While many Americans have strong opinions about Social Security, and too many people falsely believe that it won't be there for them due to irresponsible media reports and irresponsible politicians, this blog attempts to educate people about the realities of Social Security. The Squared Away Blog from the Center for Retirement Research at Boston College, explains how the formula for retirement benefits is calculated. This info is especially important for persons considering stopping working before they have accumulated 35 years of earnings (and paying FICA taxes).
"To qualify for a pension benefit at all, a person must work full- or part-time for 40 quarters – a total of 10 years." (and pay FICA taxes on their wages).
The "size of your future benefit check... is determined by your highest 35 years of indexed earnings." The Squared Away blog explained how "indexed" earnings are calculated. At least as important for many workers is that if you pay SS taxes on less than 35 years of earning, zeros are entered into the calculation. So it may be worthwhile, especially if SS will comprise a large portion of your retirement income, to work a few more years so years of zero earnings are dropped from the formula.
Learn more at: http://squaredawayblog.bc.edu/squared-away/your-social-security-35-years-of-work/

Resetting (overturning) decision to claim early Social Security benefits

About half of SS beneficiaries elect to claim retirement benefits “early” (before their “full” retirement age), thus locking in a lower benefit for the rest of their lives. While some workers make this decision because they absolutely need the income, it can be a big mistake for beneficiaries (and/or their spouses) who live longer than average lifespans. “So what can a retiree do if she later regrets the decision to take early benefits or her circumstances change such that she no longer needs the early income? It turns out there is a way to mitigate this decision after the fact—a ‘reset’ allowed under the Social Security rules.” Joe Alfonso explains, “Social Security allows you, upon reaching full retirement age, to stop receiving benefits until sometime in the future. Under the program rules, delayed benefits after full retirement age are entitled to earn credits of 8% per year up to age 70. Beneficiaries whose full retirement age is 66 and who delay benefits until they reach age 70 can therefore receive delayed credits totaling up to 32%.” Read the details in the Christian Science Monitor: http://www.csmonitor.com/Business/Saving-Money/2014/0419/Deciding-when-to-take-Social-Security-benefits  Don’t forget that the real full retirement age is 70; anyone who claims benefits before that age accepts a lower monthly benefit for life. Read the 10/23/13 blog post for details.

Social Security Statements of Estimated Benefits

Starting in September 2014, the Social Security Administration (SSA) will resume mailings at five-year intervals to workers who have not signed up to view their statements online. The statements will be sent to workers at ages 25, 30, 35, 40, 45, 50, 55 and 60. The statement includes an estimate of monthly benefits at various claiming ages. The SSA stopped mailing paper statements in 2011 due to budget cuts by Congress which resulted in big reductions in customer service. Don’t wait for the mail; sign up for electronic access to your account at: http://www.ssa.gov/myaccount/

Delaying retirement doesn't increase Social Security spousal benefits

“The calculation of Social Security spousal benefits works differently from the calculation of retirement benefits, writes Mary Beth Franklin. For each year a worker delays taking retirement benefits beyond full retirement age up to 70, the benefit is increased 8%. The delayed-retirement credit doesn't apply to spousal benefits.” Source: Investment News
More info from Ray Martin at MoneyWatch: http://www.cbsnews.com/8301-505146_162-57583321/the-lowdown-on-social-security-spousal-benefits/

Wives lose when husband claims Social Security at Age 62

"Many husbands file for their Social Security benefits at age 62, a decision that may one day deprive their widowed wives of up to $170 a month."
According to research reported in the Squared Away blog, "almost 40 percent of all Americans claim their benefits the same year they turn 62." When wives outlive their husbands they suffer from his decision to claim benefits as early as possible, resulting in a smaller benefit... until death.  The study’s author, Alice Henriques, an economist with the Federal Reserve Board in Washington, “was able to show that the husbands, when they made their decisions, took into account the impact on themselves of the claiming date they selected. But they showed virtually ‘no response to the large incentives’ of having the ability to provide their widowed wives with more income in the future.”  It’s time for wives to be more involved in crucial financial decisions. Come to the Sept. 11 FPW to learn more about SS claiming strategies. Read the details at the Squared Away Blog: http://squaredawayblog.bc.edu/squared-away/62yo-men-file-social-security-wives-pay/

Don't get "framed" when claiming Social Security Benefits

"We've been framed, at least when it comes to deciding when to begin taking Social Security benefits. According to behavioral economics research, the way seniors are presented with information about Social Security benefits has a big impact on their decision."  Learn about how "anchoring" can affect this vitally important decision:
http://money.usnews.com/money/blogs/the-best-life/2013/05/22/dont-get-framed-when-claiming-social-security_print.html

How much of SS Benefit is Taxable?

Up to 85% of Social Security retirement benefits are subject to income taxes for persons with $34,000 income and above. Check out this table to calculate if your benefits are taxable, and if so, what percent are subject to income taxes:  http://networthadvice.com/2013/01/23/are-social-security-benefits-taxed/