Misleading social security headlines could cost retirees a fortune | Smart change: personal finance

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Ana Lucie Murillo

When news broke last month that Social Security funds would be low sooner than expected, the news spread like wildfire. Fears that the program is running out of money may lead some people to make the wrong retirement decision, a new survey suggests.

Alarmist media coverage of Social Security funding shortfalls – as numerous headlines around the annual trustees report released last month show – is influencing people to say they will claim benefits sooner, which would definitely reduce the amount. of their monthly checks, according to a study released this week by Boston College’s Center for Retirement Research.

The study found that the scarcity of framing of certain Social Security titles made readers nervous, and they subsequently made poorer decisions about when to claim Social Security. When the Treasury Department announced that Social Security trust fund reserves would be depleted a year earlier due to the pandemic, officials made it clear they would still be able to pay 76% of current benefits. Plus, Congress could still act to replenish the fund before the deficit begins in 2034, and many experts believe lawmakers will. Yet many headlines have focused solely on the depletion of trust funds, using scary words like “insolvency.”

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More than 3,000 online survey participants, aged 21 to 61, reacted to various examples of headlines about exhaustion of social security funds. A group that read the headlines referring to the trust fund later said it would call for Social Security sooner. (Those who mistakenly believe the program will go bankrupt want to get all they can ASAP.) Safety sooner, but less than the group that read the most alarming headlines.

So when should you actually apply for Social Security benefits? It can be difficult to determine the best time, given that the Social Security Administration, or SSA, has abandoned the practice of sending annual letters with benefit forecasts to anyone under the age of 60. You can view your estimated benefits on the SSA website, but the projections are not accurate, the agency says.

What is clear is that if you apply for your eligibility at 62 as early as possible, you will get about 75% of what you would have received had you waited several years for what the government calls your rate retirement age. full, when you get 100% of what you qualify for.

If you were born between 1943 and 1954, your full retirement age – that is, the age at which you will receive all of your social security benefits – is 66. If you were born in 1960 or later, your full retirement age is 67. And if you were born somewhere in the middle of those dates – between 1955 and 1959 – your full retirement age is between 66 and 67. ).

And if you wait until you’re 70, you’ll get what’s called a deferred retirement credit, which means your monthly checks will be even bigger.

This is already a far cry from the age at which most people decide to claim Social Security benefits. About a third of workers claim their benefits at age 62. Ultimately, the longer you wait to claim, the higher your monthly checks will be. It is therefore in your interest to wait as long as possible, knowing that Social Security will not run out of money before this date.

Retire with money

Retire With Money brings the latest retirement news, ideas and advice to your inbox. Elizabeth O’Brien has been covering retirement for over 10 years.

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