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News Items, by Subject

Social Security - benefits, incl. coverage

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How Social Security Benefits Are Computed: In Brief (PDF)
11 pages. "Social Security is of ongoing interest both because of its role in supporting a large portion of the population and because of its long-term financial imbalance, and policy makers have considered numerous proposals to change its benefit computation rules. The Social Security benefits that are paid to worker beneficiaries and to workers' dependents and survivors are based on workers' past earnings." [Report R43542, June 28, 2018] (Congressional Research Service [CRS])
Improving Social Security Coverage and Retirement Benefits for Independent Contractors (PDF)
44 pages. "This paper provides a background of the policy mechanism for covering [independent contractors (ICs)] through Social Security, explores the reasons why the system leaves gaps in coverage for ICs, and offers six categories of policy options to improve Social Security coverage and re tirement benefits for these workers." (National Academy of Social Insurance [NASI])
An Actuarial Perspective on the 2018 Social Security Trustees Report (PDF)
10 pages. "Social Security's short-range OASDI financial projection is worse than the projection made a year ago.... Moving the short-range estimate period forward one year reduced the fund ratio by 18 percentage points ... The actuarial balance worsened, from a negative 2.83 percent to a negative 2.84 percent, from the 2017 to the 2018 Trustees Report." (American Academy of Actuaries)
Wake Up, Millennials: What the Latest Social Security Trustees Report is Telling You
"If Congress takes no action to close this gap prior to 2034, system benefits will effectively be reduced by 21%, across-the-board at that time. To put the program back in long-term balance prior to 2034 will require something like a 22% across-the-board decrease in benefits or a 28% increase in the payroll tax[.]" (Ken Steiner, FSA Retired)
Depending on Your Age, This Will Protect You from a Social Security Fail
"Social Security remains on the cusp. Out of balance as of this year, it's doomed to go insolvent in 2034. What can people do to help protect themselves against the failure of Social Security? Here are some practical examples of how people, based on their current age, can best protect themselves (and their children) from this imminent failure." (Fiduciary News)
Social Security's Financial Outlook: The 2018 Update in Perspective
"The 2018 Trustees Report shows virtually no change: ... Trust fund exhaustion is still 2034, after which payroll taxes still cover about three quarters of promised benefits. This shortfall is manageable, but action should be taken soon to equitably share the burden among cohorts, restore public confidence, and give people time to adjust. One concern is whether the declining fertility rate is a lingering effect of the Great Recession or a permanent shift that could worsen Social Security's finances." (Center for Retirement Research at Boston College)
Social Security Combined Trust Fund Reserves Depletion Year Remains 2034
"In the 2018 Annual Report to Congress, the Trustees announced: [1] The OASI Trust Fund is projected to become depleted in late 2034, as compared to last year's estimate of early 2035, with 77 percent of benefits payable at that time. [2] The DI Trust Fund will become depleted in 2032, extended from last year's estimate of 2028, with 96 percent of benefits still payable.... [3] The asset reserves of the combined OASDI Trust Funds increased by $44 billion in 2017 to a total of $2.89 trillion. [4] The total annual cost of the program is projected to exceed total annual income in 2018 for the first time since 1982, and remain higher throughout the 75-year projection period." (U.S. Social Security Administration [SSA])
The Case for a New Social Contract for Retirement
"People are today living longer than at any other time in history.... [We] need to ensure the long-term sustainability of social security benefits.... The traditional career trajectory of taking on additional responsibilities over time before abruptly stopping work at pension age ... needs to be replaced by a more flexible approach and the ability to transition into retirement, be it by reducing hours or working in a different capacity." (Aegon)
Social Security Programs and Retirement Around the World: Working Longer
"In the two decades since the project began, the dramatic decline in men's labor force participation has ended and been replaced by sharply rising participation rates. Older women's participation has been rising as well.... [The authors] document trends in participation and employment and also consider factors that may help to explain these changes in behavior." (National Bureau of Economic Research [NBER]; purchase required for full document)
Social Security: Options for Potential New Automatic Adjustment Features (PDF)
"Under an automatic adjustment approach, changes to keep the system in positive long-range actuarial balance would be made on a periodic basis. These changes could be in the form of an increase in revenue, an adjustment in the total projected benefits over the recipients' lifetimes, or some combination of the two.... This issue brief examines automatic adjustment options, including their advantages and disadvantages." (American Academy of Actuaries)
Knowledge Gap on Social Security May Lead to False Sense of Security
"[M]ore than half (55%) of future retirees plan on Social Security being their main source of retirement income, while one in four (26%) believe they can live comfortably in retirement on Social Security alone. Yet a similar amount of currently retired U.S. adults (27%) say their Social Security payment is less than they expected.... [M]any older adults think they are eligible for Social Security benefits sooner than they actually are, including 57% of future retirees." (National Association of Plan Advisors [NAPA])
Recent Updates to Medicare and Social Security: Why They Matter (PDF)
"As a direct result of [recent] changes ... a 55-year-old couple each earning $70,000 in 2018 will face the following retirement challenges: [1] The cumulative cost of the delay in Means Testing indexing, combined with the lowering of brackets three through five, will increase their lifetime surcharges by almost $122,000 (over $272,000 in future value). [2] The elimination of 'File Restricted' and 'File and Suspend' claiming strategies will result in the loss of over $36,000 (nearly $78,000 in future value) in potential lifetime Social Security benefits.... If future COLAs are consistent with the latest Social Security Trustee projections (2.6%), the couple will require 123% of their Social Security income to meet their future health care expenses." (HealthView)
Paying for Parental Leave with Future Social Security Benefits
"A recent proposal would allow new parents to trade future Social Security benefits for a few months of paid leave. Projections ... show that providing a progressive, 12-week leave benefit averaging about half pay ... would require raising the Social Security full retirement age for leave program participants about 25 weeks. This increase would permanently reduce participants' monthly Social Security retirement benefits about 3 percent. The proposed program would raise Social Security's annual costs, net of benefit offsets, about 1 percent, worsening the program's financing shortfall." (Urban Institute)
A Targeted Minimum Benefit Plan: A New Proposal to Reduce Poverty Among Older Social Security Recipients
"[The authors] propose an effective and relatively inexpensive targeted program to provide a minimally adequate floor to old-age income through the program. This minimum benefit plan would provide a cost-effective method for reducing elder poverty to low levels. A key element is that the benefit would not count toward other social programs' income eligibility thresholds. Other aspects include an income-tested benefit that would bring beneficiaries to the poverty threshold; application by filing of a 1040 income tax return; and setting of benefit levels and distribution through the Social Security Administration." (Urban Institute)
Much Ado About Nothing Saved for Retirement? Why Social Security Alone May Be Enough
"It may be true that many who have had low income levels live off income from Social Security, but circumstances occur when other people must face this same fate.... Cutting expenses prior to retirement has two benefits. First, it conditions to future retiree to live a more modest (and therefore affordable) lifestyle. Second, if presents the added bonus of freeing up money that can then be saved for retirement." (Fiduciary News)
Estimates of the Financial Effects on Social Security of H.R. 4584, the 'Student Security Act of 2017' (PDF)
"H.R. 4584 specifies that for every $550 (in 2018 dollars) in student loan balance that a person chooses to have forgiven, his or her [earliest eligibility age] and [normal retirement age] would be increased by one month.... [These] estimates [assume] that one-half of eligible student loan amounts would be forgiven with this offer.... [T]he long-range OASDI actuarial deficit would decrease from 2.83 percent of payroll under current law to 2.52 percent of payroll assuming enactment of the Bill." (U.S. Social Security Administration [SSA])
[Opinion] Alicia Munnell Explains the Social Security Fix No One Wants
"Policymakers should fix Social Security by raising taxes. Money doesn't come from heaven. It's going to have to come from someplace, and it should be done on the revenue side. We need to maintain benefits. People don't have anything else other than 401(k)s, and a significant portion of the population doesn't even have those." (ThinkAdvisor)
[Official Guidance] Text of IRS Publication 15 (Circular E): Employer's Tax Guide, for Use in 2018 (PDF)
70 pages. "What's New -- 2018 federal income tax withholding.... Employers should implement the 2018 withholding tables as soon as possible, but not later than February 15, 2018.... P.L. 115-97 suspends the exclusion for qualified moving expense reimbursements from your employee's income beginning after December 31, 2017, and before January 1, 2026.... Reminders: ... Severance payments are subject to social security and Medicare taxes, income tax withholding, and FUTA tax." (Internal Revenue Service [IRS])
Public Employees: Avoid Big Surprises After You Retire -- Like a Major Reduction of Your Social Security Benefits
"[If] you have worked in a position(s) that was subject to Social Security and in a position(s) that was not subject to Social Security, it makes good sense to analyze whether you could be impacted by either the [Windfall Elimination Provision and/or the Government Pension Offset] and to determine if there is anything you would want to do to mitigate those impacts. As part of the process, it wouldn't hurt to check on the accuracy of your Social Security earnings record and your projected Social Security benefits." (Best Best & Krieger LLP)
[Official Guidance] Text of 2017 IRS Publication 915: Social Security and Equivalent Railroad Retirement Benefits (PDF)
32 pages. "This publication explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits.... This publication covers the following topics. [1] Whether any of your benefits are taxable. [2] How to report taxable benefits. [3] How much is taxable. [4] How to treat lump-sum benefit payments. [5] Deductions related to your benefits, including a deduction or credit you can claim if your repayments are more than your gross benefits." (Internal Revenue Service [IRS])
Avoid the $300,000 Retirement Mistake by Carefully Choosing Social Security Start Date
"Could you afford to give away $300,000 in retirement? ... [A]ccording to one financial expert, you could leave that much on the table by choosing the wrong strategy to claim your Social Security benefits." (WECT)
The Mortality Effects of Retirement: Evidence from Social Security Eligibility at Age 62
"Using mortality data that covers the entire U.S. population and includes exact dates of birth and death, we document a robust two percent increase in male mortality immediately after age 62. The change in female mortality is smaller and imprecisely estimated. Additional analysis suggests that the increase in male mortality is connected to retirement from the labor force and associated lifestyle changes." (National Bureau of Economic Research [NBER])
Social Security Primer (PDF)
17 pages. "This report provides an overview of Social Security financing and benefits under current law. Specifically, the report covers the origins and a brief history of the program; Social Security financing and the status of the trust funds; how Social Security benefits are computed; the types of Social Security benefits available to workers and their family members; the basic eligibility requirements for each type of benefit; the scheduled increase in the Social Security retirement age; and the federal income taxation of Social Security benefits." [Report R42035, Nov. 30, 2017] (Congressional Research Service [CRS])
Changes to CBO's Long-Term Social Security Projections Since 2016
"This report explains the changes to CBO's long-term Social Security projections since last year. Compared with those made in July 2016, CBO's latest projections indicate a slight improvement in the financial outlook for Social Security." (Congressional Budget Office [CBO])
Evaluating Lump Sum Incentives for Delayed Social Security Claiming
"[This Working Paper evaluates] the potential impact of a Lump Sum reform for delayed Social Security claiming.... [T]he Lump Sum delayed benefit plan does not dramatically change solvency outcomes ... [A]sset projections show that the lowest and middle-income groups accumulate substantially higher nest eggs under the Lump Sum delayed benefit plan.... [T]he Lump Sum reform ... outlined here has positive distributional consequences overall without costing the system more money." (Pension Research Council, The Wharton School of The University of Pennsylvania)
Five Important Ages for Retirement Planning
"At age 50, your employees will become eligible to save more the standard amount in their 401(k) and IRA accounts ... By waiting until the age of 59-1/2 to take a withdrawal, your employees will get to keep an additional 10% of their money.... Your employees will be able to sign up for Medicare during a seven-month period starting three months prior to their 65th birthday.... Baby boomers born between 1943 and 1954 will be eligible to begin claiming the full Social Security benefit they've earned at age 66.... Whether it's needed or not, they'll be required to take distributions from their traditional IRAs, traditional 401(k)s and Roth 401(k)s after age 70-1/2." (Voya)
[Official Guidance] Social Security Announces Benefit and Wage Base Increases for 2018
"The 2.0 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 61 million Social Security beneficiaries in January 2018.... [T]he maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $128,700 from $127,200. Of the estimated 175 million workers who will pay Social Security taxes in 2018, about 12 million will pay more because of the increase in the taxable maximum." (U.S. Social Security Administration [SSA])
Protect Your Social Security Benefits After Data Breaches
"The most secure action a person can take is to create their own 'my Social Security' account.... Social Security uses information in your credit file to verify your identity. If the file is frozen because of a security freeze, the agency can't find what it needs to ask questions to confirm that you are who you say you are. The agency uses what it calls an 'identity services provider.' Want to guess who that is? Equifax currently has the $4.3 million contract for one year to verify people's identities." (The Washington Post; subscription may be required)
Annual Statistical Report on the Social Security Disability Insurance Program, 2016
"Disability benefits were paid to almost 10.2 million people. Awards to disabled workers (706,448) accounted for 88 percent of awards to all disabled beneficiaries (799,330). In December, payments to disabled beneficiaries totaled more than $11.3 billion." (U.S. Social Security Administration [SSA])
Social Security Retirement Benefits: Claiming-Age Combinations Available to Married Couples
"This note explores the claiming rules, contingent situations, claiming-age combinations, and benefit amounts available to married couples with a range of respective birth years and own-record benefit levels. The sheer number and variety of claiming-age combinations would be overwhelming if a couple were to consider each one individually." [Research and Statistics Note No. 2017-01, released Sept. 2017] (U.S. Social Security Administration [SSA])
Social Security: The Trust Funds (PDF)
21 pages. "This report covers how the Social Security program is financed and how the Social Security trust funds work. It will be updated annually to reflect current projections of the financial status of the Social Security trust funds." [Report RL33028, Sept. 12, 2017] (Congressional Research Service [CRS])
[Opinion] Social Security: A Promise Breaking?
"While Social Security is not going 'bankrupt,' it's clear it will have to change in both a fundamental and disruptive way. For this reason, many financial professionals are telling their younger clients to plan on not receiving Social Security when they retire." (Fiduciary News)
What's the Maximum Possible Social Security Benefit in 2017?
"The average monthly Social Security payment for retirees was $1,360 in January 2017. But many retirees receive over $2,000 per month from the Social Security Administration, and the maximum possible benefit is $3,538 in 2017. However, qualifying for payments worth $3,000 or more requires some serious career planning throughout your life. Here's what you need to do to qualify for the maximum possible Social Security payment." (U.S. News & World Report)
[Discussion] WEPs and Governmental Defined Contribution Plans
"Does anyone know how Social Security's Windfall Elimination Provision (WEP) would apply to a governmental defined contribution plan? For example, some governmental agencies have done away with DB plans as their Social Security replacement plan, and moved new hires into DC plans. Some of these new hires have Social Security earnings from prior jobs and are wondering how or if the WEP would apply to them." (BenefitsLink Message Boards)
Social Security Information for People Affected by Hurricane Harvey
"[USPS has provided] a list of Post Office locations ... where checks will be made available for pick-up beginning Friday, September 1.... Nearly all payments issued by direct deposit will arrive as scheduled.... For recipients in the affected areas who receive their payment through a Direct Express card, fees will be waived, even if they have evacuated out of the area.... Social Security has established three emergency payment locations in Texas[.]" (U.S. Social Security Administration [SSA])
Financial Effects on Social Security of the Save Social Security Act of 2017 (PDF)
22 pages. "Assuming enactment of the proposal, the projected trust fund reserve depletion year for theoretical combined OASDI and DI Trust Funds would be extended to 2064. Under current law, the projected trust fund reserve depletion year for the combined trust funds is 2034." (U.S. Social Security Administration [SSA])
How Early Retirement Reduces Projected Social Security Benefits
"Social Security benefits aren't actually reduced for those who retire early -- they simply stop accruing additional benefits when they stop working. But given that Social Security projects the assumption of work until full retirement age, it's crucial to recognize that actual benefits may be lower for those who retire early -- even if they wait until full retirement age to actually receive those benefits.... [At] a minimum, it's crucial to take a moment and look at the individual's inflation-adjusted historical earnings, to understand whether or how much of an impact not working to full retirement age may actually have on projected benefits!" (Nerd's Eye View)
An Actuarial Perspective on the 2017 Social Security Trustees Report (PDF)
11 pages. "The combined Social Security trust fund reserves are projected to become depleted during 2034, the same year as projected in last year's report. If changes are not implemented by that date, only about 77 percent of scheduled benefits would be payable after 2034, declining to 73 percent in 2091.... To bring Social Security into actuarial balance for the next 75 years ... changes equivalent to either an immediate increase of 2.76 percentage points in the payroll tax rate, or an immediate decrease of about 17 percent of benefits for all current and future beneficiaries, or some combination thereof, is required." (American Academy of Actuaries)
Estimates of the Financial Effects on Social Security of the 'Protecting and Preserving Social Security Act' (PDF)
22 pages. "Assuming enactment of the proposal, the projected trust fund reserve depletion year for theoretical combined OASDI and DI Trust Funds would be extended to 2059. Under current law, the projected trust fund reserve depletion year for the combined trust funds is 2034." (U.S. Social Security Administration [SSA])
Social Security Tips for Working Retirees
"If you claim your benefits and continue to work, there is an earnings restriction until you reach your full retirement age (FRA), 65-67, depending on the year you were born.... If your benefits have been reduced due to earning too much prior to reaching your FRA, you will get these benefits back at your FRA when your monthly Social Security check will be increased to account for benefits withheld earlier due to excess earnings.... Social Security benefits are subject to federal income taxes above certain levels of 'combined income.' ... When to claim Social Security benefits will be one of the most important decisions that you make regarding your retirement[.]" (Fidelity)
Social Security COLA Projected to Rise 2 Percent
"[T]he Social Security and Medicare trustees projected that Social Security recipients would receive a 2.2 percent cost-of-living adjustment (COLA) in 2018. It would be the largest increase since 2012, when the COLA rose 3.6 percent. Social Security recipients received no cost-of-living adjustment in 2015 and just 0.3 percent in 2016." (AARP)
[Opinion] Social Security Slouches Towards Insolvency
"Each year since 2010, Social Security has been operating at a cash flow deficit, meaning the annual costs exceed income from payroll taxes and the taxation of benefits. In 2022, the annual program costs will be more than total income, which also includes interest on the trust fund assets. At this point the trust fund will be drawn down. By 2034, the trust fund will be exhausted, at which point tax income would only be enough to pay for 77 percent of benefits." (Charles Blahous, Manhattan Institute for Policy Research)
Social Security Trustees: No Change for Combined Trust Fund Reserves Depletion Year
"In the 2017 Annual Report to Congress, the Trustees announced: The asset reserves of the combined OASDI Trust Funds increased by $35 billion in 2016 to a total of $2.85 trillion. The combined trust fund reserves are still growing and will continue to do so through 2021. Beginning in 2022, the total annual cost of the program is projected to exceed income. The year when the combined trust fund reserves are projected to become depleted, if Congress does not act before then, is 2034 -- the same as projected last year. At that time, there will be sufficient income coming in to pay 77 percent of scheduled benefits." (U.S. Social Security Administration [SSA])
Why Do More New Englanders Receive Disability Insurance Benefits for Mental Disorders?
"A greater share of people in New England states receive Social Security Disability Insurance (DI) benefits for mental disorders than the share nationwide.... [E]vidence suggests that demographics and economics play a large role, as does greater access to health insurance and health care." (Urban Institute)
Nine Ways to Retire on Social Security Alone
"Delay Social Security ... Do a Social Security do-over ... Maximize Social Security survivor benefits ... Eliminate debt ... Move to a less expensive locale ... Don't forget taxes ... Buddy up ... Take advantage of benefit programs ... Utilize freebies." (AARP)
Geographic Patterns in Social Security Disability Receipt
"In 2015, 1.8 percent of all 18- to 65-year-olds across the country received DI benefits because of mental disorders. That recipiency rate was markedly higher in Maine, New Hampshire, Rhode Island, and Vermont. The evidence suggests that access to and treatment from the health care system (which tend to be better in New England states) may help people identify their illnesses and contact the DI program and other services." (Urban Institute)
Delaying Social Security Claims (or Not)
"In general ... retirees who saved a ton of money don't need to worry much about delaying Social Security benefits. The benefits won't make much difference either way. At the other extreme, a large majority of Americans will have very little in the way of retirement savings. About half will have almost no savings. These retirees may need the income as soon as they retire and will not be able to postpone claiming." (The Retirement Cafe)
How to Maximize Social Security Retirement Benefits
"[1] Check your wage history on the Social Security statement ... [2] Know your full retirement age ... [3] The benefits and costs of working in retirement ... [4] Taxing Social Security benefits ... [5] Spousal benefits ... [6] Survivor benefits ... [7] Divorced spousal benefits." (Lawton Retirement Plan Consultants)
[Opinion] Why Raising Social Security's 'Full Retirement Age' Is a Bad Idea
"[T]he retirement age has little to do with how long people work, and a lot to do with how much money they get.... [As] the FRA rises from 66 to 67, the worker retiring at 62 sees his monthly benefit cut from 75% to 70%of the full benefit. The worker who increases his retirement age from 66 to 67 sees no cut in the monthly benefit but receives benefits for one less year, reducing his lifetime benefit. So raising the FRA is a cut in benefits either way." (Alicia H. Munnell, in MarketWatch)
Social Security Annual Statistical Supplement, 2016
"About 60.0 million persons received Social Security benefits for December 2015, an increase of 956,277 (1.6 percent) since December 2014. Seventy-two percent were retired workers and their spouses and children ... Seventy-one percent of the 40.1 million retired workers received reduced benefits because of entitlement prior to full retirement age. Relatively more women (74.1 percent) than men (68.8 percent) received reduced benefits." (U.S. Social Security Administration [SSA])
The Growing Gap in Life Expectancy by Income: Recent Evidence and Implications for the Social Security Retirement Age (PDF)
34 pages. "This report provides a brief overview of the concept of life expectancy, how it is measured, and how it has changed over time in the United States. While life expectancy may be studied in a variety of contexts, this report focuses on the link between life expectancy and [socioeconomic status], as measured by lifetime income. In particular, this report synthesizes recent research on [1] the life expectancy gap by in come and [2] the relationship between this gap and Social Security benefits. Finally, this report discusses the implications of this research for one type of Social Security reform proposal: increasing the Social Security retirement age." [CRS Report R44846, May 12, 2017] (Congressional Research Service [CRS])
Social Security and Total Replacement Rates in Disability and Retirement
"[A]bout half of the 10-percentage-point advantage in Social Security replacement rates for SSDI beneficiaries is due to the actuarial adjustment applied to retirement benefits, implying that career earnings are not that different between retired workers and SSDI beneficiaries. But total replacement rates are substantially lower for SSDI beneficiaries, which indicates that, despite Social Security's vital role in providing a reliable income source, SSDI beneficiaries have much lower post-career well-being than retired workers." (Center for Retirement Research at Boston College)
Social Security Benefits: What Retirees Get Right and Wrong
"[Certain] aspects of the Social Security program remain confusing to vast numbers of pre-retirees. For instance: 38% incorrectly believe they can easily switch their claiming strategy after making an initial choice.... Two-thirds do not realize you must file for benefits 3 to 4 months before receiving your first check.... Only a quarter know their full retirement age[.]" (Money)
An Experimental Analysis of Modifications to the Survivor Benefit Information within the Social Security Statement
"When workers are compelled to consider the effect that their claim age has on their survivor benefit, they appear to incorporate this into deciding when to claim. Each modification increased the expected claim ages of respondents by roughly one year relative to the control.... [It] was sufficient for respondents to merely see that their spouse would receive a lower survivor benefit at lower claim ages." (Center for Retirement Research at Boston College)
Social Security Retirement Benefits and Private Annuities: A Comparative Analysis
"This issue paper explains some key features of Social Security retirement benefits, focusing on program funding; benefit payments to retired workers, their spouses, and survivors; and benefit taxation. It then discusses key features of private annuities, including funding and payments, types and features, and taxation. In addition, this paper gives examples of the premiums needed to replicate Social Security retirement benefits and discusses the variables that affect the amount of annuity income. Lastly, this issue paper explains some of the risks of both the Social Security program and the private annuity industry." (U.S. Social Security Administration [SSA])
Innovative Strategies to Maximize Social Security Benefits (PDF)
20 pages. "No other vehicle can match the combination of inflation-fighting increases, longevity protection, investment risk elimination, and spousal coverage that Social Security delivers -- potentially making it one of the most valuable sources of retirement income. While the Bipartisan Budget Act of 2015 restricted the use of certain Social Security claiming techniques, there are many remaining strategies that can help maximize Social Security benefits and enhance retirement security." (Prudential)
Most Americans Maintain or Increase Spendable Income After Claiming Social Security (PDF)
"Three years after claiming, the median taxpayer in the study reported spendable income that was greater (103 percent) than spendable income in the year before claiming. Median replacement rates three years after claiming were higher for individuals in the lowest quintile of 1999 income (123 percent), and lower for the highest income (95 percent for the top 1 percent of the income distribution)." (Investment Company Institute [ICI])
Why Are U.S. Households Claiming Social Security Later?
"The Early Baby Boomer cohort was less likely to be fully retired than [the cohort of persons having 1931-1941 birth years] at both age 62 (36.7 percent vs. 44.0 percent) and age 64 (49.5 percent vs. 53.9 percent).... [T]he shift from DB towards DC plans was the biggest contributor to these declines, followed by better health. Changes to Social Security rules and improvements in mortality played smaller roles. Taken together, the four changes explain about 60 percent of the drop in full retirement at 62[.]" (Center for Retirement Research at Boston College)
The Pros and Cons of Taking Social Security Early
[By] taking Social Security at age 62, you're only receiving 75 percent of potential benefits. By taking out proceeds at age 70 (the oldest age you can claim Social Security benefits), you're increasing your maximum potential returns by 8 percent for every year you delay benefits ... There are a few scenarios where it does make sense to take Social Security at age 62, and health ... is definitely one of them." (U.S. News & World Report)
Know What to Expect from Social Security Benefit Estimators
"[If] participants use one of the free tools analyzed in this report, they will likely receive reasonably accurate benefits estimates. However, depending on the tool, participants may be more or less likely to absorb, draw meaningful inferences about and act on information. Therefore, the differences in the way Social Security benefit estimators communicate results is key, because when it comes to retirement planning, accurate information is worth little without understanding and action." (Corporate Insight)
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