The purpose of Money Talk is to improve readers' financial capability with research-based personal finance information.
Thursday, May 30, 2019
Social Security Disconnects
have recently been working on a project with colleagues where we compared
research-based retirement planning recommendations with what people actually do
in real life. My assigned topic was Social Security and below are six things
that I discovered during my research literature reviews and online searches:
Social Security claiming age decision is complex and requires an analysis of
unique personal factors including health status and financial need.
American households have too little wealth accumulated to retire successfully
before their full retirement age or FRA (age 66 to 67, depending upon year of
maximize lifetime Social Security benefits, workers should consider delaying
their receipt of benefits to at least FRA if they foresee average or better
life expectancy and it is affordable to do so.
status is a key variable. Recommendations for claiming age vary for single
individuals vs. couples. A common recommendation was for men to consider
delayed claiming while women claim as early as possible.
a disconnect between simulation research results and “real world” practices.
The most popular Social Security claiming age is 62 and, in 2017, only 4% of men
and 6% of women waited to claim benefits at age 70.
are viable strategies to stop working and still postpone Social Security to
receive larger benefits later. Options include tapping IRA balances and using
reverse mortgages as sources of “stopgap” income.
research is needed to determine exactly why people claim Social Security
benefits when they do. Possible explanations include spousal pressure to
retire, mistrust of the federal government, financial need, unemployment,
uncertainty about future health status and life expectancy, and “take what you
can now” attitudes.