Misleading Social Security headlines could cost retirees – Community News
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Misleading Social Security headlines could cost retirees

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When the news came out last month that Social Security funds would run out faster than expected, the news spread like wildfire. Fears that the program will run out of money could lead some people to make poor retirement decisions, a new study suggests.

Alarmist media coverage of Social Security funding gaps — as seen in many headlines surrounding the trustees’ annual report released last month — is influencing people to say they are more likely to claim benefits, which is the magnitude of would permanently reduce their monthly checks, according to a study released this week by Boston College’s Center for Retirement Research.

The study found that the sparse framing of some Social Security headlines made readers nervous, and they subsequently made poorer decisions about when to claim Social Security. When the Treasury Department announced that the Social Security Fund’s reserves would be depleted a year earlier due to the pandemic, officials made it clear they could still pay out 76% of current benefits. In addition, Congress could still act to replenish the fund before the deficit kicks in in 2034, and many experts believe lawmakers will. Yet many headlines focused solely on the depletion of the trust funds, with terrifying words like “insolvency.”

More than 3,000 participants in the online survey, ranging in age from 21 to 61, responded to various sample headlines about social security funds running out. One group that read the headlines then referred to the trust fund said they would be more likely to claim Social Security. (Those who mistakenly believe the program will go bankrupt want to get what they can as soon as possible.) Participants who saw a headline that instead focused on tax revenues that continue to support three-quarters of Social Security benefits still responded by deciding to claim social security. Security earlier, but less so than the group that read more alarming headlines.

So When Should You Actually Claim Social Security Benefits? It can be difficult to determine the best time, as the Social Security Administration, or SSA, has stopped sending annual letters of expected benefits to anyone under the age of 60. You can check your estimated benefits on the SSA’s website, but the projections aren’t exact, the agency says.

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

If you were born between 1943 and 1954, your full retirement age — that is, the age at which you receive full 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. (This chart on the SSA website charts how many months to 66 years those people can claim their full benefits).

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

That’s a long way from the age when most people decide to claim Social Security benefits. About a third of employees claim their benefits at the age of 62. The bottom line is that the longer you wait to claim, the heavier your monthly checks will be. So it is in your best interest to wait as long as possible, knowing that Social Security will not run out of money before then.