In a just released survey of 55 and older workers, 24% say they are “very confident” and another 53% described themselves as “somewhat confident” that they know enough to make that big decision.
Big Retirement Mistake: Thinking You Know When To Claim Social Security, When You Don’t
The catch is, when the same folks took an eight question quiz about crucial Social Security rules, just 5% got all the answers right. Another 22% got 7 correct, while 45% got 3 or more wrong. Workers can start their Social Security checks anywhere from age 62 until 70, but just 40% knew that the percentage increase in monthly benefits from a two year delay was somewhere between “11% and 20%” (it’s 14%), meaning most did not know the value of delaying Social Security, a crucial matter. (The “full” Social Security retirement age for those born between 1943 and 1954 is 66, but you can claim Social Security retirement benefits anywhere from 62 to 70, with your monthly check increased for each month you wait; a worker gets a 76% higher benefit if he claims at 70 than he would at 62. Essentially, by delaying your Social Security claim, you’re buying an inflation indexed annuity from Uncle Sam far more cheaply than you could purchase it from even a low-cost private annuity provider. The payoff to waiting has gotten even sweeter in recent years, due to rising life expectancy and falling interest rates, making it wise for most boomers to wait until well past 62 to start benefits.)
By Financial Engines’ figuring, there are thousands of different variations in the way a married couple could claim benefits and their lifetime income gains from an optimal strategy could exceed $250,000, says Chief Investment Officer Christopher L. Jones. For a single, gains can be in excess of $100,000. Both numbers are huge when you consider the typical 60 year old only has about $125,000 in his 401(k), he points out. Even if you’re well off, the potential payback is nothing to sneeze at.
Read more about this in an article from Forbes on March 11, 2014 by Janet Novack
William Wombacher, your Central Illinois Certified Elder Law Attorney (CELA) and Social Security Disability Specialist. I’ll help you! http://www.wombacherlaw.com
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