Discrepancies in Social Security Benefit Estimates

Oct 12, 2021

SSA has recently redesigned its statements to show benefit estimates at each age from 62 (or the client’s current age if over 62) through age 70. For clients born in 1955 through 1959, whose FRAs are 66 plus some number of months, the statement shows the estimate for FRA (e.g., 66 and 6 months) as well as age 67. In a few (not all) of the cases that we’ve seen, these amounts are the same. Clearly, they should not be. Each month a client delays application, the benefit amount goes up by a few dollars. (See references at the end for the exact formula.)

In addition to this error, we are seeing mistakes in the DRCs (delayed retirement credits) between FRA and age 70. For example, one statement showed a benefit of $3,223 at 68, $3,459 at 69, and $3,773 at 70. Instead of going up by 8% a year, the benefit went up by 7.3% between 68 and 69 and 9.1% between 69 and 70.

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Social Security Announces Redesigned Statement

Oct 4, 2021

After doing a soft launch of its new redesigned statement last spring, SSA has announced that statements have been redesigned “to provide information to people in clear and plain terms about Social Security’s programs and services.” The agency conducted extensive research, review, and testing to make the updated Statement easy to understand. The new Statement is shorter, uses visuals and plain language, and includes fact sheets tailored to a person’s age and earnings history. Examples of the new Statement and fact sheets are available here (PDF).

Read the full press release here.

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Boomer Drawdown Speed May Be Underestimated

Sep 23, 2021

Past generations drew down their wealth slowly in retirement, leaving much of their savings untouched. However, this pattern may not hold as the Baby Boomer generation retires, because they are less likely to have a defined benefit (DB) plan and will need to tap the assets in their defined contribution (DC) plans to support their consumption.

The Center for Retirement Research studied the relationship between access to DB plans and the speed at which past generations drew down their wealth. It found that having access to a DB plan was associated with slower drawdown of retirement wealth. The larger the share of retirees’ resources in an annuity-like form — either DB plans, Social Security benefits, or commercial annuities — the slower they drew down their wealth.

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Media Coverage of Trust Fund Influences Claim and Benefit Expectations

Sep 13, 2021

Does the news about the Social Security trust fund have an impact on when workers plan to claim their benefits and how much they expect those benefits to be? A recent survey says yes. The Center for Retirement Research at Boston College showed study participants identical articles with different headlines. The headline for the control group reports that Social Security has a “long-term financing shortfall,” but does not directly reference the trust fund. The headlines for the three treatment groups highlight the depletion of the trust fund. The first headline read, “The Social Security Trust Fund Will Deplete its Reserves in 2034.” The second mirrors recent media coverage: “Social Security Fund Headed toward Insolvency in 2034, Trustees Find.” And the third emphasizes ongoing program revenue alongside the trust fund: “Revenues Projected to Cover Only 75 Percent of Scheduled Social Security Benefits After 2034.”

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Combined Trust Funds Projected Depletion One Year Sooner Than Last Year

Aug 31, 2021

The Social Security Board of Trustees today released its annual report on the long-term financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds are projected to become depleted in 2034, one year earlier than projected last year, with 78 percent of benefits payable at that time.

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The Impact of Inflation on Social Security Income

Aug 30, 2021

This fall, the U.S. Social Security Administration is likely to announce that benefits will be increased by around 6 percent beginning January 1, 2022. This cost-of-living-adjustment (COLA), which would be the largest in 40 years, is an important reminder that keeping pace with inflation is one of the attributes that makes Social Security benefits such a unique source of retirement income.

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Social Security reports nearly 400,000 more beneficiary deaths in 2020 than 2019

Aug 24, 2021

Last week, for the first time, the Social Security Administration (SSA) released information on the number of beneficiaries who died in 2020, the year the COVID-19 pandemic began. There were nearly 400,000 more beneficiary deaths in 2020 than the agency tabulated for 2019, representing a 17 percent year-over-year increase.

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“Guaranteed Income For Life” More Appealing Than an “Annuity”

Aug 16, 2021

Most people contemplating retirement want guaranteed income for life. Those who want more guaranteed income than Social Security provides can get it by purchasing an annuity—that is, an insurance-backed product that promises guaranteed income for life. The word “annuity” means “a sum of money payable yearly or at other regular intervals.”

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Waiting for the OASDI Trustees’ Report

Aug 9, 2021

The annual Social Security Administration trustees report for this year has yet to be released with post-Covid-19 estimates.

But because the economy is growing, including middle- and upper-income payrolls that comprise most of the trust funds’ revenues, the pandemic’s impact could be small, according to Shai Akabas, director of economic policy at the Bipartisan Policy Center.

“The bottom line is that we don’t think the picture has changed a whole lot,” Akabas said. “It’s still the dire picture that we had a year or two years or three years ago.”

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As More Women Opt Out Of The Workforce, Caregiver Credits Could Help

Aug 2, 2021

Covid-19 prompted many women to leave the workforce.

That’s because many women were forced to choose between working and taking care of their children and families amid a pandemic often opted for the latter.

The difference in earnings and career prospects can be seen immediately. And it could also have implications for women’s retirement security.

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Kotlikoff: SSA Tricking People into Making Poor Claiming Decisions?

Jul 26, 2021

The Social Security Administration is misleading and mistreating Americans by “running scams” and “tricking them” into making claiming choices that cheat them out of benefits to which they’re entitled, argues Laurence Kotlikoff, Boston University economics professor, in an interview with ThinkAdvisor.

One such injustice he calls “a terrible hoax [that] may be the worst public policy this country has ever run.”

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Most Americans in Dire Need of Social Security Education

Jul 19, 2021

Most Americans don’t have as much knowledge of the basic functions of Social Security as they thought, according to a study from Nationwide Retirement Institute.

Around 54% of the adults surveyed by Nationwide—who are not receiving Social Security benefits—claim they know exactly how to optimize their Social Security benefit, but only 6% actually know all the factors that determine the maximum benefit someone can receive, the study reveals… Around 68% of the respondents said it is now more important than ever to optimize their Social Security—a sense especially prevalent among Gen Xers (80%) and millennials (71%).

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Biden Fires Social Security Commissioner

Jul 12, 2021

President Joe Biden on Friday fired Social Security Commissioner Andrew Saul after he refused to submit his resignation as the President had requested, a White House official told CNN.

Biden had asked for the top two officials at the Social Security Administration to submit their resignations, the White House official told CNN, but only Saul refused. Deputy Commissioner David Black agreed to submit his resignation, the official said, and it was accepted.

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‘Know Your Social Security Act’ Introduced in Congress

Jul 6, 2021

Congress enacted requirements in 1989 and 1990 for Social Security statements to be sent annually, but it’s fallen short. Now four Beltway politicians are doing something about it.

Proving retirement planning issues are rarely partisan, the Know Your Social Security Act was introduced on June 24 by Senators Bill Cassidy, R-La., and Ron Wyden, D-Ore., and House Ways and Means Committee Members John Larson, D-Conn., and Vern Buchanan, R-Fla.

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Survey: Only 10% of non-retirees plan to claim at 70

Jun 28, 2021

Getting the largest possible Social Security check doesn’t appear to be incentive enough for 90% of non-retirees 45 and older to wait until age 70 to claim them, according to a new study from Schroders Investment Management. Indeed, 30% plan to begin taking benefits between age 62 and 65, before full retirement age. Fourteen percent plan on taking benefits between 66 and 69, while nearly half (46%) aren’t sure when they will claim.

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Workers Overestimate their Social Security

Jun 21, 2021

The U.S. Social Security Administration reported a few years ago that half of retirees get at least half of their income from their monthly checks. For lower-income retirees, the benefits constitute almost all of their income.

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One-third of Americans plan to retire later due to Covid-19

Jun 14, 2021

It’s no secret that Covid-19 has upended people financially at all stages of life.

Now, one new report shows just how the pandemic has changed the way people think about retirement.

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File a Social Security Claim to Protect Your Rights

Jun 7, 2021

I frequently hear from readers who tell me that they contacted the Social Security Administration with the intention of filing for Social Security benefits of one kind or another and then were either told they were not eligible for any benefits or were just otherwise talked out of filing.

Of course, sometimes that is good advice. For example, if you are 62 years old and still working full time and making $75,000 per year, and you call the SSA to file for retirement benefits, the rep would be correct in telling you that you simply are not eligible for benefits until you retire or reach your full retirement age, whichever comes first.

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No-Benefit Jobs Better than Retiring Early

Jun 1, 2021

Many workers in their 60s lose some of their stamina. Either their bodies start showing signs of wear, or they don’t tolerate on-the-job stress like they used to.

People who find themselves in this situation but can’t afford to retire will appreciate the findings in a recent study: older workers who transition to a new job—and perhaps a less demanding one—have greatly improved their retirement finances, even if the new job lacks health and retirement benefits.

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Why Delayed Social Security Claiming Is More Valuable Than Ever

May 24, 2021

For most clients of financial advisors, the delayed claiming benefit isn’t actuarially fair. It is a gift. Higher income Americans have made significant improvements in longevity over recent decades. For example, a Brookings study finds that men in the top 10th percentile of income gained six years in longevity in just 20 years. Average Americans have a 1 in 5 chance of living to the age of 95, while among highest-income healthy Americans the probably is about 1 in 2.

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