This week, the federal government put every worker’s Social Security statement online. But while most people look at their statements, research shows that more than one in three misses this major point: the longer one waits to file, the larger the monthly retirement check will be.
We’re talking big numbers: someone eligible to receive $1,000 a month at the popular retirement age of 62 can get $1,333 by waiting until 66 and $1,760 by waiting until 70. Of course, one’s health, financial resources, and life events may make filing later difficult or impossible. But getting the information is critical to making a smart decision, which plays a major role in one’s financial well-being in retirement.
The Social Security Administration (SSA) put the statements online after creating a minor news flap last year when it stopped sending them via snail mail to workers. In February, SSA resumed the mailings to Americans age 60 and older. (Full disclosure: SSA funds this blog through the Center for Retirement Research at Boston College.)
Back to the point: The statements are now easily available on ssa.gov to individuals willing to provide some personal data – the site verifies the personal data they enter online against information held by the credit scoring company, Experian.
Here are a few other things about Social Security that might surprise you. According to various research papers that seek to understand how Americans view their benefits: …Learn More
New research shows that the share of Americans who sign up to receive their Social Security pensions at age 62 has declined sharply over the past decade.
This trend is expected to continue despite a temporary spike in applications by 62-year-olds during the Great Recession, said Richard Johnson, a senior fellow who conducted this research at the Urban Institute, a Washington think tank. This is a major shift in retirement behavior, and it reflects sweeping cultural changes that range from more flexible employment options for older workers to the baby boomer health and fitness craze.
“Over the past 10 years, we saw the share of people claiming at 62 fall about 10 percent for men and 8 percent for women,” he said. “That’s a pretty big decline in 10 years’ time.”
Sixty-two year olds still constitute the largest single group of new applicants every year, regardless of age. That’s why the significant decline in their application rate is notable. Those who sign up for their Social Security checks when they first become eligible – within days or weeks of their 62nd birthday – are known as “early claimers.” People with physically demanding jobs are more likely to do so, because of health problems or unpleasant and exhausting work. …Learn More
We know that not enough Americans save for retirement. Behavioral finance professor Shlomo Benartzi devised a way to fix it – quite awhile ago, in fact.
To ease the pain of saving money, Benartzi and economist Richard Thaler designed a now-famous program in which employees can commit to increase their 401(k)s savings when they get a raise.
Saving is painful because it requires sacrifice, but committing to save money that one doesn’t yet have synchs with human psychology. In 1998, Benartzi and Thaler tested their theory on blue-collar workers in a Midwestern manufacturing plant, and it worked.
The key to saving, Benartzi said, is “embarrassingly simple but extremely powerful.”
The finding was nothing short of ginormous, though employer adoption has been modest. David Wray, president of the Plan Sponsor Council of America, estimated that about 10 percent of U.S. employees with 401(k) plans at work have automatic savings increases, typically at raise time. It’s much more common among mega-employers, he said.
If you’ve heard about behavioral economics but haven’t had time to learn what it’s really about, this 15-minute TED video in which Benartzi explains is an excellent start.
Squared Away readers responded strongly to a recent post, “For Elderly, Little Left as Life Ends.” New research showed that half of the elderly living alone and one-third of couples have less than $10,000 left in savings in the years before they leave this world.
A comment that came in from Susan Weiner, a Boston-area chartered financial analyst, said, “This study is disturbing no matter how you read it.”
John Graves added a skeptical note: “As always, it all depends on how you read the statistics. I read this as, ‘nearly 50 percent had more than $50,000 in assets when they died.’ ”
Do you read the glass as half empty or half full? What are the difficulties of making your savings last through all the phases of retirement? To read more comments, click here. Better yet, keep the conversation going by commenting below or on our Facebook page!
In the second of two videos, retirees from the Savin Hill Apartments in Boston’s Dorchester neighborhood spoke honestly about the decisions they made during their working lives that have affected their financial security in retirement. The residents come from all walks of life and from home towns ranging from Dabrowa Tarnowska, Poland, and Thomasville, Alabama, to around the corner in East Boston.
Before retiring, James Gomes said he often wasted his regular paychecks from General Electric. Arlene Starr wishes she’d saved – like her sister did. And immigrant Trung Quang Pham’s low income made it tough to set money aside.
They are residents of the Savin Hill Apartments in Boston, most of whom are “pretty much on fixed incomes,” said apartment manager Sandra Baker of CMJ Management Co.
They are not alone either. Millions of retirees rely on Social Security’s fixed monthly pensions, which average $1,181. The federal pension program provides the vast majority of retirement income for nearly one in four retired couples and nearly half of the elderly living alone. And new research for the first time determined that a large swath of the elderly leave this world with little or no assets left in savings and personal retirement accounts.
In the first of two videos, retirees in the Savin Hill Apartments generously agreed to discuss the issues they face for Squared Away. The second video – about their financial decisions and regrets over a lifetime – appears Thursday. …Learn More
About half of the elderly living alone and one-third of elderly couples have less than $10,000 left in their savings and investment accounts just before they leave this world.
These grim statistics may be a more accurate gauge of retirement survival than the balances Americans have accumulated as they enter retirement, a pursuit that pre-retirees and the financial-services industry tend to focus on.
To determine where retirees wind up financially, economists James Poterba at the Massachusetts Institute of Technology, Steven Venti at Dartmouth College, and David Wise at Harvard University crunched a mass of data. Tracking a nationally representative sample of middle-aged and older Americans, they tabulated the financial assets held by elderly couples and the elderly living alone as they approached retirement, retired and aged, and when they were last observed in the sample.
“What we take away from this is that a significant number of households have a very small cushion if they encounter any kind of financial need,” Poterba said in a telephone interview last week, referring to a new working paper, “Were They Prepared for Retirement? Financial Status at Advanced Ages in the HRS and AHEAD Cohorts.”
The following is a small slice of what the researchers found in the last years before the elderly died…Learn More