Read That Social Security Statement!

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 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:

  • Social Security is the most important source of retirement funds for about two-thirds of U.S. workers.
  • One out of every four Americans over-estimates his or her benefits; another one in four under-estimates them.
  • These misperceptions can play a major role in retirement decisions – to the detriment of retirees who had overestimated their benefit checks.
  • A central tenet of Social Security is that it’s set up to help low-income and working people: their benefits, relative to their lifetime earnings, are higher than they are for highly paid professionals.
  • Working a few more years – or leaving the workforce but delaying claiming your benefit (if that’s financially possible) – also may be enough time to help repair a tattered savings account.

To learn more about Social Security benefits, read the Center for Retirement Research’s “Claiming Guide.”

One Response to Read That Social Security Statement!

  1. Jerry E. Stephens says:

    Shouldn’t you include one additional item when identifying monthly Social Security benefits available at different retirement ages? That item is the amount actually paid out to one person over an actuarially defined lifespan. The person taking benefits at age 62 certainly will receive a smaller monthly benefit payment. But that cash benefit will total the same amount of money whether the person elects to begin cash benefits at age 62 or waits until age 70. Cost of living increases, if provided, will affect the actual monthly benefit. But that would amount to a relatively small difference in the lifetime benefit paid to the two individuals. Isn’t that a bit of information that the well-informed Social Security recipient should understand?