I came across this MassMutual consumer poll, which revealed that 33% of those over 50 failed. Claiming Social Security is a decision not to be taken lightly and one that you just don’t want to wing! Sure, there are online calculators that will tell you when to claim based on the amount of benefit and your age, but when clients ask me when to claim I tell the standard “It all depends…”
The answer for John and Mary isn’t necessarily the same answer for Joe and Martha. Do you have other sources of “guaranteed” income such as a pension? Are you retiring early? Will you be working in retirement receiving income from a board position, a hobby type income, or a side gig? How is your health? How long did your parents live? What does your overall portfolio composition look like in terms of taxable assets (you will only owe capital gains when liquidated), retirement assets (IRAs are taxed as ordinary income, but Roth IRAs are not taxed at all)? We need to look at Social Security income as a component of your overall cash flow in retirement rather than in isolation.
See how you fare compared to the other poll respondents (answers at the end of article):
1. If I take benefits before my full retirement age, they will be reduced for early filing.
2. If I am receiving benefits before my full retirement age and continue to work, my benefits might be reduced based on how much I make.
3. Once I start collecting Social Security, my benefits will never change.
4. If I have a spouse, he or she can receive benefits from my record even if he or she has no individual earnings history.
5. If I have a spouse and he or she passes away, I will receive both my full benefit and my deceased spouse’s full benefit.
6. The money that comes out of my paycheck for Social Security goes into a specific account for me and remains there, earning interest, until I begin to receive Social Security benefits.
7. Under current Social Security law, full retirement age is 65 no matter when you were born.
8. As a divorced person, I might be able to collect Social Security benefits based on my ex-spouse’s earnings history.
9. Under current law, Social Security benefits could be reduced for everyone in 2035.
10. If I file for retirement benefits and have dependent children age 18 or younger, they also may qualify for Social Security benefits.
11. If I delay taking Social Security benefits past the age of 70, I will continue to get delayed retirement credit increases each year I wait.
12. I must be a U.S. citizen to collect Social Security retirement benefits.
How did you do?
Answers: 1.T, 2.T, 3.F, 4.T, 5.F, 6.F, 7.F, 8.T, 9.T, 10.T, 11.F, 12.F