{"id":331691,"date":"2021-08-28T20:32:00","date_gmt":"2021-08-28T17:32:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/robert-powells-retirement-portfolio-how-to-claim-social-security-at-the-right-time\/"},"modified":"2021-08-28T20:32:00","modified_gmt":"2021-08-28T17:32:00","slug":"robert-powells-retirement-portfolio-how-to-claim-social-security-at-the-right-time","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/robert-powells-retirement-portfolio-how-to-claim-social-security-at-the-right-time\/","title":{"rendered":"#Robert Powell&#039;s Retirement Portfolio: How to claim Social Security at the right time"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a40b41322a5d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a40b41322a5d\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/robert-powells-retirement-portfolio-how-to-claim-social-security-at-the-right-time\/#Some_people_who_take_Social_Security_early_are_misinformed_and_impatient\" >Some people who take Social Security early are misinformed and impatient<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/robert-powells-retirement-portfolio-how-to-claim-social-security-at-the-right-time\/#Robert_Powell\" >Robert Powell<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#Robert Powell&#039;s Retirement Portfolio: How to claim <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Social<\/a> Security at the right time<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"Some_people_who_take_Social_Security_early_are_misinformed_and_impatient\"><\/span>\n  Some people who take Social Security early are misinformed and impatient<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div id=\"cx-next\" data-nosnippet>\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000387650\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div data-layout=\"\n                inline\" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetArticleReader\n              \n              inline\n  article__inset\n          article__inset--type-InsetArticleReader\n              article__inset--inline\n  \"><\/p>\n<div class=\"media-object-article-reader\">\n<div class=\"audioplayer\" data-sbid=\"WP-MKTW-0000387650\" role=\"region\" aria-label=\"Listen to Article\" tabindex=\"-1\" id=\"articlereader\" data-show-title=\"false\" data-theme=\"wsj-article-reader\" data-show-header=\"false\" data-show-subscribe=\"false\" data-ads-enabled=\"true\" data-save-publication=\"false\">\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       Many people claim Social Security earlier than the age at which they would receive 100% of what they are entitled to receive. In fact, roughly 50% of all working men claim at age 62, and nearly 70% have claimed before full retirement age.<\/p>\n<p> And they do so for several reasons, according to Neha Bairoliya, an assistant professor at the University of Southern California and co-author of a recent<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/ssrn.com\/abstract=3896031\" class=\"icon none\"> paper<\/a> that examined Social Security claiming decisions.<\/p>\n<div class=\"paywall\">\n       Read: Your retirement is years away. Can you count on Social Security?<\/p>\n<p>What are those reasons and what can those entitled to Social Security do to claim their benefits at a more optimal age? There are some legitimate reasons why someone might claim early. Some people might be unemployed and unable to find work again. Some might be in bad health. And still others might just want to kick back and enjoy their grandchildren.<\/p>\n<p>But often, those who claim early are simply misinformed and impatient.<\/p>\n<p>Read: Why I won\u2019t wait to take Social Security<\/p>\n<p><strong>There\u2019s a penalty?<\/strong><\/p>\n<p>Age matters when claiming Social Security benefits. But many \u2014 according to Bairoliya and her coauthor\u2019s research \u2014 don\u2019t know that claiming before one\u2019s full retirement age (the age at which someone is entitled to 100% of their benefit) results in a permanently reduced benefit. And for those whom it <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>lies, early claimants receive a permanently reduced spousal benefit.<\/p>\n<p>In fact, Bairoliya and her co-author estimated that 22% of noncollege educated workers and 9% of college graduates believe there is no penalty for claiming Social Security benefits early. \u201cThey think that claiming at age 62 is the same as claiming at age 65,\u201d she said.<\/p>\n<p>But there is a penalty, and it can be severe. According to Social Security, a benefit is reduced 5\/9 of 1% for each month before full retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5\/12 of 1% per month.<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>And worst case, those who claim Social Security early at age 62 may find their benefit reduced by as much as 30%. \u201cThat\u2019s a very big penalty,\u201d said Bairoliya. \u201cAnd if you look at the life expectancy in retirement and how long Americans expect to live\u2026and you do a present value calculation based on your life expectancy, it does not make sense to apply a 62 and take this (30%) penalty.\u201d<\/p>\n<p>Rather, in terms of maximizing the present value of your Social Security benefits, it makes sense to delay claiming to age 70.\u00a0<\/p>\n<p>According to Social Security, starting to receive benefits after full retirement age may result in larger benefits. And because of something called delayed retirement credits, a person can receive his or her largest benefit by claiming at age 70. \u201cWhat we find is that for most individuals it makes sense to delay claiming Social Security to at least their (full) retirement age,\u201d said Bairoliya. \u201cThat\u2019s what common sense tells us.\u201d<\/p>\n<p>Read: Social Security could be insolvent \u2018within 8 years,\u2019 economist warns<\/p>\n<p><strong>Over and underestimating chances of survival<\/strong><\/p>\n<p>Another reason why some individuals are claiming early? Individuals aren\u2019t correctly estimating their longevity, which can vary greatly by marital status, education and income. \u201cAll those things go a long way in determining when and how soon you\u2019re going to die,\u201d she said.<\/p>\n<p>In fact, Bairoliya and her co-author also discovered that college-educated workers are more likely to underestimate their chances of survival at older ages while those without a college degree overestimate their longevity. And given that, many are claiming Social Security at less-than-optimal ages. \u201cWe find that some individuals are pessimistic about their mortality, their survival chances,\u201d said Bairoliya. \u201cBut there is no reason for college graduates to be pessimistic about their mortality.\u201d<\/p>\n<p>A recent <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.pnas.org\/content\/118\/11\/e2024777118\" class=\"icon none\">study<\/a>, for instance, examined how many years a given 25-year-old could expect to live up until the age of 75. And what the researchers found was this: In 2018, American adults with a bachelor\u2019s degree could expect to live 48.2 years out of a possible 50, while those without a college degree could expect to live 45.1 years.<\/p>\n<p>Read: I\u2019m 62, live in Missouri but work in Florida and have $1.8 million \u2014 \u2018have I positioned myself well?\u2019<\/p>\n<p><strong>How to counter the misinformation<\/strong><\/p>\n<p>To be fair, this trend of people not claiming Social Security at optimal ages has been going on for a long time, long before COVID-19, according to Jason Fichtner, vice president and chief economist of the Bipartisan Policy Center. \u201cNow, with millions of older Americans out of work, many might think about claiming earlier, providing them access to cash now but jeopardizing their retirement security down the road,\u201d he said. \u201cFaced with this high-stakes decision of when to claim benefits, it is more important than ever that people understand the consequences of their claiming age on their financial security.\u201d<\/p>\n<p>How might one do that?<\/p>\n<p>1. By computing the effects of claiming early or after full retirement age at this Social Security <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ssa.gov\/oact\/quickcalc\/early_late.html\" class=\"icon none\">website<\/a>.\u00a0<\/p>\n<p>Joe Elsasser, a certified financial planner with Covisum, suggested looking not just at the monthly reduction in benefits but the reduction in the lifetime value of the benefits. \u201cThe monthly presentation doesn\u2019t \u2018feel\u2019 as significant as the total when it is projected over a lifetime,\u201d he said.<\/p>\n<p>Fichtner also said calculating the adverse effect of claiming early is especially important for those without a college degree as well as those with lower lifetime earnings and retirement savings. \u201cThey would greatly benefit from delayed claiming and receiving a higher monthly Social Security payment that lasts the rest of their lives,\u201d he said.<\/p>\n<p>For the record, the average age at which individuals are claiming Social Security is rising. In 2020, it was 65 for men, up from 64.1 in 2000, according to <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ssa.gov\/policy\/docs\/statcomps\/supplement\/2021\/6b.html\" class=\"icon none\">Social Security<\/a>. But the data also show that nearly one in four men (23.5%) claimed Social Security early in 2020.<\/p>\n<p>2. By reading Social Security Administration\u2019s new brochure,<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ssa.gov\/pubs\/EN-05-10147.pdf\" class=\"icon none\"> When to Start Receiving Retirement Benefits<\/a>, which provides valuable information to help people think through when the best time is to claim. \u201cJust getting this two-page information document in front of people could have a major impact on when people claim Social Security retirement benefits \u2014 a decision that has major financial implications for the retirement security of millions of Americans,\u201d said Fichtner.<\/p>\n<p>3. Social Security could perhaps do a better job of showing would-be beneficiaries how life expectancy varies by gender, marital status, and the like. \u201cIf Social Security could show what an average person in this particular category expects to live, maybe this would help people inform themselves about their own mortality as well,\u201d Bairoliya said.<\/p>\n<p>4. Experts recommend not using<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ssa.gov\/OACT\/population\/longevity.html\" class=\"icon none\"> Social Security\u2019s life expectancy calculator<\/a>, which shows the average number of additional years a person can expect to live, based only on the gender and date of birth. In other words, it\u2019s the standard life table. At present, men in the U.S. aged 65 can expect to live 18 more years on average while women aged 65 years can expect to live around 20.7 more years on average, according to Statista.\u00a0\u00a0<\/p>\n<p>Instead, use a calculator that considers a wide number of factors that could increase or decrease life expectancy, such as current health, lifestyle, and family history. Examples include Some of the best life expectancy calculators include:<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.livingto100.com\/\" class=\"icon none\"> Livingto100<\/a>;<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.blueprintincome.com\/tools\/life-expectancy-calculator-how-long-will-i-live\/\" class=\"icon none\"> Blueprint Income<\/a>;<a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/media.nmfn.com\/tnetwork\/lifespan\/#0\" class=\"icon none\"> LifeSpan Calculator from Northwestern Mutual<\/a>; and<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.johnhancockinsurance.com\/life-expectancy-calculator.html\" class=\"icon none\"> John Hancock Life Expectancy Calculator<\/a>.<\/p>\n<p>5. Whatever you do, don\u2019t use a break-even calculator. \u201cIt is a common place to start when making the claiming age decision to think of the decision in terms of the \u2018break-even,\u2019\u201d said Heather Schreiber, founder of HLS Retirement Consulting. \u201cIn other words, \u2018how long do I have to live to make waiting and foregoing monthly payments now a better choice than starting earlier, albeit at a reduced rate?\u201d<\/p>\n<p>The challenge with using break-even as a guidepost exclusively, particularly in the case of married couples, is that the combined life expectancy of the couple is sometimes not considered because it may be harder to conceptualize, said Schreiber.<\/p>\n<p>Instead, using a tool like the one found on <a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/www.longevityillustrator.org\/\" class=\"icon none\">www.longevityillustrator.org<\/a> can show the likelihood of a couple of various ages and health histories, living to advanced ages. \u201cThe reality is that people tend to underestimate how long they will live and, in so doing, how long they will spend in retirement,\u201d she said.<\/p>\n<p>6. Think household. Schreiber also noted the importance of making the Social Security claiming decision a household decision. \u201cSocial Security, for most, is the foundation of a solid retirement income plan,\u201d she said. \u201cMaking the wrong choice can be disastrous to the longevity of both income and the other assets earmarked for retirement.<\/p>\n<p>This becomes particularly crucial when working with couples in which there is a marked disparity in income benefits.\u00a0<\/p>\n<p>\u201cThe claiming age choice of the higher earner will have lasting effects on the surviving spouse and couples often don\u2019t understand the complexities of Social Security enough to consider the effect of an early\/reduced claim on survivor income,\u201d she said. \u201cEven if the higher wage earner has compromised health, it may still make sense to consider waiting until at least full retirement age to file, even to age 70 if possible, and instead, consider having the lower wage earner file earlier to supplement retirement income.\u201d<\/p>\n<p>This strategy, Schreiber said, would provide for a modest Social Security income benefit while preserving the higher wage earner\u2019s monthly income for the survivor.<\/p>\n<p><strong>One-size does not fit all<\/strong><\/p>\n<p>Not everyone is not the same and people have different financial challenges, health, and retirement goals, as well as different marital status, education, and income.<\/p>\n<p>\u00a0\u201cSome people may benefit from early claiming, such as those in poor health, while others would benefit financially for delaying claiming until age 67 or as late as age 70, especially those who have longer life expectancy,\u201d said Fichtner.<\/p>\n<p>Bairoliya is in complete agreement; \u201cThere would still be a small fraction of people for whom it would make sense to claim before their normal retirement age, not 62 though,\u201d she said. \u201cIt does not make sense.\u201d<\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>    <span>By<\/span><\/p>\n<div class=\"author mobile-scrim hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Robert Powell\",\"subhead\":\"The Wall Street Journal\",\"list\":[{\"type\":\"link\",\"icon\":\"bio\",\"url\":\"https:\/\/www.marketwatch.com\/topics\/journalists\/robert-powell\",\"text\":\"Biography\"},{\"type\":\"link\",\"icon\":\"twitter\",\"url\":\"https:\/\/twitter.com\/RJPIII\",\"text\":\"@RJPIII\"},{\"type\":\"link\",\"icon\":\"facebook\",\"url\":\"https:\/\/facebook.com\/pages\/Robert-Powell-Editor-Retirement-Weekly\/102847546436122\",\"text\":\"pages\/Robert-Powell-Editor-Retirement-Weekly\/102847546436122\"},{\"type\":\"link\",\"icon\":\"email\",\"url\":\"http:\/\/www.marketwatch.com\/news\/mailto:rjpiii@comcast.net\",\"text\":\"rjpiii@comcast.net\"}]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Robert_Powell\"><\/span>Robert Powell<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. 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In fact, roughly 50% of all working men claim&#8230;<\/p>\n","protected":false},"author":1,"featured_media":331692,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-331691","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/331691","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=331691"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/331691\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/331692"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=331691"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=331691"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=331691"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}