Choosing the age at which you start collecting social security retirement benefits and the type of benefits you claim is not difficult. But boy, yes!
“There are 2,728 in the Social Security Handbook,” said Lawrence Kotlikoff, a professor of economics and social security expert at Boston University, in my new “Social Security Handbook.”Friends talk moneyA podcast episode. “And there are literally hundreds of thousands of rules about Those 2,728 rules. I think this is the most complex system humanity has ever developed. “
That’s why I’m not so surprised by the results of these findings from recent national insurance surveys. 6% of Americans They said they knew all the factors that determine the maximum social security benefits Someone can receive it, and only 39% know the age at which they are eligible to receive what is known as a full retirement benefit. (Recently, that age is between 66 and 67, depending on when you were born.)
In another social security survey by global investment manager Schroders, 70% of American workers They said they wish they had more knowledge about social security.
Confusion and mistakes claiming social security
And a 2019 study by two USC researchers said, “Most individuals are facing. Significant uncertainty About the amount of social security retirement benefits they receive after retirement, and about their tendency to overestimate these amounts. “
Kotrikov believes that at least half of those who claim social security benefits “make big mistakes,” if not 70%.
Fortunately, there are a variety of ways to help you make smart social security claim decisions, from websites, apps and software to hired social security professionals. My “Friends Talk Money” co-sponsored Terry Savage and Pam Krueger and shared information about them in a new episode. The highlights after that are as follows.
“The name of the game is to leave no money on the table,” said Krueger, host of MoneyTrack on public television and founder of the Wealthramp service, which scrutinizes financial advisors.
The guidance is especially applicable to couples and divorced people who often make the most complex assertive decisions.
Basic math about social security benefits
But first, it helps you understand the basic calculations for social security benefits.
You can usually start billing at the age of 62. However, the benefit amount will be reduced each year you claim before the full retirement age. Also, delaying claims from full retirement to age 70 each year will increase your social security benefits by 8%.
“Don’t get social security benefits early,” and if you could avoid it, Savage urged you not to see your benefits diminished.
But when it comes to social security, things are by no means simple.
The magnitude of your profits depends, among other things, on how much you earn each year. How many years have you worked? Whether you are single, married, divorced, or widowed, and if you are married, your spouse’s employment history and social security claim date.
Kotrikov says there are 11 different social security benefits. That complexity is why it costs money to get help making social security claim decisions.
In addition, you may need to consider social security penalties for earning employment income when collecting benefits before retirement. It’s known as a revenue test.
How Social Security Revenue Tests Can Hurt You
“If you get social security early, social security will withhold $ 1 for every $ 2 you earn over $ 18,960 this year,” Savage explained. “If you wait until you reach full retirement and you’re still working, the test is a bit more generous. For every $ 3 you earn over $ 50,520, you’ll confiscate a $ 1 benefit.”
The first place to start to claim information is Social security website.. So, the free “My social securityYou can use your account to view your social security earnings history and estimated profit forecasts.
However, the Social Security Administration site has major restrictions for couples. You cannot see the amount of social security benefits for two people together.
You can also get billing information from your social security staff by phone (via your nearest office or country toll-free number 800-772-1213). Due to COVID-19 restrictions, the social security field office remains largely closed.
However, Kotrikov cautions about the information it receives from social security employees.
“In my experience [Social Security staffers] In half the time, you’ll get the wrong or misleading answer, “he said. “These people are low-paying and well-meaning, but overworked and under-trained.”
Look at calculators, apps and advisors
You can use a free online calculator (from financial services companies, federal government, etc.) to get stadium figures for social security benefits at different ages Consumer Financial Protection Bureau And AARP) Or by payment of social security claim strategy software.Kotorikov’s Maximize my social securityFor example, it costs $ 40 a year. Social Security Solution ” SSAnalyzer The software runs for $ 300 a year.
If you have a financial adviser, that professional may be able to help. But don’t count on it.
According to a national insurance survey, about half of the people who work with financial advisers do not provide advice on how and when to apply for social security benefits.
“I think the average advisor knows the minimum you need to know to assist a client,” Kruger said. “And it goes beyond their heads … Frankly, if you’re planning a retirement and your adviser can’t help you get into the weeds that model the” if “scenario. I feel [about Social Security], I will find another adviser. “
To choose between, it is advisable to look for a financial professional with a special social security course and certification. Currently, three national groups offer such training.
Over 200 advisors passed the exam from National Registered Social Security Analysts Association, Or NARSSA, and about 2,300 people are enrolled in the course.
“The closest thing to my heart is that I can help others in my age group make this. [Social Security claiming] NARSSA co-founder Martha Shedden, in her 60s, said “Friends Talk Money.”
According to Sheden, NARSSA advisors typically charge about $ 400 to $ 600 for advice, based on Kotrikov’s software calculations.
The· National Social Security Association (NSSA) — Not affiliated with the Social Security Administration — There is also a certification program for advisors. According to NSSA co-founder Marc Kiner, about 2,500 people have certificates.
Social security rules are complex, but Kinner said learning them is like learning a foreign language. “Yes, it takes time to learn a foreign language, but if you work with it, you can learn it,” he said.
An NSSA adviser decides how much to charge the client, but Kiner said his fee was $ 545.
The third group is Companies for Social Security Claim Strategy Or CSSCS. It is also certified.
When it comes to claiming, “context is important”
According to Kinner, he asks a lot of questions before hiring an advisor to help him apply for social security. “What is their pricing? If they aren’t charging you anything, they want your property,” he said. If they charge a large amount of money, they are likely to be independent and objective.
A final tip from Kluger: As part of your overall financial situation, look at social security benefits that assert your decisions as a whole.
“There are specific investment strategies for people who really work in your particular situation to make a profit,” Kruger said. “Context is important.”
Kotrikov said the average social security benefit is just over $ 1,500 a month, and making the right choices about when and how to claim social security “can make a difference between a decent retirement and a terrible retirement.” Stated.
Richard Eisenberg Senior Web Editor for Money & Security and Work & Purpose Channels at Next Avenue and Managing Editor for the site. He is the author of “How to Avoid the Middle-aged Financial Crisis” and is a personal finance editor at Money, Yahoo, Good Housekeeping, and CBS Moneywatch.
This article has been reprinted with permission from NextAvenue.org, © 2021 Twin Cities Public Television, Inc. all rights reserved.
Other works at Next Avenue:
How to Get Good Help When Claiming Social Security — When and How to Claim Can Make the Difference Between a Decent Retirement and a Bad Retirement
http://www.marketwatch.com/news/story.asp?guid=%7B20C05575-04D4-B545-7510-9427FAAA23BB%7D&siteid=rss&rss=1 How to Get Good Help When Claiming Social Security — When and How to Claim Can Make the Difference Between a Decent Retirement and a Bad Retirement