How to Help Americans Claim Social Security at the Right Age

Sep 22, 2020 /

Social Security is the foundation of retirement security in America. Among households headed by someone aged 65 or over, more than half rely on Social Security benefits for a majority of total income, while 19% depend on Social Security for at least 90% of income. One of the key financial decisions facing older Americans is when to claim Social Security retirement benefits. While these benefits are available as early as age 62, claiming later permanently raises monthly benefits, with the maximum benefits available to those who claim at age 70. Delaying claiming is thus equivalent to purchasing a greater inflation-adjusted annuity that will be paid for as long as the beneficiary lives. Most people, however, do not claim Social Security at their optimal age, usually because they claim too early. This brief examines why older Americans typically do not claim Social Security optimally and how public policy can help them make better claiming decisions.

Read more ...

2020 Election: The American Society on Aging Weighs In

Sep 18, 2020 /

What’s in store for older Americans from the 2020 presidential election? For answers, the American Society on Aging (ASA) just hosted its Panel of Pundits —an annual event that’s been running for almost 20 years. The five panelists brought a range of political perspectives and decades of experience in the aging and political worlds. You can find the full article and a link to the replay at Next Avenue.

Read more ...

Reframing Social Security Claiming Decisions

Sep 15, 2020 /

One of the key financial decisions facing older Americans is when to claim Social Security retirement benefits. The timing affects how much they will receive for the rest of their lives. Unfortunately, most people do not claim Social Security at their optimal age but instead claim too early. Financial advisers can play a critical role in reframing how their clients think about their Social Security claiming decisions by referring to the earliest eligibility age of 62 as the “minimum benefit age” or “reduced benefit age” and describing age 70 as the “maximum benefit age,” to focus on benefit size.

Read more ...

Trends in Working and Claiming Behavior at Social Security’s Early Eligibility Age

Sep 11, 2020 /

This paper has observed work behavior at ages 61 and 63 and claiming behavior at Social Security’s Earliest Eligibility Age (EEA) of 62—that is, when workers are first eligible to claim Social Security retired-worker benefits. These observations were limited to workers born from 1937–1944 (aged 61–63 in 1998–2007) and conditional on workers living to age 64, never having been disabled-worker beneficiaries, and being fully insured (eligible) at age 62 to claim retired-worker benefits. For both sexes, this study found that fully insured workers were distributed across multiple working- and claiming-status combinations, rather than being concentrated in one particular working- and claiming-status category.

Read more ...

What Jobs Do Employers Want Older Workers to Do?

Sep 8, 2020 /

Over the past couple of decades, Americans have been seeking to work to older ages. The current COVID-19 recession notwithstanding, a long-term trend toward later retirement has sharply increased the labor force participation rate among older individuals. However, working to older ages requires more than a willingness on the part of workers; it requires employers to hire them on terms that are worthwhile. While employers often say they are open to employing older workers, evidence of discrimination in audit studies suggests reason to worry. One question is: “What jobs do employers really want older workers to do?”

Read more ...

Good News: A COLA Raise Likely After All

Sep 1, 2020 /

Inflation has been on a roller coaster in 2020. First, COVID-19 disruptions cratered prices for gasoline, travel, even car insurance. Summer rebounds in those commodities, as well as increases for in-demand items like used cars, meat and haircuts, have put the consumer price index back on a more normal trajectory, one that will likely mean an increase in the Cost of Living Adjustment (COLA) for 2021. The Kiplinger Letter is now forecasting a 1.2% increase in the 2021 COLA, which should be welcome news to retirees and others who receive Social Security benefits.

Read more ...

Attitudes and Perceptions of Social Security

Aug 28, 2020 /

August 14th marked the 85th anniversary of the signing of the Social Security Act, providing retirement benefits to American workers. It is instrumental in providing a safety net that keeps millions of Americans out of poverty every month and enjoys continued massive public support from Americans of all ages and political parties. To celebrate this anniversary, AARP commissioned a survey of 1,441 Americans ages 18+ to understand their views on Social Security retirement benefits.

Read more ...

Trump vs. Biden: Checking the Facts

Aug 25, 2020 /

Recently President Donald Trump and his Democratic opponent, former Vice President Joe Biden, have accused each other of supporting cuts to Social Security. These claims require context. There’s disagreement as to what extent Trump’s executive action will diminish Social Security funds, and Trump’s claims to pay for his proposed payroll tax cut through economic growth strike many as unrealistic. Meanwhile, Biden has supported spending freezes and cost-of-living adjustment reductions as well as budget protections for Social Security over his long career in the Senate, but his current proposals aim to protect and expand it.

Read more ...

Millions of Older Americans Forced Into Early Retirement

Aug 21, 2020 /

Since March 2020, 2.9 million workers ages 55 to 70 have left the labor force, the New School’s Retirement Equity Lab found in a recent study. And more than half of unemployed American workers over the age of 55 are at risk of being forced into early retirement in the wake of the Covid-19 crisis. Around half a million of the 1.3 million older workers who were already unemployed in March gave up looking for work by June and left the labor force. In addition, close to 4 million older workers lost their employment from March to June, and 2.4 million of them left the labor force entirely.

Read more ...

How Accurate Are Retirees’ Assessment of Risks?

Aug 18, 2020 /

Retirees with limited financial resources face numerous risks, including outliving their money (longevity risk), investment losses (market risk), unexpected health expenses (health risk), the unforeseen needs of family members (family risk), and even retirement benefit cuts (policy risk). This study systematically values and ranks the financial impacts of these risks from both the objective and subjective perspectives and then compares them to show the gaps between retirees’ actual risks and their perceptions of the risks in a unified framework. It finds that 1) under the empirical analysis, the greatest risk is longevity risk, followed by health risk; 2) under the subjective analysis, retirees perceive market risk as the highest-ranking risk due to their exaggeration of market volatility; and 3) the longevity risk and health risk are valued less in the subjective ranking than in the objective ranking, because retirees underestimate their life spans and their health costs in late life.

Read more ...

Millennials Want to Hear About Social Security Too

Aug 14, 2020 /

Social Security planning might be a better conversation starter for younger prospects than for older prospects. Nationwide found evidence for that recently when it commissioned an online survey of 1,727 U.S. consumers ages 24 and older. They found that 32% of the millennials (defined as ages 24-39) without advisors said they plan to ask a financial advisor about Social Security. Only 21% of the Gen Xers without advisors, and 6% of the boomers without advisors, said they’d ask advisors about Social Security claiming.

Read more ...

Happy (Almost) Birthday, Social Security!

Aug 11, 2020 /

This Friday, August 14, is Social Security’s 85th birthday. Social Security Works, a nonprofit organization that promotes the expansion of Social Security, is sponsoring a “tweetstorm” to celebrate the anniversity. They encourage everyone to join the fun by using #SocSec85 and #ExpandSocialSecurity.

Read more ...

Prepare to Retire Earlier Than Planned

Aug 7, 2020 /

The coronavirus pandemic is causing many older workers who’ve lost jobs or been offered early retirement severance packages to decide to pack it in. But taking early retirement can throw a monkey wrench into your future financial security. That’s why it’s vital to be cautious before doing it. “The numbers suggest that while many older workers displaced by COVID-19 job loss are still seeking work, a large number have dropped out of the labor market entirely,” writes Jennifer Schramm, a senior strategic policy adviser at the AARP Public Policy Institute.

Read more ...

Social Security Wait Times Increased In the Past Decade

Aug 4, 2020 /

Millions of Americans are waiting in line longer at Social Security Administration field offices than they were 10 years ago despite fewer people using the agency’s in-person services. According to a July audit by the SSA inspector general, 43 million Americans waited an average 24.8 minutes to see a customer service representative at the agency’s 1,200-plus field offices during fiscal 2019, compared to 45.4 million Americans waiting about 19 minutes on average in 2010. Auditors found 4.2 million Americans waited an hour or longer to meet with a representative in 2019, nearly double the 2.3 million Americans who waited that long in 2010.

Read more ...

Researchers Probe How Men and Women Age Differently

Jul 31, 2020 /

It has long been known that women tend to outlive men, and their longevity streak will likely continue. Life expectancy for women is expected to reach 87.3 years, and 83.9 years for men, by 2060, according to the U.S. Census Bureau. Researchers—including those in the emerging field of geroscience, the study of aging and age-related disease—are trying to piece together why. By examining gender-based distinctions in the immune system, cell structure, brain and other systems, researchers are discovering how and why men and women grow older in clearly different ways.

Read more ...

Covid-19 Pushes Medicare Trust Closer to Insolvency

Jul 28, 2020 /

Government projections show Medicare’s expenditures will continue to outpace revenue growth. This reflects the increasing demand for healthcare services not being fully offset by payroll tax revenues. The most recent projections for the Medicare program show funding for the program to be depleted by 2026. This latest projection, prepared by Board of the Federal Health Insurance Trust, was submitted to Congress on April 22, 2020, utilizing data through calendar year 2019. That was all before Covid-19 hit. Therefore the data used in these Congressional reports was examined prior to the impact of the pandemic. With the recent downturn of the economy, and subsequent job losses, contributions to the Medicare Hospital Trust Fund from payroll taxes will be significantly reduced.

Read more ...

Working Longer Benefits Employers and Employees

Jul 24, 2020

Research on making it easier for people to work longer has tended to focus on economic security. This paper links working longer to health and longevity. Purely age-based retirement policies have led to complications and unintended consequences including insufficient retirement resources, possible depletion of Social Security, and flawed perceptions of older workers. By working longer, older adults are better able to support themselves, remain healthier, and live longer. New data show that, when employed, older adults are as much as four times more socially engaged, offsetting deepening concerns worldwide about the adverse effects of loneliness, particularly on older populations. The very definition of retirement should be reconsidered in light of increasing data suggesting that traditional retirement can be detrimental to financial, mental and physical health.

Read more ...

SSA Still Shortchanging Retirement Beneficiaries With Widow(er)’s Benefits

Jul 21, 2020 /

SSA administers the Old-Age, Survivors and Disability Insurance (OASDI) program to provide monthly benefits to retired and disabled workers, including their dependents and survivors. An individual may be entitled to more than one benefit at the same time. For example, an individual can be dually entitled to retirement benefits based on his/her own earnings and widow(er)’s benefits based on the earnings of his/her deceased spouse. SSA conducted a recent survey with the objective of determining whether there were individuals receiving retirement benefits who may have been eligible for, but not receiving, higher widow(er)’s benefits.

Read more ...

How Widespread Unemployment Might Affect Retirement Security

Jul 17, 2020 /

The National Retirement Risk Index (NRRI) measures the share of working-age households that are at risk of being unable to maintain their pre-retirement standard of living. The NRRI, which is constructed by comparing households’ projected replacement rates—retirement income as a percentage of pre-retirement income—with target rates, has recently shown about half are at risk. A new study shows that the pandemic is likely to have increased the NRRI by 5 percentage points—with a 7-percentage-point increase for older households and a 3-percentage-point increase for younger ones. The pandemic has worsened an already bleak outlook for retirement security.

Read more ...

The Challenge for Older Workers

Jul 14, 2020 /

In anticipation of rambunctious children returning to the classroom in the fall, older teachers are sounding alarms about how challenging it will be to make the schools safe for themselves, as well as the children and families. Their fears about going back to work in a pandemic are shared by older workers around the country with chronic conditions, which increase the mortality rate for people who contract COVID-19.

Read more ...