Fidelity reports that only 28 percent of
surveyed 61-year-olds plan to start claiming benefits at 62, compared to nearly 50% in 2008. On the surface, this is good news: delayed claiming is
generally the better bet, especially in the case of high-earning workers expected to predecease their spouses.
However, Fidelity’s other findings indicate widespread confusion on the Social Security topic among the pre-retiree demographic. Some examples:
38% of surveyed pre-retirees erroneously believe Social Security’s actuarial reduction for early claiming
to be a temporary penalty. In fact, the reduction is permanent unless you go back to work and have your checks withheld by the
earnings test (if under full retirement age) or voluntarily suspend your benefits, removing the actuarial reduction for every month your benefit is in suspension (if full retirement age or older.)
Only 26% of surveyed pre-retirees know their own full retirement age. As one’s
full retirement age is the starting point for the Social Security claiming decision, this is a fairly serious information gap.
50% of respondents believe their benefits will be reduced if their ex-spouse files a Social Security claim
based on their record. This is untrue.
Fidelity cites a general improvement in the economy as a possible reason for the decreasing popularity of the early claiming decision. With fewer pre-retirees in urgent financial need, they argue,
there’s less incentive to claim early.