Poor Advice About Social Security
When to start taking Social Security benefits is a difficult decision that has a significant impact on retirees. Yet, a new working paper finds that individuals who turn to financial advisers for help are often misguided.
Social Security benefits can be claimed as early as age 62. Each year an individual delays filing a claim—up to age 70—the monthly benefit increases. This delay can result in a large lifetime increase in income for retirees who live into their 80s or longer. For a couple, the delay not only increases the working spouse’s benefit, but it also increases the survival benefit should the non-working spouse (typically the wife) live longer. For women who stayed at home while their husbands worked, this is an important point.
Given the opportunity for additional lifetime income, it would seem that most advisers would be in a position to properly guide their clients on how to maximize Social Security benefits. Yet, a survey conducted for the working paper found that only 44% of advisers believed they were “very knowledgeable about how retirement benefits rise with age.” This was despite the fact that more than three-quarters of advisers said they discuss Social Security with their clients.
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