At today’s hearing, GAO released study commissioned by Chairman Collins and Ranking Member McCaskill recommending improvements to information about timing of retirement decision
Washington, D.C.—In a continuation of their focus on improving retirement security, U.S. Senators Susan Collins (R-Maine) and Claire McCaskill (D-Missouri), the Chairman and Ranking Member, led a hearing today titled, “Maximizing Your Social Security Benefits: What You Need to Know.” The hearing highlighted the importance of individuals choosing the right time to begin receiving Social Security benefits, which can affect seniors’ retirement income by tens of thousands of dollars.
Retirees are entitled to claim benefits as early as age 62, but those who do so will see their annual benefits permanently reduced by nearly one-third compared to what they could have received by waiting until they’re older. In fact, few people realize that their benefits can go up by eight percent annually for each year they delay claiming benefits, up to the age of 70. For example, an average individual earning $42,000 per year and filing at age 62 would receive approximately $1,200 per month from Social Security. If this person is able to keep working until age 70, however, his or her monthly benefit could reach $2,112—an additional $912 per month.
Chairman Collins and Ranking Member McCaskill have expressed concern that many Americans may be unfamiliar with this aspect of the Social Security program, leading them to make a costly mistake. In March 2015, the two Aging Committee leaders requested that the GAO study ways in which the Social Security Administration can improve and clarify the information it provides to eligible individuals to ensure that they have a complete understanding of the factors that will affect their retirement benefits. The GAO unveiled its study for the first time at today’s hearing along with six recommendations on ways the Social Security Administration (SSA) can improve the ways it provides information to seniors. The SSA generally agreed with the GAO’s recommendations.
“The decision on when to claim Social Security benefits is, for many Americans, the most important financial decision that they will ever make. Most Americans don’t realize the enormous implications of choosing one age versus another. That’s why we’re so insistent that there be accurate and complete information,” said Senator Collins. “I believe SSA can do more to clarify these key points, and I look forward to seeing those recommendations implemented.”
“It shouldn’t take a financial professional to impart the basic message we are talking about today,” said Senator McCaskill. “Every person who claims benefits must interact with SSA, so this is our last stop to inform people about the advantages of waiting. We hope SSA will see it is in all of our interests to make sure the public is fully educated on this issue.”
Social Security benefits make up the largest component of retirement income for a majority of American households. Deciding when to begin receiving these benefits is one of the most important financial choices many people will ever make. While there are a number of factors seniors must consider as they approach their retirement years, including health or the physical demands of work, it is vital to ensure that seniors have accurate, clear, and consistent information they need to fully understand the Social Security rules that govern these decisions.
Witnesses for the hearing included: