A new report, “The Retirement Solution Hiding in Plain Sight: How Much Retirees Would Gain by Improving Social Security Decisions,” has eye-opening statistics for the importance on perfect timing for claiming Social Security benefits. Social Security now accounts for about one-third of all income annually received by U.S. retirees, amounting to $1 trillion in annual benefits.
The research indicates that the financial effect of Social Security could be even greater if more people waited to enroll, since monthly benefits can increase in value if retirees delay claiming. New technology invented by United Income and data sponsored by the Social Security Administration, shows:
- Retirees will collectively lose $3.4 trillion in potential income that they could spend during their retirement because they claimed Social Security at a financially sub-optimal time, or an average of $111,000 per household.
- Current retirees will collectively lose an estimated $2.1 trillion in wealth because they made the sub-optimal decision about when to claim Social Security, or an average of $68,000 per household.
- Only 4 percent of retirees make the financially optimal decision about when to claim Social Security.
- About 21 percent of those at risk of not affording retirement (or having enough income to cover their expected cost of living) would see an improvement in their chances if they claimed Social Security at the optimal time.
- Elderly poverty could be cut by nearly 50 percent if all retirees claimed Social Security at the financially optimal time.
Read the full report here.