To borrow a line from Tom Petty, “…the waiting is the hardest part.”
That’s often the case for people who haven’t saved enough for retirement and are feeling the need to file for Social Security benefits closer to age 62 than 70.
They probably even know it could cost them big time in the long run, but they decide to file as a way to alleviate immediate financial needs. Did they have regrets about that decision later?
In a first-ever survey (released May 14) to uncover regrets and learnings from those who have filed for Social Security retirement benefits, Massachusetts Mutual Life Insurance Company (MassMutual) discovered that indeed there were.
The 2019 MassMutual Social Security Pulse Check commissioned in collaboration with AgeFriendly.com uncovered a valuable ‘pay it forward’ message from today’s—to tomorrow’s—retirees, especially younger generations.
“When to retire and file for Social Security retirement benefits should be your choice, and this study underscores the need to plan ahead for the unforeseen and save as much as you can,” said Mike Fanning, head of MassMutual US. “Many are not saving enough for retirement and need to access funds the minute they can—regardless of the longer-term impact of the decision—and in some cases, unforeseen health issues are complicating the issue.”
Some key findings of the survey:
- Three out of 10 (30%) filed at age 62 or younger
- Nearly 4 out of 10 (38%) wished they filed later
- More than half (53%) filed out financial necessity, such as not saving enough, and another one-third (30%) filed as the result of unforeseen issues, such as health issues or employment changes
Leaving money on the table
Many survey respondents shared regrets about the consequences of filing early.
“People not being able to sustain for very long on what they’ve saved appears to be a common occurrence today,” Fanning said. “This study reveals that many are leaving money on the table that they’re eligible for—and that they could have received for many years to come. Planning ahead for the foreseen—and the unforeseen—appears to be the ‘pay it forward’ message from today’s to tomorrow’s retirees.”
In the simplest and most conservative cumulative calculation, a married couple with longevity into their early 90s could be leaving more than a half million dollars on the table—or as much as $2,000-$4,000 per month for life—by filing for Social Security retirement benefits at age 62 versus filing at age 70. Furthermore, a surviving spouse could receive $1,000-$2,000 per month less for life as a result of filing at age 62.
The majority of survey respondents (79%) to the MassMutual Social Security Pulse Check felt that they had the appropriate amount of information about when to file for Social Security retirement benefits, and nearly 6 out of 10 (58%) didn’t get help or advice.
“The interesting thing about Social Security modeling is that every person and every couple is different,” said David Freitag, a financial planning consultant with MassMutual. “It is hard to make relevant generalizations about filing strategies. In reality, each person needs to do a careful analysis based on their unique situation in life to help ensure they are not leaving money on the table for years to come, and a financial advisor can help.”
For more information and examples of write-in commentary from survey respondents, visit this blog.
- SEE ALSO: Good News for Social Security Solvency