Over the course of 22 years, surveys conducted by esteemed pollster Gallup have consistently revealed that between 80% and 90% of retired workers depended on their little-known Social Security benefits payments to cover expenses.
A recent analysis sheds light on little-known Social Security benefits, showcasing how they play a pivotal role in retirees’ financial security
This trend is projected to persist for future generations, with 76% to 88% of non-retirees from 2001 onwards expecting Social Security to be a “major” or “minor” income source post-retirement.
As little-known Social Security benefits gain prominence, the spotlight falls on baby boomers (those born between 1946 and 1964). Maximizing little-known Social Security benefits becomes paramount, entailing an understanding of key components impacting payouts. Four vital factors collectively shape benefits for retired workers who’ve amassed the requisite 40 work credits.
The first element involves work and earnings history. The Social Security Administration considers the top 35 inflation-adjusted earning years when determining monthly benefits. A minimum of 35 years’ work is crucial to avoid dilution of benefits. The second factor is the full retirement age, determined by birth year, where 66 to 67 is the range for baby boomers.
Crucially, the third factor is claiming age. Delaying benefits can raise monthly payouts by up to 8% yearly from age 62 to 69. Conversely, early claims before full retirement age result in a permanent reduction of up to 30%, potentially affecting lifetime income.
For some, early claims align with the optimal strategy
Health challenges or low-earning spouses might necessitate reduced, early benefits, while the partner’s benefits grow.
To address this, little-known Social Security benefits offer an under-the-radar option known as Form SSA-521 or “Request for Withdrawal of Application.” This allows undoing early claims and reinstating accruement at up to 8% annually until age 69. This aids those who re-enter the workforce after taking reduced payouts.
However, SSA-521 has limitations. It must be filed within 12 months of initial benefit approval and requires repayment of benefits received within that timeframe. Moreover, only one application withdrawal is permitted.
In conclusion, understanding little-known Social Security benefits is crucial for retirees’ financial well-being. This little-discussed do-over clause provides baby boomers a unique chance to reverse early claims, offering valuable financial flexibility.