November 08, 2021

The Media Will Decide Your Social Security Claiming Age, Ep #217

12 minutes

Do you let news headlines affect your choices? The Center for Retirement Research at Boston College wanted to learn more about this question, so they conducted a study to find the answers. In this episode of Retirement Starts Today, we’ll take a look at the findings of this study and analyze how people’s misconceptions can influence their life choices in retirement. After checking out the retirement headline, I’ll clarify a Rule of 55 question from Dave. Listen in to hear how headlines may be affecting your decisions.

Outline of This Episode

[2:32] Media coverage of Social Security could affect claiming age
[7:21] Don’t let scary headlines plan your retirement for you
[9:40] A tricky Rule of 55 question from Dave

Do sensational headlines affect people’s retirement decisions?

I found an article written by Emile Hallez at Investment News titled Media Coverage of Social Security Could Affect Claiming Age which piqued my interest since, as a financial advisor, this is exactly what I don’t want to hear.

In this age of social media, we are used to immediate gratification which means that many people don’t dig past a news story’s headline to learn more. The Center for Retirement Research at Boston College studied this phenomenon in relation to Social Security benefits and retirement age. Articles on Social Security often emphasize the trust fund depletion date which leads people to believe that the entire Social Security system is insecure.

Check out the episode where we recently reviewed an article similar to the ones shown in this study.

How did people react to the experiment?

To analyze how people reacted to headlines, researchers showed several types of headlines on Social Security to participants and then asked them a series of questions about their confidence in the Social Security system. The researchers studied how the type of headline affected people’s decisions regarding their own retirement plans.

They discovered that workers shown headlines that emphasized the Social Security depletion date decided to claim Social Security a year earlier than those in the control group. Learn more about how the study was conducted and the results by pressing play.

Don’t let alarming headlines plan your retirement

A careful retirement plan should be created based on what is right for you and your family. You’ll want to consider your financial future in the long term and how it will affect your life. Shocking headlines incite many to act on fear, but this would be short-sighted. Once you have a retirement plan in place, you can refer back to it when making any decisions about your retirement rather than a knee-jerk reaction.

Rules of thumb for claiming Social Security

If you are listening to a retirement podcast, hopefully, you aren’t easily swayed by sensational Social Security headlines, but how should you plan on claiming Social Security? If you are married then I suggest deferring the larger benefit for as long as possible. You can collect the smaller benefit whenever you need the income. By deferring the larger benefit, you will be deferring income longer which will leave room to do Roth conversions if needed and the larger benefit will grow to serve the spouse that lives the longest. It doesn’t matter who earned the larger benefit because upon the first death the smaller benefit expires and the larger one continues.

Resources & People Mentioned