Data & Research October 28, 2008

Many Plan to Start Social Security at 62

A Fidelity Investments survey found that nearly half (45%) of Americans age 61 are planning to begin taking Social Security at 62, the first year that eligible recipients can apply.
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A Fidelity news release said the top reasons driving their decision to collect early are immediate financial needs and health and longevity concerns.

Of those who plan to begin drawing down at age 62, more than three quarters (77%) will use the funds to pay for basic living expenses, such as food, utility costs, and mortgages. This group expects their Social Security payments to compose as much as half (49%) of their total retirement income, yet when asked to quantify their Social Security payments, only 22% knew exactly how much their check will be, according to Fidelity.

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Nearly three quarters (73%) of those planning to start taking Social Security at age 62 are also making their decision without having a formal retirement income plan.

“Many Americans who are within one year of beginning to collect their Social Security retirement benefits may be planning to rely too much on it, considering Social Security currently only funds a little more than one-third, or 37% of an average retiree’s income,” said Carolyn Clancy, executive vice president at Fidelity Investments Personal and Workplace Investing, in the news release. “Social Security-related decisions can be complex and there can be tradeoffs associated with the various payment strategies. But with some basic guidance and a lifetime retirement income plan, individuals may find it easier than they think to make an informed decision and get the most from their benefits.”

I Have to Do What?

When quizzed about issues such as filing requirements and taxation, a vast majority (85%) correctly identify age 62 as the earliest possible age that people may become eligible for Social Security, but 56% do not know when they will be eligible for full Social Security benefits (age 66 for those born 1943-54).

More than half (54%) are unaware that they need to file for their benefit three months before they wish to start receiving payments. Seven percent of respondents incorrectly believe that the Social Security Administration (SSA) will contact them when it is time to receive benefits. Nearly one-third (31%) also believe that Social Security payments are not taxable, and 12% were not aware that working in retirement could impact their benefits.

Half (51%) also are not aware that when a spouse passes away, the surviving spouse may be eligible to receive the larger of their two Social Security payments.

Products October 28, 2008

Fidelity Adds Social Security Web Content

Fidelity introduced a series of new educational resources to help Americans better understand their Social Security options, and how it can impact their retirement income.
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According to a Fidelity news release, the new Web site content includes:

  • simplified information on Social Security benefit decisions and examples illustrating how key factors, such as age, can impact Social Security payment amounts;
  • a printable table showing common strategies to consider when deciding when to take benefits;
  • resources to help create a retirement income plan, including a Social Security payment estimate, using Fidelity’s Retirement Income Planner tool;
  • a customer brochure with Social Security-related information including the five key steps to becoming Social Security-ready, and four critical factors to consider before they make a final decision;
  • new informational materials that outline the benefits of creating a retirement income plan, as well as how to get started;
  • a new educational audio program on Fidelity.com with information from the Social Security Administration to help people better understand the program and the options available regarding when to receive benefits;
  • local seminars, held in conjunction with the Social Security Administration, in Fidelity Investor Centers nationwide to help individuals better understand their Social Security options.

More information is available at www.fidelity.com/socialsecurity.

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