The blue-collar bluesThe study compared workers in a variety of positions and industries–farming, construction, sales, professional, and managerial, among others–and found that blue-collar workers were much more likely to claim early retirement benefits than others. This may be due to the fact that blue-collar work is typically more physically demanding, and therefore progressively harder as people age. For example, 54% of men in farming jobs claimed benefits at age 62, compared with just 26% of men in managerial positions. Eight out of 10 male farmers claimed their benefits before reaching full retirement age, compared with a little more than half of all managers, both male and female.*
Employment status impactA person’s employment status also revealed significant differences in the timing of claims. Full-time workers were approximately 30% less likely to claim early. By contrast–and perhaps not surprisingly–those who said they were retired or unemployed were more likely to tap their Social Security early. Interestingly, those with long work histories–at least 35 years of earnings–were 38% more likely to claim their benefits early than were those with shorter work spans.
Other factorsThe study revealed several other factors that contributed to early claims of benefits: • Education: Those with less than a college degree were 23% more likely to claim early than were those with at least a college education. • Marital status: Widowed individuals were generally more likely to claim their benefits before reaching full retirement age compared with married, divorced/separated, or partnered couples. • Life expectancy: Those who thought they had a strong chance of living past age 75 were significantly more likely to delay their benefits when compared to those with lower longevity expectations.
Financial benefits of waitingAccording to the GAO’s research, delaying Social Security resulted in a stronger financial position in retirement. Households with an individual who delayed benefits until at least full retirement age received a median income that was 45% higher than households who took benefits early. Similarly, total wealth in households where someone delayed benefits until at least full retirement age was 25% higher than in households with someone who claimed early. *The study did not report findings for female farmers. For more information on these findings and others, including how the Pension Protection and Affordable Care Act changes affect health coverage options for those who claim early, view the complete study at www.gao.gov. IMPORTANT DISCLOSURESLumina Financial Consultants, LLC (LuminaFi) is a registered investment advisory firm based in Vienna, Virginia. The information provided is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The types of securities and investment strategies mentioned may not be suitable for everyone. Each investor should evaluate investments and financial strategies based on his or her own particular situation. The information is not intended to provide tax, legal or investment advice. The information in these materials is from sources that are publicly available and believed to be reliable; however, the information is subject to change at any time and without notice. Further, LuminaFi does not guarantee the suitability or potential value of any particular investment or information source provided herein. To the extent this material pertains to any tax matters, it is not intended nor written to be used for the purposes of avoiding taxes and/or penalties that may be imposed by law.
GAO Report Reveals Why People Claim Social Security Benefits Early