Social Security Is Not Telling People Enough about Their “Longevity Risk”, Study Shows

Social Security Is Not Telling People Enough about Their “Longevity Risk”

Claims specialists may not be doing their best at informing Americans of the program, including not telling people enough about their longevity risk, according to a new study done by the Government Accountability Office.

The Study

The study showed that even though claims specialists help people file for their Social Security, they repeatedly leave out important details, or don’t explain things clearly enough for their customers to understand. The study also found that the online claims process omits information and is also carelessly misleading people about when to claim benefits.

It’s not a shock to anyone that the program confuses people. The handbook has more than 2,700 entries spanning from topics such as remarriage to black lung benefits. The GAO also found that Americans are sadly under-educated about Social Security and when to start the filing process.

“The American public is clueless that this decision is so important,” Senator Claire McCaskill (D-Missouri) said about the report, which she commissioned with Senator Susan Collins (R-Maine), according to ThinkAdvisor. “It is staggering that so many Americans don’t realize that this is a decision at all. Many think you just claim at 62, or when you stop working. Or when you claim Medicare. Or when you hit full retirement age at 66 or 67.”

Although claims specialists are normally helpful and, for the most part, good at their jobs, they still need help when informing workers on how to make a well-informed choice about their Social Security, the GAO discovered. For example, only eight of the 30 interviews had a claims specialist inform the customer that benefits are based on 35 years of earnings, and that working for a longer period of time could possibly increase their monthly benefits by increasing their average lifetime earnings.

In six interviews, claims specialists gave workers their “breakeven age,” or the age their total monthly payments from filling at a later date would be equivalent to, if they filed at an earlier time.

One of the most important issues is understanding the “longevity risk”, or the risk that you might live longer than originally expected. Most people underestimate their life expectancy, so they have the risk of running out of funds. The report also found that life expectancy risks should be given.