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Susan Tompor: Social Security sent out some wrong estimates. What you need to know

Susan Tompor, Detroit Free Press on

Published in Home and Consumer News

Laurence Kotlikoff, professor of economics at Boston University, wrote in a June 25 column in Forbes: "I've learned that Social Security is providing benefit statements that are flat out incorrect."

Kotlikoff had heard one story from a Connecticut financial planner who was looking at a truly bizarre statement from a client. Some even wondered if that statement might be fake because it was just so amazingly off the mark.

The figure for claiming at age 62, for example, was nearly as good as the dollar amount you'd get for waiting to claim at full retirement age -- which was age 66 and four months in this person's case. It doesn't work that way.

The Social Security retirement benefit system has tons of moving parts. But in general, you're getting significantly more each month when you claim Social Security benefits at your full retirement age -- or even more at age 70 -- than if you would claim Social Security benefits at age 62.

Kotlikoff discovered a problem when a financial planner shared a story of a client who would only see a gain of $24 a month by waiting four years until the full retirement age of age 66 and four months, compared to taking a payment at age 62.

With those kind of numbers -- which are clearly wrong -- why bother waiting beyond age 62 to a few months past 66?

 

In his Forbes piece, Kotlikoff said: "The statement lists estimated retirement benefits at the client's full retirement age (FRA) of 66 and four months at $1,061."

That figure, he said, was on the money.

But he said the client's retirement benefit at age 62 could not be 97.7% of the amount offered at the full retirement age, he said.

On top of that, the estimate listed the payout for age 66 at $1,372 a month.

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