Social Security is a hot topic because so many people rely on these retirement benefits -- and so many future retirees worry about whether the benefits will even be there for them at all.
Unfortunately, new data from the Center for Retirement Research (CRR) revealed certain types of headlines in stories about Social Security could end up prompting readers to make a decision about claiming retirement benefits that costs them in the long run.
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Is the media scaring you into the wrong Social Security moves?
According to the Center for Retirement Research, many headlines surrounding Social Security have an "alarmist tone." Specifically, headlines that focus on the program's financial future often emphasize the fact its trustees have warned the Social Security trust fund could run dry by 2034, necessitating benefit cuts.
While the trust fund is scheduled to run short, it's also true that payroll taxes from current workers will still provide enough to pay out most of the promised benefits.
Unfortunately, this information is often not addressed until late in articles. And many people focus on the headlines so they walk away with the impression retirement benefits are in imminent danger of running out.
CRR looked at the impact of this on how retirees make decisions about when to claim benefits. The researchers found all of the negative headlines tested prompted people who read them to claim benefits early. Depending on the headline, readers said they would start their checks between six months and a year earlier than the control group.
Younger workers were found to be more influenced than older workers by the alarmist headlines, with workers between the ages of 25 and 54 planning to claim a year earlier. This makes sense since most of the news focuses on future potential cuts to benefits that are more likely to impact those who aren't yet near retirement age.
Still, CRR concluded that "media coverage of the trust fund makes many workers fear an unrealistically severe cut to their future Social Security benefits," in ways that shape their behavior.
Are you being led astray?
Claiming Social Security early can have consequences, as starting checks sooner than planned could mean getting hit with more early filing penalties or missing the chance to earn delayed retirement credits.
Early filing penalties permanently reduce your benefit for each month you claim ahead of full retirement age while delayed retirement credits increase it until 70 for each month you wait for checks after FRA.
To avoid getting hit with penalties unnecessarily, you should research how Social Security works and make a decision about when to claim your checks based on individual factors such as your health status, your desired retirement age, and your spouse's claiming decisions.
The reality is, you should not consider future benefit cuts as a major factor influencing your claim. That's because lawmakers are extremely unlikely to allow seniors to experience a major reduction in benefits due to the political ire this would cause.
Some type of fix before the trust fund runs dry is inevitable, and both current and future retirees are all but certain to get the full amount of benefits they've been promised.
