Deciding when to take Social Security is complicated in the best of times. But it can be even more difficult in the midst of a pandemic.
The coronavirus outbreak has resulted in changes that might influence everything from your decision on when to claim benefits to the overall future of the program.
Following are some factors to consider before claiming Social Security benefits during the pandemic.
Delaying benefits might make sense
The Federal Reserve has slashed interest rates in response to the pandemic. That means savings rates on many bank accounts are near rock-bottom lows.
So, if you have a lot of money sitting in a low-yielding savings account, it might make sense to turn there first so you can delay filing for Social Security benefits.
Remember that tapping savings — instead of turning to Social Security — can be risky. Hit a bump in the road, and you may need that money, especially if you don’t have a solid emergency fund.
But the bottom line is that few — if any — short-term assets can match the 8% return you get from delaying Social Security benefits.
Finding help is harder
Before the pandemic, you could stroll into your local Social Security Administration office and get answers to many key questions.
But those offices now require you to make an appointment in advance, thanks to COVID-19. Before entering, you must complete a self-assessment checklist that proves you are healthy. In addition, you are the only one allowed into the office, and you must wear a mask. If you prefer, you can also call the SSA office for help.
Should you rely on the Social Security Administration for insight? Anyone who has regularly read our “Social Security Q&A” column has learned that SSA officials do not always offer accurate information.
Hoping for better answers? A company called Social Security Choices offers a personalized analysis of various claiming strategies. Social Security Choices sells its product for $39.99. But Money Talks News readers can save $10 by using the code “moneytalks.” For more, check out “A Simple Way to Maximize Your Social Security.”
Future benefits might be at greater risk
If you are a worrywart, here is one more thing to keep you up at night: The future of the Social Security program might be a bit less secure than it was prior to the pandemic.
As we have reported, a pair of nonprofit institutions recently issued reports showing that thanks to the coronavirus pandemic, the program’s retirement reserves could be depleted as early as 2031 or 2032. A combination of higher unemployment, lower interest rates and low inflation is at the root of the problem.
To learn more, check out “Social Security’s Woes Are Accelerating — Blame the Pandemic.”
Should you be concerned? Possibly — but maybe not. Money Talks News founder Stacy Johnson is convinced Social Security will be there for the long haul. To find out his take, read “2-Minute Money Manager: Will Social Security Still Be There When I Retire?”
Changing your mind is not an option
Millions of people have lost their jobs during the pandemic. If you are among them and are of a certain age, it can be tempting to change your plans and begin claiming Social Security right now.
For many people, that’s a smart move. But before you take the plunge, understand that the decisions you make today about Social Security largely are irrevocable.
As Jeff Miller of Social Security Choices points out:
“It is possible to claim Social Security benefits at any time after 62 (60 if you are a widow or widower), but normally a claiming decision is final. If you were planning to delay claiming so that you would receive higher benefits later, claiming Social Security benefits now could mean that your benefits will be lower for the rest of your life.”
There is one possible exception to the rule, but it comes with two big caveats. For more, check out “Should I Claim Social Security Now Due to the Coronavirus?”
2021 could look a lot like 2020
Each October, the federal government announces the cost-of-living adjustment — or COLA — that Social Security recipients will receive the following year. The COLA is based on changes in the Consumer Price Index.
Although it won’t be until October that we know for sure, many experts are predicting either a very slight increase in Social Security benefits or none at all.
Jim Blankenship, author of “A Social Security Owner’s Manual,” told USA Today he expects a modest increase next year:
“Assuming nothing dramatic occurs in the third quarter, my best guess is that the COLA may at best be around 0.5%. But in the end, the COLA could be zero, if there’s price deflation with potential COVID-19 flare-ups.”
Scammers are hot on your trail
Fraudsters are a pest at any time. But a crisis like the pandemic brings out the best — or, rather, worst — in them.
Soon after the pandemic reached U.S. shores, we reported that the federal government had begun warning Social Security recipients to be on the lookout for letters telling them their benefit payments would be stopped unless they called a specific phone number.
Such scams are intended to get personal information or payment from the targeted Social Security beneficiary. If you believe you are the target of such a scam, report the harassment to the SSA by using its dedicated online form at https://oig.ssa.gov.