Many baby boomers base their Social Security strategies on outdated information or emotional fears rather than facts, according to Louis Green, who worked at Deutsche Bank, UBS and PNC and is now a CFA and CFP with Savvy Advisors.
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“There are several strategies to maximize your benefits,” Green explained. But first, people need to understand what they’re getting wrong about the program. Here are the five biggest misconceptions Green encounters with baby boomer clients.
Claiming as Early as Possible To Make Sure They Get Something
Many baby boomers rush to file for Social Security at age 62, thinking they should grab benefits while they can. Green said this approach often backfires.
“Think carefully before deciding to file for Social Security benefits as soon as possible,” he advised. “While you can claim retirement benefits as early as age 62, you won’t receive 100% of your benefit amount.”
The numbers tell the story. For people born in 1960 or later, full retirement age is 67. Filing at 62 reduces benefits by about 30% compared to waiting until full retirement age. Spousal benefits get hit even harder, with reductions of about 35%.
Green recommended considering your income needs and health situation before making the early filing decision. The immediate cash might feel good, but the long-term cost can be substantial.
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Worrying About Social Security Completely Running Out
Fear about Social Security’s future leads many baby boomers to make hasty claiming decisions. Green said this emotional response ignores the actual facts about the program’s funding.
“Avoid making emotional decisions about when to file based solely on Social Security’s funding status,” he said.
The reality is more nuanced than complete collapse. According to the Social Security Administration, combined trust fund reserves of Old-Age and Survivors Insurance and Disability Insurance are projected to become depleted in 2034 if Congress doesn’t act. But even then, there would still be sufficient income to pay 81% of scheduled benefits.
“Social Security may see changes down the road, but it’s not wise to plan your retirement as if the program will disappear entirely,” Green shared.
The program is funded primarily by dedicated payroll taxes, which means it has a reliable income source even if the trust fund reserves run low.
Assuming It Doesn’t Matter When You Claim
Some baby boomers believe the timing of Social Security claims doesn’t matter because the total lifetime benefits are roughly the same regardless. Green said this thinking misses important nuances.
“Your benefits are based on your average indexed monthly earnings and whether you file before or after your FRA,” he explained.
For people born in 1943 or later, delaying benefits past full retirement age increases monthly benefits by 8% for each year you wait, up to age 70. This can majorly boost lifetime income, especially for people who live well beyond their break-even age.
Green recommended using the Social Security Administration’s online calculator to estimate benefits at different claiming ages. The tool helps people see how much the timing decision actually matters for their specific situation.
“Before deciding when to claim, review your financial needs, health and longevity expectations,” he advised.
Assuming You Can’t Work and Collect Social Security at the Same Time
Many baby boomers think they have to choose between working and collecting Social Security. Green said this belief keeps people from optimizing their financial situations.
“You can work while collecting Social Security, but your benefits may be temporarily reduced if you claim before your FRA,” he explained.
The rules for 2025 are specific but manageable. If you’re under full retirement age, $1 gets deducted for every $2 you earn above $23,400. In the year you reach full retirement age, $1 gets deducted for every $3 you earn above $62,160, but only for the months before you reach full retirement age.
Once you reach full retirement age, your benefits are no longer reduced regardless of how much you earn. This means baby boomers can continue working and collect full Social Security benefits simultaneously.
Assuming You Can’t Do Anything To Optimize Social Security
The biggest mistake Green sees is baby boomers treating Social Security as a passive program where they have no control over outcomes. He said there are actually several strategies to maximize benefits.
The first strategy involves choosing the right filing age. As we previously noted, delaying benefits can mean up to 8% more per year after full retirement age until age 70.
Green also recommended calculating your break-even age by factoring in life expectancy. This helps determine whether early claiming or delayed claiming makes more financial sense.
For married couples, coordination strategies is most likely a smart move. “The lower-earning spouse might file early while the higher-earning spouse delays to increase the survivor benefit,” Green suggested.
Understanding spousal and survivor benefits opens up additional options. “Survivors can sometimes claim survivor benefits first and switch to their own higher benefit at age 70,” he shared.
Louis Green is an investment adviser representative with Savvy Advisors, Inc. (“Savvy Advisors”). Savvy Advisors is an investment advisor registered with the Securities and Exchange Commission (“SEC”). Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation.
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This article originally appeared on GOBankingRates.com: I’m a Former Deutsche Bank Advisor: 5 Things Baby Boomers Get Wrong About Social Security
