By Leticia Miranda, Senior Policy Adivsor, Economic Security Policy, NCLR
Quick Answer: Delay the date you choose to collect benefits
As eight million Latino Baby Boomers barrel toward retirement over the next 20 years, a critically important decision they will face is deciding when to retire and begin collecting the Social Security benefits they have earned. As it turns out, when you decide to collect Social Security benefits has a huge impact on your finances as you age. Waiting to collect benefits means higher benefits for life. Given the high poverty rates among Latino seniors, it's important that we adopt strategies that can help us maximize our benefits.
NCLR recently held a community meeting in Miami with Latino Baby Boomers facing the decision about when to begin collecting benefits. Participants learned that waiting even one extra year could make a big difference in their benefits for the rest of their lives. NCLR also released the brochure entitled "Latinos and Social Security: It Pays to Wait"," to provide more information (in Spanish).
Consider, for example, a worker whose monthly benefit would be $750 if they retired at age 62. That worker would get $800 if they delayed one year and $866 if they delayed two years. If that worker delayed until age 66 -- which is their full retirement age -- they would get $1,000 in monthly benefits. If they delayed until 70, they would get $1,320. These are increases on top of the normal cost-of-living adjustments. The gains from waiting were recently increased by the Social Security Administration.
Heavy dependence on Social Security means that Latinos can benefit from any strategies to increase their Social Security benefits. Over half of Latino seniors (55 percent) depend on Social Security for almost all of their income. In addition, average yearly benefits for Hispanic seniors are just $13,295 for men and $10,500 for women. And Latino seniors are more than twice as likely to live in poverty compared to all American seniors -- 21 percent versus 9 percent.
On top of this, Latinos live longer, which means they will have to rely on their benefits for more years. According to the Social Security Administration, the typical Latina woman will live to age 89 compared 85 for all women, while the typical Latino male will live to age 85 compared to 82 for all men. The decision about when to begin collecting benefits also affects a worker's spouse and survivors. Because a surviving widow or widower is entitled to 100 percent of their deceased spouse's benefits, the primary worker can provide more protection to their survivor by delaying when they take benefits. Living spouses can maximize their benefits by waiting until their full retirement age to collect spousal benefits.
NCLR's efforts to educate the Latino community, is part of a larger campaign by the National Academy of Social Insurance (NASI) called "When to Take Social Security: It Pays to Wait". This campaign informs American workers about the benefits of delaying when they claim Social Security. Please see the video they created as part of this campaign:
They also created the video in Spanish in case you want to share it with the Spanish-speakers in your life.
Before we end, let's answer your key question: will Social Security be there for you when you retire? Yes! Social Security's finances are much stronger than many people think. Social Security is fully funded for the next 20 years and 75 percent funded after that. Congress has amended Social Security many times to meet new needs and serve new generations. Policymakers have many options to adjust revenues, benefits, or both to ensure that all future benefits will be paid in full.
This was first posted to the NCLR Blog. Follow Leticia Miranda on Twitter: @mirandareport