5 questions with Social Security expert Mary Beth Franklin

With so many Americans reaching retirement lately – or scheduled to in the near future – the topic of Social Security benefits is one that should interest most people.

At least, that’s according to Mary Beth Franklin, a contributing editor with Investment News, an author and a certified financial planner. Franklin, who is based in Virginia, specializes in Social Security benefit matters and often, she said, answers two dozen or more e-mails per day on the subject.

Q: How long will Social Security be around?

A: Social Security is the most popular federal program in history. While there are some long-term financial problems, there are mathematically easy fixes. Tough political fixes, but easy math fixes.

Congress does, however, need to do something before 2034 because the (Social Security) trust fund is running out. The longer lead time you have to phase in changes, the easier it is for the American public, but there needs to be the political will.

The last major change to the program was in 1983, and those laws are not yet fully implemented more than 30 years later. One of the changes made in 1983 was to raise the full retirement age to 67 for people born in 1960 or later. That will not take effect until 2027.

Q: What are some of the biggest mistakes people make with Social Security?

A: A lot of people think it’s going broke, so they want to grab it early. I don’t agree with that concept. It’s not wise to grab benefits as soon as possible – when you’re 62 – because you will get a reduced benefit for the rest of your life.

For example, if your full retirement age is 66, where you would be entitled to 100 percent of your benefits, if you claim early at 62, you’re getting a 25 percent reduction for the rest of your life. If you’re willing to wait until age 70, when you’d get the maximum amount, you’d get an extra 8 percent per year for the years you didn’t collect between 66 and 70. That’s a 32 percent increase at age 70 versus age 66. If you look at the difference between 62 and 70, that’s a 76 percent increase in Social Security income for the rest of your life.

Q: How many people choose to take their benefits as soon as they can?

A: It’s nearly half. Congress made some changes in 2015 that eliminated some of the creative claiming strategies that would allow people – particularly married couples – to significantly boost their lifetime benefit based on how and when each spouse chose to claim. One of those strategies, called file and suspend, is now gone. If you didn’t exercise it by April 29, it’s history, but there is still a valuable option for married couples and some divorced couples. If you were born on or before Jan. 1, 1954, you can use a strategy that allows you to let your benefit grow if you’re at least 66 and your spouse is already collecting. You can claim half of what your spouse is getting.

Q: You say that a person will often receive bad information when they go to a Social Security representative. Why?

A: Half the time, Social Security will give you the wrong answer. The problem is that there are more than 2,700 rules that govern Social Security benefits. Not all the reps know all the rules, and the people who tend to know the rules are going out the door. They’re retiring and taking that knowledge with them.

I tell people to know in advance what their rights are because it’s not the representative’s job to advise what to take.

Q: Is it realistic to think, as many people do, that the program’s days are numbered?

A: I don’t have a crystal ball, but I find it highly unlikely that Congress will make massive changes for existing or near-retirees. Now, maybe they would for people under 40 or under 30 with the idea that they’d have decades to get used to it.

Frankly, until Congress gets serious about Social Security reform, it’s anybody’s guess.

This story was originally published July 20, 2016 at 2:52 PM with the headline "5 questions with Social Security expert Mary Beth Franklin."