What Mitt Romney Knows About Social Security That You May Not

Mitt RomneyMitt Romney recently celebrated his 65th birthday.

But while this milestone spurs many Americans to retire and begin claiming Social Security benefits, Romney told Fox News host Neil Cavuto that he has no plans to sign up for his entitlement checks anytime soon.

It's not just because he hopes to be president. Romney's up to something else entirely here.

This Is Not Romney's Time

You see, as SmartMoney columnist Jack Hough recently wrote, "a savvy retiree can maximize benefits by choosing to begin payments at just the right time."

Citing a working paper written by economists John Shoven at Stanford University and Sita Nataraj at Occidental College, he elaborates, "Monthly payments are 76% greater for a retiree who waits until age 70 than for one who begins collecting at 62, adjusted for inflation."

Because life expectancy continues to rise and real interest rates are zero (and interest rates on "safe" bank accounts aren't much higher), it's clear that delaying the day when you apply for Social Security benefits is a move most Americans should make, not just Mitt.

We're talking here about a simple move that could mean the difference between pinching pennies in retirement and living out your golden years comfortably. And while Romney isn't quite in the same boat as the rest of us, you can bet this is why he's delaying taking Social Security benefits.

Are You Compounding Your Biggest Retirement Fears?

Unfortunately, most Americans aren't familiar enough with the system (or are confused by the complexity of the system's minutiae) to know just how important a decision delaying benefits could be. Most still begin taking Social Security payments at 62, or after stopping work.

After working a job for 30 years or longer, hitting the eligible age for Social Security is a milestone that reminds most folks to slow down and enjoy the remainder of their life, living out lifelong dreams and spending time with their kids and grandkids.

But when you think about it, the two biggest "worries" folks nearing retirement have are:

1. Whether they will outlive the money they've saved.
2. Whether their savings will be eroded by inflation.

Delaying Social Security benefits will provide a hedge against both of these fears.

Paul Solman of PBS' NewsHour likens it to buying old-age insurance. As he says, "The cost: the foregone Social Security checks between ages 66 and 70. The benefit: If you live past your early 80s, you are receiving more in total than had you started collecting at 66."

Plus, with annual cost-of-living adjustments, your Social Security payout is protected from inflation.

This is exactly why most experts say perhaps the single most effective tactic for a wealthier retirement is to live off savings for a few years to lock in the benefits of a higher Social Security check that comes after delaying benefits.

That's what Mitt's doing. And now you know this strategy, too.

This article was written by Motley Fool analyst Adam J. Wiederman. Click here to read Adam's free report on how to ensure a wealthy retirement.

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Edward

This article totally ignores the lost SS income during the years of waiting until a later year, and focuses only on the amount per month. The numbers don't work in the examples in the article. Waiting until 70, you would have to live much longer than expected for the monthly increases to ever catch up to what you left on the table by waiting. The math is not complicated and it's not magic... Figure it out for yourself.

July 20 2012 at 2:47 PM Report abuse rate up rate down Reply
Cheryl

He should set the example and not claim them at all. It's disgusting that Buffett talks about wanting his taxes raised, while he has drained social security every month for the last two decades. Someone needs to lead on this or SS will be a welfare system rather than a retirement system.

May 23 2012 at 5:18 PM Report abuse rate up rate down Reply
SGT RIKER

7 Reasons Why Mitt Romney’s Electability Is A Myth http://rightwingnews.com/john-hawkins/7-reasons-why-mitt-romneys-electability-is-a-myth/

April 23 2012 at 12:05 PM Report abuse rate up rate down Reply
alscotti57

this article is a crock of $h!t

April 15 2012 at 9:01 PM Report abuse +1 rate up rate down Reply
rustymoore2012

People, take the SS benefit as early as you can and make it another stream of income. For those who like to use wonky stats, remember the three types of lies: lies, d@mned lies, and statistics.

April 15 2012 at 9:00 AM Report abuse rate up rate down Reply
kramdenrf

MiserblOF

Do the math. Present value of the bird in the hand is more than the one in the bush 10 years hence. Life expectancy isn't that much different for people in their later years. The higher AVERAGE is more a result of people not dying YOUNG than living Methuselah lifespans. In other words, a group of people who used to die at 30 100 years ago are living to 60 and raising the average like crazy, but the life expectancy of a person at 62 or 65 isn't all that much more, ESPECIALLY working people who have been abused by the corporate thugs on the job.for 40 years or more.
---------

Waiting is a sucker bet. Mitt can afford it, most can't.

April 15 2012 at 1:55 AM Report abuse rate up rate down Reply
1 reply to kramdenrf's comment
kramdenrf

I looked up the life expectancy for males age 62 in two mortality tables, a newer one and an old one. the old one showed an expectancy of 16+ years and the new one 19+ years. Take the cash.

April 15 2012 at 2:01 AM Report abuse rate up rate down Reply
sfamilyent

People like Romney should not collect any SS, because they don't need it.

April 14 2012 at 7:43 AM Report abuse rate up rate down Reply
rtgarton

What a lot of crap. I love when these super rich guys say they are not taking their SS until the right time. Yea, and they use Their SS to probably pay their golf club membership. We slobs for the most part have to take it early to make ends meet. Taking it at 70 a lot of us wont be around and that is what the govt is hoping so they pay out a lot less. To fix this, give incentives to corporations to hire the older worker instead of discriminating against them. If you dont want to give medical benefits than dont. Let us work. That alone will burden SS a lot less. What right does SS have to require you to pay back if you make over $14000, If you draw at 62. If they are able and willing to work then let them. I dont mean crap jobs at the Home Depot, Lowes or Walmart. They dont give a hoot when they call you in. I have to give a lot of credit to these people working holidays and weekends on those concrete floors. They desire better pay and better hours.

April 13 2012 at 11:12 PM Report abuse rate up rate down Reply
Robert & Lisa

Obama will not leave the White House willingly. In fact, we fully expect him to dissregard the election if he loses, declare martial law and try to become dictator.

April 13 2012 at 11:50 AM Report abuse rate up rate down Reply
ha6ai

Mitt Romney knows how to fix Social Security.

Obama does not (or if he does, he chooses not to try for purely political reasons).

Romney wants America to succeed.

April 13 2012 at 5:53 AM Report abuse +1 rate up rate down Reply
2 replies to ha6ai's comment
rtgarton

Romney is not a working man. Both are ego maniacs. I am not even voting this year. Like voting for Beavis or Butthead who is worse of the two?

April 13 2012 at 11:15 PM Report abuse -1 rate up rate down Reply
sfamilyent

Mitt doesn't know spit about how to fix anything...

April 14 2012 at 7:45 AM Report abuse -1 rate up rate down Reply