"Get What’s Yours" is far from a soft-porn escapist romp, but the how-to book on maximizing your Social Security payout has become an improbable bestseller. On its first day of sale on February 17 it was in the top five on Amazon's Top 100 list, and as recently as Thursday evening it was No. 3.
While the book's dry subject matter won’t ever qualify as entertainment, the subtitle—The Secrets to Maxing Out Your Social Security—mainlines into the rich vein of national retirement anxiety. In a recent survey, BlackRock reported that nearly two-thirds of Americans consider Social Security a “critical” factor in their retirement security. Even among those with investable assets of at least $250,000, more than 60 percent also consider Social Security critical to making the numbers work in retirement.
Yet the book’s co-authors, Boston University economist Laurence Kotlikoff, journalist Philip Moeller and PBS NewsHour correspondent Paul Solman, point out that we’re clearly not getting the most out of a critical piece of our retirement income puzzle.
The central strategy to maximize benefits is simple though not easy: Delay when you start to take Social Security benefits. Wait until age 70 and your benefit will be 76 percent higher than if you started your payouts at the earliest claiming age of 62. Yet the authors note that less than 15 percent of people currently receiving a benefit waited for that. Sure, some folks need to start taking benefits earlier if they can’t continue working, or don’t have 401(k) or IRA assets they can tap first. And yes, there are some outlier situations where early claiming makes plenty of sense, but not in more than eight of 10 situations.
The authors don't mince words. “…If you aren’t waiting at least until 66 or age 70 to take at least one benefit……you are, in our opinion, imprudent, if not nuts,” they write. That reference to "one benefit" is there because many of us have more than one benefit we can claim. In addition to our own, there can be a survivor benefit, a spousal benefit or the benefit of a former spouse.
The authors do some number-crunching to back up the nutty accusation. They look at a 60-year-old couple that retires after having earned the maximum amount taxed by Social Security throughout their careers. In 2015, income of $118,500 puts you at the max. The investment value of their future benefits swings from $1.2 million if they claim at age 62 to $1.6 million if they use a claiming strategy that maximizes their payout.
That is to say, they'd need an investment stash of $1.2 million to $1.4 million earning 2 percent above inflation to generate the same income they're guaranteed to get from being smarter about taking Social Security. An extra $400,000 in value to your retirement security is likely a whole lot more than you can pull off with catch-up contributions to a 401(k) or by using even the most prescient asset allocation strategy.
To be clear, for couples, that strategy doesn’t presume both spouses wait until age 70. Much of the 336-page book is spent explaining how the legions of Americans with two potential benefits should tap one of those benefits early and leave the other to marinate and grow to its age-70 max. Yes, such decisions are far less racy than deciding which flogger to use. But the book's unlikely bestseller status shows that purely financial maneuvers can be titillation enough for Baby Boomers nearing retirement.