A federal report finds 580,000 Iowans are cashing Social Security checks now, with thousands more being added to the list every year. Many Iowans are trying to make difficult decisions about when to retire in order to maximize their payments.
Financial advisor Kelly O’Donnell recommends doing plenty of research so you can get the most out of what you’re owed. “Sixty-percent of households will rely on Social Security for more than 75% of their income in retirement,” O’Donnell says. “The challenge is, it is very complicated. There are more than 2,700 rules for how to calculate benefits and over 8,000 different combinations for how a married couple can claim Social Security.”
Iowa’s population is one of the oldest in the country. In 2010, Iowa ranked 5th in the U.S. in the percentage of population age 65 and older. That same year, Iowa ranked 2nd behind only Florida in the percentage of residents over 85. O’Donnell says Iowans are living longer and it pays to delay. “For every year you delay Social Security, you’ll receive a fixed 8% increase in monthly benefits,” O’Donnell says. “That difference can mean tens and even hundreds of thousands of dollars more in lifetime benefits.”
O’Donnell says a study found the typical American couple leaves more than $100,000 on the table in lifetime benefits. “For married couples there’s an interesting strategy where you can have the lower earner begin to claim Social Security at age 62 and that brings an income that helps fund the ability for the higher earner to wait until later to claim Social Security, even maybe age 70, before you’ll receive the maximum benefit,” O’Donnell says.
A U.S. Census Bureau report found that in 2012, there were more than 470,000 Iowans 65 and over, accounting for more than 15-percent of the state’s population. By 2040, it’s estimated 680,000 Iowans will be over 65, or about 20-percent of the population.