Veterans Losing Out on Social Security Benefits

published 18 October 2013

A new survey of U.S. veterans, conducted for the Kiplinger Washington Editors, finds that a high percentage of vets are unaware of how to get an estimate of their Social Security benefits, and they do not understand the cost of claiming benefits early or the potential benefit of delaying the start of benefits.

More than seven in ten veterans surveyed “didn’t know” or “underestimated” how much monthly benefits are reduced if they claim benefits at age 62 rather than at today’s full retirement age of 66. Likewise, nearly nine in ten vets didn’t realize how much benefits will increase if they wait until age 70 to start claiming them.

The benefit due at age 66 is reduced by 25% for those who claim at age 62. The benefit at age 66 rises by 8% each year a retiree delays claiming, until age 70. A retiree due $1,200 a month at age 66, for example, gets $900 a month if benefits start at age 62 and $1,584 a month if he or she holds off claiming until age 70.

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“This knowledge gap must be filled,” says Knight Kiplinger, editor in chief of Kiplinger publications, including Kiplinger’s Personal Finance magazine. “Doing so will enhance the financial security of the men and women who serve to protect our freedom.”

This Veterans Day, November 11, vets will be given free access to a powerful online tool that creates a personalized recommended claiming strategy designed to maximize lifetime benefits from Social Security. (Kiplinger’s Social Security Solutions usually costs $49.95.) The program, which produces a personalized, downloadable report for each vet who uses it, is being sponsored by Wells Fargo.

William Meyer, founder of Social Security Solutions and creator of the tool, says he believes the knowledge gap uncovered by the survey reflects Americans’ general lack of understanding of the complex rules that govern Social Security. “We’re focusing on veterans now because this is a group that we can help, and it’s a group that we should help. And what better time than Veterans Day?”

“Ironically, 70% of the veterans surveyed said they believed the best place to find advice about the best time to claim benefits is a Social Security office or the agency’s Web site,” Meyer adds. “Unfortunately, Social Security employees are forbidden to offer such advice.”While the survey found that 80% of vets who were collecting benefits had claimed them as soon as possible (at age 62), 68% of those who have not yet claimed benefits said they planned to wait until full retirement age or later.

“There is a lot of uncertainty surrounding Social Security benefits among those nearing retirement, and we want to help veterans understand more about their retirement options,” says Karen Wimbish, director of retail retirement at Wells Fargo. “Choosing when to take your Social Security benefits is one of the most important financial decisions of your life.”

To illustrate the potential value of the online tool, Meyer cites the results of an educational program offered to a group of Iowa residents last summer. "The recommended claiming strategies could add an average of more than $170,000 to the lifetime benefits of those who used the tool," Meyer reports. Estimated lifetime benefits were projected to be $27,000 to as much as $305,000 more than the amount recipients would likely collect by simply claiming benefits as soon as possible, at age 62. "We want to make sure veterans don't leave money on the table by making a silly mistake," Meyer says. "Maximizing Social Security and coordinating those benefits with military retirement pay can provide for a much richer retirement."

Veterans will be able to access their free report on November 11, 2013, at www.SocialSecurityforVeterans.com. In addition to their name, age and marital status, they’ll need to enter their Primary Insurance Amount (PIA), which is the estimated monthly Social Security benefit they will receive if they start benefits at full retirement age. Instructions at www.SocialSecurityforVeterans.com explain how to get that figure. The free-for-a-day program is also open to widows and widowers of veterans.

The online poll of 1,000 veterans ages 50 to 70 was conducted at the end of September by the online-polling firm Qualtrics and has a margin of error of plus or minus 3%. One in four of those polled have or expect to have served 20 or more years in the military, so they are eligible for military retirement pay. But nearly 30% were unaware that they could claim that benefit and Social Security at the same time.

McCormally retired in 2018 after more than 40 years at Kiplinger. He joined Kiplinger in 1977 as a reporter specializing in taxes, retirement, credit and other personal finance issues. He is the author and editor of many books, helped develop and improve popular tax-preparation software programs, and has written and appeared in several educational videos. In 2005, he was named Editorial Director of The Kiplinger Washington Editors, responsible for overseeing all of our publications and Web site. At the time, Editor in Chief Knight Kiplinger called McCormally "the watchdog of editorial quality, integrity and fairness in all that we do." In 2015, Kevin was named Chief Content Officer and Senior Vice President.