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What You Don't Know About Social Security Can Hurt You

Retirees may be leaving hundreds on the table monthly, a survey finds

By Richard Eisenberg

Could your confusion or ignorance about the Social Security retirement benefit rules keep you from having a secure, comfortable retirement?

That seems quite possible, according to findings from an AARP and Financial Planning Association (FPA) survey released today of what pre-retirees do and don’t know about Social Security.

For its report, Social Security Planning in 2015 & Beyond: Perspectives of Future Beneficiaries and Financial Planners, the researchers surveyed 1,215 future Social Security beneficiaries ages 45 to 64 and 1,279 Certified Financial Planners (CFPs).

The Truth About Their Social Security Knowledge

Nearly half (47 percent) of the pre-retirees surveyed called themselves “very or somewhat knowledgeable” about how their benefits will be determined. But their responses to questions about the rules belie their confidence.

“I’d say that number is higher than the reality,” said David Yeske, Managing Director at the San Francisco, Calif. financial planning firm Yeske Buie, who worked on the survey. “Their understanding of Social Security is pretty good, but there was a huge lack of knowledge about the impact of deferring benefits and about spousal benefits.”

Why does that matter? “The choices people make about collecting Social Security retirement benefits could have a huge impact on the benefits they receive over the next 30 or 40 years,” Yeske noted. In fact, 39 percent of the pre-retirees surveyed expect Social Security to make up 50 percent or more of their retirement income.

The report’s conclusion: “Millions of Americans are at risk of making claiming decisions that leave hundreds of dollars per month on the table and out of their pockets."

The AARP/FPA survey echoes findings from one released by MassMutual in June, where 72 percent of respondents got a failing grade when asked basic questions about Social Security retirement benefits.

Key Findings From the Survey

Here are some of the public’s striking knowledge gaps, according to the AARP/FPA survey:

  • Nearly four in 10 (39 percent) didn’t know the earliest age you can start collecting Social Security retirement benefits — age 62.
  • Although most (88 percent) knew that waiting from age 62 to Full Retirement Age — that’s now between age 66 and 67, depending on when you were born — would increase their benefit amount, only 5 percent knew exactly how much. They’d get a benefit boost of 25 to 30 percent, depending on when they were born.
  • Only 57 percent knew that waiting beyond their Full Retirement Age to start claiming benefits could further increase their benefits.
  • Just one third know that claiming Social Security benefits at age 70 will result in their maximum benefit amount. (Social Security’s Delayed Retirement Credits boost the size of monthly benefits by roughly 8 percent for each year you defer claiming until age 70.)
  • A striking 73 percent didn’t know that when Social Security benefits are withheld due to work income prior to Full Retirement Age they will get the benefits back over time.
  • Only half of respondents who’ve been married know they can receive Social Security benefits based on their living spouse’s work history.
  • Just 26 percent of respondents who’ve been or are married know that a divorced person can collect Social Security benefits based on the ex-spouse’s work history if the couple was married at least 10 years. (34 percent thought the rule was five or fewer years and 31 percent thought they could never collect from an ex-spouse’s work record.)

“Anecdotally, when I bring up the rules about Social Security and divorce to my clients, universally they are surprised,” says Yeske.


It’s unfair to be too hard on the public about their confusion and ignorance regarding Social Security’s rules. After all, by one estimate, there are 2,728 of them.

But many pre-retirees could get a better idea of how much they can expect to receive from Social Security if they only took the time, according to the survey.

Just 64 percent have reviewed their estimated Social Security retirement benefits in the past two years. By contrast, 91 percent of Certified Financial Planners surveyed recommend their clients review their estimated Social Security retirement benefits at least once every couple of years.

Few Use Advisers for Social Security Help

Only 16 percent of respondents said financial advisers have provided them with information about Social Security retirement benefits.

“I’m disturbed by this number, but I’m not shocked,” Sheryl Garrett, founder of the Garrett Planning Network, which serves middle-income people, told me.

That’s disappointingly low, since smart financial planners can be extremely helpful running through various claiming scenarios. “We do an analysis for our clients using 15 different claiming strategies,” says Yeske.

One reason the percentage of pre-retirees tapping advisers for Social Security help is so low, I think, is that so few Americans have financial advisers.

But another may be that some professionals say they’re financial advisers are really glorified stockbrokers or insurance agents and aren’t dispensing advice about claiming Social Security because they lack the knowledge themselves. Garrett says that when she has worked on “mystery shopper” tests of financial planners “people thought they were getting a financial plan, but it was clearly ‘how I want to invest your money.’”

How to Learn the Social Security Rules

To bone up on Social Security’s rules, I’d suggest you spend a little time on the Social Security Administration’s site (which has a decent benefits calculator); read the excellent bestseller on Social Security benefits, Get What’s Yours or the AARP-produced Social Security for Dummies. And use a good Social Security benefits software program. To find helpful software, read Help for Deciding When to Claim Social Security by Next Avenue writer Mark Miller.

Just do it soon. “Don’t wait until you’re about to file for benefits,” says Yeske.

Photograph of Richard Eisenberg
Richard Eisenberg is the former Senior Web Editor of the Money & Security and Work & Purpose channels of Next Avenue and former Managing Editor for the site. He is the author of "How to Avoid a Mid-Life Financial Crisis" and has been a personal finance editor at Money, Yahoo, Good Housekeeping, and CBS MoneyWatch. Read More
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