Financial literacy regarding Social Security becomes imperative for Americans who want to ensure that they claim the maximum amount of benefits to which they are entitled.
Social Security can be a vexing topic even for those who pride themselves on their financial knowledge. A recent AARP survey found that Social Security ranks among the primary threats to their home and family life in retirement. A recent Gallup poll found that almost half (42 percent) of lower income pre-retirees will be counting on Social Security as a major source of their retirement funds. But will that money be there when they need it? As reported earlier this year by Kiplinger, the Social Security Board of Trustees’ annual report that estimated starting in 2033, the retirement program would be able to pay out only 75 percent of scheduled benefits.
Financial literacy regarding Social Security becomes imperative for Americans who want to ensure that they claim the maximum amount of benefits to which they are entitled. Not surprisingly, Affluent investors who self-report possessing the most financial knowledge are the most confident in their understanding of the workings of Social Security benefits. More than two-thirds (69 percent) said they have a good understanding vs. just 16 percent who have the least confidence in their financial literacy. Conversely, 29 percent of the latter group of Affluent investors admit to a “minimal understanding of Social Security benefits, vs. just 4 percent of those who consider themselves the most knowledgeable.
Where do the most informed Affluent investors go for information about Social Security? More than half (54 percent) consulted the website provided by the Social Security Administration. Sixteen percent followed up with the SSA’s printed materials.
Those who self-report “some” or little-to-no” knowledge about Social Security benefits also cite the SSA as their primary source of information, but they are also more likely than those who consider themselves most knowledgeable to ask trusted friends and family members about Social Security benefits.
The SSA website and printed materials were deemed by a higher percentage of the most financially literate Affluent investors surveyed to be the key determinant in knowing when to start receiving Social Security benefits. Tellingly, these informed investors were more likely than those less-informed to research information on Social Security benefits provided by financial bloggers (10 percent vs. 1 percent), financial service firms (13 percent vs. 5 percent), and their personal financial advisor (8 percent vs. 1 percent).
The old saying, “Those who ask a question are a fool for a minute, those who never ask a fool for life,” may apply to those with the least financial knowledge. More than one-third of these Affluent investors said that their financial advisor helped them to determine when to start receiving Social Security benefits. Twenty-seven percent of those who profess the most financial knowledge responded similarly, an indication that these investors are of a more self-directed mindset and conduct their own research.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.