Timing is everything with Social Security income, but most senior citizens aren’t up to speed on the rules. What do you need to know?
Senior citizens can boost their monthly Social Security income by delaying their benefits, but most lack a full understanding of how the system works.
That’s the conclusion of a survey released this week by AARP, a nonprofit group that aims to improve the quality of life for the nation’s elderly. Americans show a basic understanding of their retirement benefits, but remain unaware that different claiming strategies can have a significant impact on their Social Security income, said AARP.
“When and how to claim Social Security retirement benefits can be a complex decision and is different for everyone,” Jean Setzfand, vice president for financial security at AARP, said in a prepared statement. “This survey shows us that people who are approaching retirement may be facing this decision without enough information to make the right choices for themselves and their families.”
Only 29 percent of the 2,000 survey participants realized that waiting until at least age 70 would mean receiving the highest possible monthly Social Security income, said AARP. Only 10 percent of survey participants said they plan to begin collecting at age 70, yet many of them are expecting Social Security income to be a major source of their retirement income.
Most respondents (62 percent) realized that waiting one year beyond their full retirement age would increase their monthly benefits, but more than half of the participants, who range in age from 52 to 70, underestimate what the increase would be.
“People are worried about retirement,” said Setzfand. “Many know they haven’t saved enough and they’re counting on Social Security. Investors surveyed by Millionaire Corner in February listed retirement security as their most significant financial concern. Worries about having enough savings to last retirement far exceeded any other financial concern, including job security, personal debt, home values, educational expenses for children and grandchildren, inflation and health care costs.
Retirement fears were highest for investors in their 50s who are approaching traditional retirement age. More than 30 percent listed retirement security as their top financial concern. More information about claiming strategies to boost Social Security income, said Setzfand, of AARP, might give Americans approaching retirement “some financial peace of mind.”
Fewer than one in 10 of participants in the AARP surveyed rated themselves as very knowledgeable, while more than half described themselves as a “little knowledgeable” or “not at all knowledgeable.” Respondents revealed a low level of understanding of the “earnings test,” which applies to individuals who are still working and who claim benefits prior to their full retirement age, and an incomplete understanding of spousal benefits and their implications for Social Security income.