Many people do not receive the maximum social security benefit they are entitled to when they retire. The confusion begins with the basic rules established for Social Security. Just under 40% of the populace knows that 62 is the earliest age that benefits can be claimed. This finding came from a survey conducted among 45 to 64-year-olds by the AARP and Financial Planning Association.
Both organizations surveyed 1,215 participants or future beneficiaries of social security. The respondents were asked how much income they expected and how well they understood the Social Security program. The research also included a survey that included 1,279 certified financial planners. The CFPs were asked if their clients had a reasonable level of knowledge about Social Security.
Most of the participants, or close to 90%, know that waiting until their full retirement age (66 or 67 years old) gets them a larger monthly check. However, only 5% know just how much more money they will receive by waiting until they are 66 or 67 years old. People tended to underestimate, rather than overestimate, the increase they received by waiting. Also, just one-third of the pre-retirees knew that they can max out their social security benefits by waiting to claim the money until after 70.
Most of the pre-retirees, or 84%, know that if they claim benefits before their full retirement age, the earnings they make will lessen their benefits. The amount retirees can earn before they see their benefits reduced is $15,720 for the 2015 tax year.
Also, the report adds that if you are married to your spouse for 10+ years and are unmarried when she or he dies, you can make a claim on the work record of your ex-spouse, assuming their benefits are higher than your own benefit amount.
About half of the respondents, who have been married, know they can collect social security benefits, based on the work record of their spouse, even if their spouse is still alive. Many, however, did not know that the level of their widow benefits is connected to the age of the spouse, when he or she began collecting benefits.
According to the report, referring to sources, such as the books, Social Security or Dummies or Get What’s Yours, by Laurence Kotlikoff, Philip Moeller, and Paul Solman, can de-mystify some of the confusion in the collection process.