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What’s right for you — Claiming Social Security

Myth: Social Security benefits will provide enough income for my retirement.

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Just 1% of CFP professionals believe their clients are very knowledgeable and 31% say their clients are somewhat knowledgeable about claiming Social Security.

Half of those surveyed, ages 45 to 64, said they expect Social Security to be a major source of their household retirement income.

The survey revealed many are not sure they understand the basic issues of claiming Social Security benefits, and what the impact will be on the decisions they make, including when to start claiming and the myriad of choices. More than 8,000 claiming strategies exist for married couples alone. “In it, the two organizations sought to explore how the experiences and knowledge of future Social Security beneficiaries compare with the experiences and recommendations of professional financial planners related to Social Security’s role in retirement income”.

The report by the Financial Planning Association and AARP released Monday details how only 1 percent of nearly 1,300 financial planners say their clients are very knowledgeable about claiming Social Security benefits.

Almost 30% of financial planners recommend that retirees wait until they are 70 to begin collecting benefits, but just 13% of consumers plan to wait that long. If he is older than full retirement age but had waited to sign up for Social Security so that he could earn delayed-retirement credits, the survivor benefits will be based on the amount he was eligible to receive at the time of his death. FPA estimates a margin of error of +/- 2.6%. There are many online Social Security calculators that can provide you with a quick view of different scenarios.

Here are a few of the biggest areas of confusion and information to help you claim all the benefits you’re due after all those decades of payroll deductions.

Such lack of clarity can result in an ex-spouse forgoing a higher benefit (or any benefit at all). Among the consumers, 16% said they had a financial advisor. “What we’re not doing and where the challenge is in connecting that knowledge with individuals that need that information”, Gjersten said.

All too often, however, consumers rely on secondhand information when it comes to making Social Security decisions. In an excellent book on strategies for claiming Social Security, Get What’s Yours, by Laurence Kotlikoff, Philip Moeller, and Paul Solman, the authors note that once you reach full retirement age, “Social Security will repay you, in the form of permanently higher benefits from this age on, any dollars it earlier withheld from you”.

However, the study said that those numbers are lower than now exist for beneficiaries already drawing benefits-48 percent of current beneficiaries are depending on Social Security for 50 percent or more of their income, with 23 percent of them receiving 90 percent of their income from those Social Security checks.

“That’s disconcerting”, Gjertsen said.

This is an opportunity to learn key concepts you need to know before applying for Social Security.

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“For anyone thinking about taking benefits, they should definitely at least start with their Social Security office for guidance”, he added.

Are you planning to use Social Security as primary income in retirement