Social Security News for Senior Citizens
Social Security News
Social Security important to all but few know much about it
AARP, financial planners release survey results on knowledge gap
Oct. 1, 2015 - Everyone agrees Social Security is very important but two new AARP surveys show that few really have any idea how it works. Financial planners say about 1 percent of their clients understand it and a survey of older Americans who have not reached age 65 found only 9 percent believe they are very knowledgeable.
Only 9% of consumers believe they are very knowledgeable about how Social Security benefits are determined and just 1% of Certified Financial Planner (CFP) professionals say their clients are very knowledgeable about Social Security "claiming", according to results of this new joint survey released by the Financial Planning Association (FPA) and AARP.
The survey results reveal a great deal about the enormous knowledge gap consumers, including clients of CFP professionals, face as they determine how to claim Social Security benefits, says AARP.
Although most acknowledge they know little about Social Security, the vast majority of consumers (77%) and CFP professionals (85%) say that maximizing benefits is very important.
Details on key findings from the survey, Social Security Planning in 2015 & Beyond: Perspectives of Future Beneficiaries and Financial Planners, are below:
What Consumers Think They Know and What They Actually Know:
· Only 9% of consumers believe they are very knowledgeable, with an additional 38% who believe they are somewhat knowledgeable about how their benefits will be determined.
· Just 1% of CFP professionals believe their clients are very knowledgeable and 31% say their clients are somewhat knowledgeable about claiming Social Security.
· Fewer than 4 in 10 consumers (39%) believe Social Security will make up at least half of their income even though AARP research shows that as Americans age, their reliance on Social Security increases significantly, with nearly 6 in 10 Americans relying on Social Security for at least half of their retirement income after they reach 80 years of age.
· More than 4 in 10 planners (42%) say Social Security is likely to be a major source of income in retirement for their clients.
· 83% of consumers overestimated or underestimated the amount of money they would receive if they waited to become beneficiaries at their full retirement age, with 67% underestimating and 16% overestimating the impact on waiting until full retirement age to claim benefits.
· 80% of those who have ever been married do not know the correct age at which they should claim their own benefits (age 70) if they want to maximize survivor benefits for their widow, with 69% incorrectly believing they could maximize survivor benefits by claiming before age 70 and 11% incorrectly believing they could maximize survivor benefits by claiming after age 70.
· 74% of those who have ever been married don’t know that they need to have been married for a minimum of ten years to collect spousal benefits if divorced, with 39% who incorrectly believe they can collect if married less than ten years, 31% who incorrectly believe they could never collect benefits from an ex-spouse’s work record, and 4% who believe they’d need to be married for 11 years or more.
· About 4 in 10 (39%) consumers didn’t know that 62 is the age they can first claim early Social Security retirement benefits.
· Nearly three in 10 (28%) CFP professionals recommend to clients that they wait to claim benefits until age 70, yet only 13% of consumers plan to wait that long.
CFP professionals think more education can help:
· Nearly half (46%) of CFP professionals recommend that their clients review their estimated Social Security retirement benefits at least once per year and nearly an equal amount (45%) say they should review their estimated benefits every couple of years.
· Consumers get their claiming information from numerous sources, including an equal amount of individuals who get their information from AARP or a financial professional (16%). Many also seek out a variety of sources including friends or family members (46%); the Social Security Administration (45%); newspaper articles (33%); financial magazines or books (22%); financial television shows (17%); and several other sources.
· “Choosing when to claim Social Security is one of the most important financial decisions many Americans will make as they prepare for retirement.” added AARP Chief Public Policy Officer Debra Whitman.
· “We found that far too many consumers don’t understand the rules of the road, and this is a case where lack of knowledge can have a major impact for the rest of their lives.”
· For the joint research, AARP commissioned GfK Roper, a national survey research firm, to conduct a national survey of 1,215 adults ages 45-64 who do not yet receive Social Security benefits but are eligible to receive such benefits based on their own work history by age 62.
· The questionnaire was fielded between June 25 and July 9, 2015, using an online Knowledge Panel and had a margin of error of +/- 3.3%.
· FPA completed an online survey of 1,279 CFP.
“For families and individuals looking to claim their Social Security benefits soon, this survey shows that far too many face a claiming knowledge gap potentially leaving thousands of dollars on the table,” said AARP President Jeannine English.
“We hope that this survey encourages Americans to begin their long term financial planning as soon as possible. This important collaboration with FPA shows that anyone getting ready to claim Social Security may risk losing out if they don’t educate themselves with AARP’s free tools, with the help of a CFP professional, or via other methods available.”
“For consumers to maximize their financial potential in retirement they need to consider Social Security and the important role it plays as one of the primary cornerstones of a sound retirement plan,” says FPA President Ed Gjertsen II, CFP.