Social Security: What You Don’t Know Can Hurt You

Contributed by: Melissa Joy, CFP® Melissa Joy

For many Americans, Social Security is their largest source of funds in retirement. A recent study conducted by AARP and the Financial Planning Association highlighted lack of consumer knowledge around Social Security. The organizations sampled Americans between ages 45 and 64 who would be or are receiving Social Security as well as financial planning professionals who have the CFP® certification.

People often rely on friends and family to receive information about Social Security – 46% of respondents relied on this group for information relative to 45% who found information from the Social Security Administration (SSA). Much lower on the list of sources was professional financial advisors (16%). Meanwhile just 9% of consumers think they’re knowledgeable about Social Security – and financial professionals estimated that 1% of their clients and consumers in general were very knowledgeable on the subject.

Social Security claiming can be complex. Recipients receive an 8% per year boost in benefits by waiting to file after age 62. Almost 70% of consumer respondents underestimated the benefit of waiting to claim. This is difficult to quantify or understand as a decision-maker.

Knowledge about benefits for widows and divorcees was also low which could result in recipients missing out. Only 20% of respondents knew the correct age for a widow to claim his or her own benefits and only 26% of those surveyed knew that you could be eligible to receive benefits after 10 years of marriage – 31% thought you could not receive benefits based on an ex’s record if divorced.

It’s not surprising that with low levels of understanding of Social Security, people are missing opportunities to increase their lifetime benefits. The SSA reports that the most popular time to receive benefits is at age 62 – more than 35% of men and women in 2012.

What should you do when faced with your Social Security claiming decision? Seek the advice and assistance of a financial planning professional. Incorporate your Social Security claiming strategy with your overall retirement plan. Make sure you’re looking out for yourself today and in the future with an informed decision.

Melissa Joy, CFP® is Partner and Director of Investments at Center for Financial Planning, Inc. In 2013, Melissa was honored by Financial Advisor magazine in the Research All Star List for the third consecutive year. In addition to her contributions to Money Centered blogs, she writes investment updates at The Center and is regularly quoted in national media publications including The Chicago Tribune, Investment News, and Morningstar Advisor.


Financial Advisor magazine's inaugural Research All Star List is based on job function of the person evaluated, fund selections and evaluation process used, study of rejected fund examples, and evaluation of challenges faced in the job and actions taken to overcome those challenges. Evaluations are independently conducted by Financial Advisor Magazine.

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