Social Security Confuses Americans, Experts Say
Aside from a vague suspicion that it is a ponzi scheme of some description, most Americans are confused by the way Social Security works, polling reveals.
Most people understand that there are minimum claim ages at which citizens can begin to draw Social Security. And people kind of get that if they put off receiving benefits, the rate of return increases dramatically- the Christian Science Monitor spoke to the AARP, whose head of retirement finance explains:
“When you scratch beyond the surface, the knowledge really plummets,” said Jean Setzfand, vice president of financial security for AARP, which recently polled older adults on their Social Security knowledge. “I don’t blame people for not knowing and understanding the details. It can be really confusing.”
Deferment is another point of moderate confusion for Americans, who may not fully understand the benefits of delaying Social Security even for a few years. The site explains that deferring after the normal retirement age of 66 or 67 yields a gain of 8% for every year between 66 or 67 and 70. Minnesota retirement advisor Joe Lucey says of increases:
“Eight percent guaranteed is awfully good in any market environment… The biggest mistake people make is they don’t understand the benefits of deferral.”
Lucey says too that people often underestimate the benefits of coupledom on Social Security benefits. He explains that in the case of the death of one spouse, the other often forgets they may be entitled to a larger share:
“Many times, people come in my office and they think of ‘me’ and not ‘we,’ …They think of their own benefit and forget the survivorship benefit that Social Security provides.”
Have you started to make provisions for retirement and Social Security yet?