By Paula Aven Gladych
Most people nearing retirement
don’t realize what a critical decision they have to make when it comes to claiming their Social Security benefits.
It’s all about timing, according to a report by Sunnyvale, Calif.-based Financial Engines. With thousands of claiming strategies out there to choose from, it isn’t all that surprising that people don’t understand their options. According to a survey by Financial Engines and Matthew Greenwald and Associates, 25 percent of respondents were confident in their ability to make a good claiming decision for their household – at the beginning of the survey.
By the end of the survey, one-third acknowledged that claiming Social Security is more complicated than they thought and four in 10 were interested in getting help.
“As people get close [to retirement], the problems they face become more complex,” said Chris Jones, chief investment officer and executive vice president of investment management for Financial Engines. “Social Security
forms the bedrock foundation of most retirees’ retirement income.”
He pointed out that Social Security covers 93 percent of Americans who have access to it and represents a significant portion of their income.
And although respondents were pretty sure they knew how to claim Social Security, by the end of the survey it was clear that “people don’t know much at all about how Social Security works,” Jones said. “People are over-confident when it comes to Social Security. They think they know what they are doing, but they really don’t.”
The claiming process is very complex and the decision that is right for one person may not be right for another. It depends on many variables, including marital status, disability, if someone is widowed or has dependents.
“For a typical married couple, there are more than 8,000 claiming strategies when determining when to take your benefits,” Jones said. “That is overwhelming to most individuals. Very few people recognize there is a decision to be made.”
Originally published on BenefitsPro.com