Information on Social Security and its benefits generally isn’t taught in schools or at workplaces. That is likely why the average American struggles to grasp the basic facts of the government program.
There are plenty of education gaps surrounding the Social Security program, according to a recent Nationwide 8th Annual Social Security Consumer Survey, which was conducted by the Harris Poll on behalf of the Nationwide Retirement Institute. Some of the survey’s highlights included information that showed 37 percent of people incorrectly assumed Social Security benefits are not protected against inflation; nearly 40 percent didn’t know the eligible age to receive full Social Security benefits; and 30 percent were unaware that Social Security may offer benefits for their spouses and children.
What to Keep in Mind at Full Retirement Age
Perhaps the costliest mistake that many Americans make is the Social Security information related to a situation in which an individual claims their benefits early. Almost half of the survey’s respondents mistakenly anticipated that the benefits will rise automatically when they reach full retirement age (FRA), which is currently set at sixty-six and two months. Do be aware that over the next several years, though, the full retirement age will gradually climb to sixty-seven.
According to the Social Security Administration (SSA), those individuals who decide to collect their Social Security benefits at age sixty-two, which is the earliest age to do so, will have their monthly benefit amount permanently reduced. “There are advantages and disadvantages to taking your benefit before your full retirement age. The advantage is that you collect benefits for a longer period of time. The disadvantage is your benefit will be reduced,” the agency says.
Stuck With Lower Benefit for Life
Other financial experts and companies, such as the Motley Fool, have also put out similar warnings.
“A lot of people file for Social Security without even knowing their FRA in the first place. Others don’t realize it’s possible to get a do-over if you file too early,” according to the private financial and investing advice site.
“Here’s one thing some seniors don’t realize until it’s too late—if you file for Social Security early, your full benefit won’t be restored once you reach FRA,” according to Motley Fool. “Rather, you’ll be stuck with that lower benefit for life. . . . Despite the fact that millions of seniors rely on Social Security heavily in retirement, there’s a lot of misinformation about the program. And sometimes, all it takes is a single misunderstanding to wind up with a lot less money in benefits than you may have anticipated. Such could be your reality if you wind up falling victim to this avoidable trap.”
Ethen Kim Lieser is a Minneapolis-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.