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BMO Retirement Institute Report: Lack Of Social Security Awareness Could Be Costing Retirees Thousands Of Dollars

Too many decisions: When to retire, how much to spend and how to invest savings all should affect when a person decides to collect Social Security benefits. However, since so many decisions take place at retirement it appears that too many options can result in confusion and paralysis, pushing many people to take Social Security early by default.

Lack of knowledge: Half of Americans (52 per cent) are not knowledgeable about general strategies to maximize Social Security benefits and 62 per cent have not actively looked for information. Sixty per cent have not discussed their Social Security decision with anyone.

Will Social Security survive?: Is Social Security running out of money? An overwhelming 83 per cent of Americans have concerns about its viability, yet most studies show Social Security is solvent well into the decade of 2030.

Spouses Have Rights Too

Another area where retirees struggle is how retirement affects their spouse. The report found that retirees are not fully aware of all their options:

  • Almost half (49 per cent) of respondents admit they are not knowledgeable about spousal benefits.
  • Fifty-six per cent are uninformed about widow benefits.

This lack of knowledge means that many could be missing out on thousands of dollars annually, since under Social Security rules, a person can receive up to 50 per cent of a spouse's benefit and a widow can receive 100 per cent of a deceased spouse's benefit.

A Financial Plan Can Help Ensure Social Security Success

The BMO Retirement Institute encourages retirees to make Social Security benefits part of a financial plan that includes other sources of income. Benefits should be discussed with a financial professional as part of a wider strategy, just like investments. The report revealed that only 54 per cent of retirees have a financial plan, while only 42 per cent of those aged 45-54 have one. Additionally, 69 per cent of those already retired said the advice they would give to pre-retirees is to make a financial plan.

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