“I recently presented the topic of Social Security to an audience of 50 people, and not one member knew you can take a lump-sum from Social Security,” said Sev Meneshian, a certified financial planner and president of Public Retirement Planners LLC in the Greater Chicago area. “The bottom line is a ton of confusion exists around this topic, because there are a number of ways and strategies to make withdrawals."
“It quickly gets confusing for the general public, not to mention financial advisors,” Meneshian added.
A recent survey by MassMutual Life Insurance showed Meneshian’s experience is not uncommon. Only 28% of respondents received a passing grade when asked basic questions about Social Security benefits — while only 8% consider themselves to be very knowledgeable about those benefits.
Almost everyone surveyed held at least one misperception about Social Security. Also, more than seven out of ten did not realize full Social Security retirement age varies depending on the year you were born in, and 55% did not understand how continuing to work affected their benefits regardless of age.
“If you're still working, don't claim benefits before your ‘full’ retirement age if you can avoid it,” said Jack Hillis, president of Hillis Financial Services in San Jose. “While you're employed, you are increasing the underlying benefit upon which your eventual benefit will be determined.”