According to a Financial Engines study of more than 1,000 retirees and near-retirees between the ages of 55 and 70, seven in 10 near-retirees (69%) who have not yet claimed Social Security said they would be at least somewhat interested in a service provided by their employer to help them develop a household claiming strategy. Of these, 39% said they would be extremely or very interested in this type of Social Security claiming help.
The study shows people made better Social Security claiming decisions with some helpful guidance about their options. More than half of respondents (52%) who have not yet claimed Social Security were influenced to consider delaying claiming after reading a simple explanation about how benefits vary with different claiming ages. Importantly, the median age respondents planned to claim increased one year (from age 65 to age 66) after watching a short video illustration. Twenty percent of study participants say they would be willing to wait four or more years longer.
Explaining the impact that delayed claiming has on a surviving spouse’s benefit also made 44% of those who have yet to claim Social Security consider claiming at a later date.
“Many people just assume that you claim Social Security starting the day you retire and that there is no need to consider Social Security claiming strategies,” says Financial Engines’ Chief Investment Officer Christopher Jones. “The reality is that the decision of when to claim Social Security is one of the most important decisions in retirement planning. Delaying Social Security even one or two years can make a big difference in household retirement income, and especially for the surviving spouse. There are few financial planning decisions that can have such a dramatic impact on the standard of living in retirement.”
As part of the study, Financial Engines asked people eight questions about claiming Social Security benefits. Seventy-three percent of people who are not yet receiving Social Security scored a grade of “C” or lower” on the quiz. The people with the fewest assets had the least awareness about how Social Security works. Only 5% of respondents were able to answer all eight questions correctly.
The study found that retirees and near-retirees are overconfident in their ability to make good Social Security claiming decisions. Despite the mixed performance on the quiz, three-quarters of people (77%) who have not yet claimed Social Security benefits felt confident in their ability to make a good decision.
The quiz is now available on Financial Engines’ website so anyone can test their Social Security knowledge and get more information.
Greenwald & Associates conducted the research on behalf of Financial Engines. Information for the study was gathered through a 15-minute online survey with 1,008 near-retirees and retirees between the ages of 55 and 70 who have an annual household income of at least $50,000. The survey included 374 people who have already claimed their Social Security retirement benefits (median age of 65) and 634 people who have not (median age of 59).