Retirees and soon-to-be retirees may be confident in their ability to make the right Social Security claims decisions, but many could still end up losing out on as much as $250,000, according to a recent study.
That's because many Americans are simply not aware of their options, such as delaying their claims until they're 70 years old, according to experts at retirement plan manager Financial Engines.
"Near retirees ... really don't understand Social Security and are basically overconfident," said Kelly O’Donnell, executive vice president of Financial Engines.
About 77 percent of retirees or near retirees are confident about making Social Security decisions, according to a Financial Engines survey of 1,008 people between the ages of 55 and 70. Meanwhile 73 percent of those surveyed who took an eight-question quiz about Social Security scored a C or worse.
"Social Security may be the best investment deal in town. You can claim Social Security at any age between 62 and 70. For each year you delay, there's a 6 to 8 percent increase in benefits. So from the period between 62 and 70, that equals a 72 percent increase in lifetime benefits," O’Donnell said.
For individuals, that could mean an extra $100,000, and for couples an extra $250,000 in benefits, O’Donnell said.
Retirees could opt to draw only from an IRA or 401(k) until they reach 70, then start claiming Social Security benefits, she said.
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