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Financial Literacy Seminar Explores Knowledge of Social Security

Lisa Schneider (center) and Melissa Knoll listen as Jason Fichtner answers a question at last week's GWSB financial literacy seminar on Social Security.

Many Americans feel unprepared for retirement. But they also overwhelmingly trust the U.S. Social Security Administration (SSA) to keep them informed.

Those were among the survey findings presented Oct. 4 by Lisa Schneider, research director for Matthew Greenwald & Associates, a Washington, D.C.-based public opinion and market research company, at the second installment of the fall Financial Literarcy Seminar Series at GWSB.

The event featured presentations on “Social Security and Retirement Decisions: The Impact of Knowledge and Framing.” Along with Schneider, panelists included Jason Fichtner, senior research fellow at George Mason University’s Mercatus Center, and Melissa Knoll, a social science research analyst for the SSA.

Among other findings, Schneider said that, in one nationally representative telephone survey of 2,000 respondents ages 25 to 65 in March 2010, just 10 percent of those surveyed reported that they would give themselves an “A” grade for being “well prepared financially” for retirement.

“One thing we know is they’re not prepared for it,” said Schneider. “And they know it too.”

Although 82 percent of respondents claimed to be somewhat-to-very knowledgeable about the age at which they will become eligible for full Social Security retirement benefits, researchers also found evidence that there is confusion surrounding such facts as retirement age, benefit-claiming age and benefit levels, Schneider said.

Possibly because of that, many Americans plan to claim their benefits before they reach the age (66 or 67) of full Social Security eligibility, meaning they will not maximize their benefits.

The survey also found that 89 percent of respondents thought it was very important for the SSA to educate Americans about how the system works, and 83 percent thought the agency should help with education about retirement in general.

The study is to be used as a benchmark for SSA’s efforts to improve the financial literacy of the American public.

The SSA avoids giving specific advice on when people should claim benefits, but does explain how the date of claiming will affect benefits.  Currently, about 49 to 50 percent of Americans claim their Social Security benefits as soon as they retire, instead of waiting until they are old enough to claim full benefits, said Knoll. Benefits can be claimed any time after the age of 62.

“When to claim is an extraordinarily important decision,” she said.

The financial literacy series – spearheaded at GWSB by Annamaria Lusardi, Denit Trust Distinguished Scholar in Economics and Accountancy and director of the Global Center for Financial Literacy – brings together academics, practitioners, policy makers, and other experts for presentations and discussions of cutting-edge research on financial literacy. For more on the Social Security seminar, go here.

Posted by gwsb on October 9, 2012 | Filed under: GWSB News.


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