Common misconceptions about US retirement that can cost you thousands of dollars

New research has shown that what you don't know about social security can cost you tens of thousands of dollars in retirement income. What exactly is at stake, said the publication Yahoo!.

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“What gets overlooked are the very basics, which are Social Security and retirement,” said Christian Worstell, content writer at HelpAdvisor.com.

Six in 10 seniors agree that the social security program is “difficult to understand and confusing,” while only 12% of seniors disagree. This confusion could jeopardize their financial security in retirement.

A poll of 1000 Americans age 55 and older found that there are four common misconceptions about social security that Americans hold.

When the full benefits begin

Two out of three Americans mistakenly believe that full Social Security benefits start at age 65. The actual age for full benefits is 66 for people born between 1943 and 1959 and 67 for those born after 1960.

“We've always associated age 65 as the most magical age, when you retire and get Social Security and Medicare,” Worstell noted. “We all figure if our grandparents retired at 65 and our parents retired at 65, so we’re going to retire then too.”

People don't realize that it's been 14 years since full benefits came with your 65th birthday, and the age to qualify for full benefits has slowly risen over the years. Many are "really in for a reality check" if they think 65 is the finish line, Worstell said, and could push some to pay benefits before they reach full retirement age.

On the subject: 7 Myths About US Social Security That Could Cost You Your Pension

But applying for early benefits means losing money. Take, for example, a 65-year-old who starts receiving Social Security benefits this year, he will receive only 91% of his total retirement benefit, and in 2021 he will miss out on $ 1. That means more than $ 667 in lost income if he will receive a pension for another 25 years, and more than $ 000 in lost income if the pension is continued for 15 years.

How much social security is paid after the death of a spouse

Many Americans have no idea that the Social Security lump sum death benefit is a one-time payment of only $255. Two in five respondents believed they would receive at least $500, with one in six relying on $5000 or more.

The overestimation is "understandable" given that the average cost of a funeral is over $ 9000, Worstell said, and many Americans expect the payment to be close to covering the funeral.

That means some “seniors are not planning for expenses through savings or insurance, and they may have to turn to crowdsourcing because they are “not adequately prepared for funeral costs,” Worstell said.

When survivor benefits come into effect

One in three elderly seniors mistakenly thinks that survivor's benefit starts the month the spouse dies, rather than the month he or she applies to the Social Security Administration.

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Delaying your claim for survivor benefits by just one month could result in a loss of nearly $4000 (for the maximum benefit) and more than $1500 for the standard amount. There are also no retroactive payments, so every month after death is another month of lost income.

What Social Security Benefit Includes

More than one in three seniors mistakenly believe that social security benefits include health insurance.

“Everyone mistakenly believes that they are the same thing,” Worstell noted. — Although there are many similarities between Social Security and the two Medicare programs, they are separate programs. You have to enroll in Medicare, and Social Security does not include any actual health insurance.”

Because programs are separate, Social Security and Medicare are not a two-time enrollment. Medicare coverage has a specific enrollment window and seniors may incur penalties for late enrollment.

The results showed that skipping the enrollment period by just 12 months can cost an older person more than $ 350 per year (depending on their income).

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