Many Americans lack awareness of their Social Security benefits

Many Americans lack awareness of their Social Security benefits

Americans are leaning on Social Security to keep them financially afloat during their retirement years - but in many cases, they aren't fully aware of how the system works. The Bankers Life and Casualty Company Center for a Secure Retirement (CSR) has released a new study, finding a number of gaps in retirees' knowledge of retirement financing.

The study, entitled "The Longevity Risk and Reward for Middle-Income Americans," surveyed 500 Americans ranging in age from 55 to 75. Of the retirement-age persons polled, 34 percent failed to realize that delaying retirement will lead to a higher rate of benefits paid out after he or she stops working. Furthermore, 47 percent falsely believe that annual cost-of-living increases are guaranteed, and 36 percent think, incorrectly, that full Social Security benefits automatically start at one's 65th birthday.

"Most Americans will rely on Social Security to fund their retirement years but the program was never designed to replace all of your income," said Chris Campbell, vice president of marketing and business development at Bankers Life and Casualty Company. "Know your full retirement age and explore your income options. Many products and services exist for people with virtually any level of income."

Using expense management products to manage one's budget while on Social Security is vital. Without the proper software tools, there are a number of tax laws one might miss. Did you know, for instance, that approximately one-third of those receiving Social Security benefits must pay taxes on that income? If you're not up to date on the tax code, you might find yourself in trouble.

Awareness isn't exactly running high these days - CSR found that 35 percent of middle-class Americans do not know how much they stand to make from Social Security once they retire. But with the right tools, taxpayers can learn the ropes in no time, and it will certainly benefit them down the road.