A typical American couple may be leaving up to $250,000 on the table in Social Security earnings because they don’t know the best strategy for when to take benefits, says Christopher Jones, chief investment officer of Financial Engines, an independent RIA with $98 billion in assets under management.

In a recent survey conducted by Financial Engines, which specializes in managing retirement accounts for large employers, three-fourths of the 1,000 respondents said they felt comfortable or very comfortable about their ability to make decisions about Social Security.

However, that confidence is misplaced, says Jones. Three-fourths of people taking an eight-question test about Social Security basics got
a C grade or less.

“Social Security is extraordinarily complex. The implications are that people do not know what to do when making Social Security decisions,” he says. “Advisors also have a gap between confidence and competence when it comes to Social Security, but there has been a lot of interest lately in advisors getting better educated on Social Security. This is a way for them to engage clients and obtain new business.”

Financial Engines recently launched a free Social Security and income-planning tool on its Web site designed to help people gauge their best options for taking benefits.

Most people still take it at 62 years old or within a month or two of retiring, but benefits increase at about 8% a year for each year they are delayed.
“Social Security is one of the best deals in town, but the message is still not out there about how to take advantage of it,” Jones says.