BMO Retirement Institute Report: Lack of Social Security Awareness Could Be Costing Retirees Thousands of Dollars

 BMO Retirement Institute Report: Lack of Social Security Awareness Could Be
                    Costing Retirees Thousands of Dollars

-- Half of Americans are currently collecting or planning to collect Social
Security before full retirement age

-- More than half are not knowledgeable about strategies to maximize benefits-
including when to begin collecting benefits and how spouses are impacted

-- Eighty-three per cent are concerned about the future viability of Social
Security

-- Social Security benefits should be part of a financial plan that includes
other sources of income

PR Newswire

CHICAGO, Nov. 23, 2012

CHICAGO, Nov. 23, 2012 /PRNewswire/ --The BMO Retirement Institute today
issued a report which found that many American retirees do not understand key
issues surrounding Social Security and, consequently, are losing out on a
significant amount of money that could be used to fund their retirement.

The report, Retirees Not Maximizing Social Security Retirement Benefits,
revealed that many retirees are taking their benefits too early and are not
necessarily aware of options and strategies that may result in higher
benefits.

"With factors such as the volatile stock market, longer life expectancy,
rising health care costs and fewer defined benefit pensions, Social Security
may play an even bigger role in ensuring retirement security for the next wave
of retirees," said Stephen Williams, Vice President, U.S. Financial Planning
Strategy, BMO Private Bank. "It's vital that retirees do their research and
seek out expert advice so they can make informed decisions to maximize their
benefits.After all, they paid into the program – why not take full advantage
of it?"

Timing Impacts Dollars

The report noted that the decision about when to take Social Security has an
impact that can last a lifetime. For example, claiming Social Security as
early as age 62 means receiving a reduced dollar amount for life; meanwhile,
waiting until full retirement age or beyond yields a higher amount for life.
However:

  oWhile 91 per cent of respondents understood that waiting longer increases
    the monthly amount they will receive, almost half admitted they are
    currently collecting or planning to collect before full retirement age.
  oCouples are particularly vulnerable since a claim impacts both for their
    combined lifespan and can significantly affect spousal and widow benefits.

Influencing Factors

The report also revealed several factors that influence when people begin
taking Social Security:

Too many decisions: When to retire, how much to spend and how to invest
savings all should affect when a person decides to collect Social Security
benefits. However, since so many decisions take place at retirement it appears
that too many options can result in confusion and paralysis, pushing many
people to take Social Security early by default.

Lack of knowledge: Half of Americans (52 per cent) are not knowledgeable about
general strategies to maximize Social Security benefits and 62 per cent have
not actively looked for information. Sixty per cent have not discussed their
Social Security decision with anyone.

Will Social Security survive?: Is Social Security running out of money? An
overwhelming 83 per cent of Americans have concerns about its viability, yet
most studies show Social Security is solvent well into the decade of 2030.

Spouses Have Rights Too

Another area where retirees struggle is how retirement affects their spouse.
The report found that retirees are not fully aware of all their options:

  oAlmost half (49 per cent) of respondents admit they are not knowledgeable
    about spousal benefits.
  oFifty-six per cent are uninformed about widow benefits.

This lack of knowledge means that many could be missing out on thousands of
dollars annually, since under Social Security rules, a person can receive up
to 50 per cent of a spouse's benefit and a widow can receive 100 per cent of a
deceased spouse's benefit.

A Financial Plan Can Help Ensure Social Security Success

The BMO Retirement Institute encourages retirees to make Social Security
benefits part of a financial plan that includes other sources of income.
Benefits should be discussed with a financial professional as part of a wider
strategy, just like investments. The report revealed that only 54 per cent of
retirees have a financial plan, while only 42 per cent of those aged 45-54
have one. Additionally, 69 per cent of those already retired said the advice
they would give to pre-retirees is to make a financial plan.

"Retirees should educate themselves on the various aspects of Social Security
and get advice on what's best for their particular situation," said Williams.
"And be sure to draft a financial plan that incorporates Social Security
benefits along with other retirement income sources to provide a comprehensive
roadmap for covering lifestyle needs, wants and wishes."

To view a copy of the full report, please visit:
www.harrisbank.com/retirementinstitute

*Sources for all data and findings referenced in this release can be found in
the report at www.harrisbank.com/retirementinstitute

BMO and BMO Financial Group are trade names used by Bank of Montreal. Estate
planning requires legal assistance which Bank of Montreal and its affiliates
do not provide. Please consult with your legal advisor.

About the BMO Retirement Institute

The BMO Retirement Institute, a part of BMO Financial Group, was established
in 2008 to provide thought-provoking insight and financial strategies for
individuals planning for, or currently in, their retirement years.

SOURCE BMO Private Bank

Contact: Patrick O'Herlihy, Chicago, patrick.o'herlihy@bmo.com, 312-461-6970;
Beth Copeland, Indianapolis, beth.copeland@bmo.com, 317-269-1395; Carey Allen,
Phoenix, carey.allen@bmo.com, 480-558-6383
 
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