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When it comes to Social Security, far too many retirees -- and future retirees -- are in the wilderness. Not only are most Americans not fully informed about the program, they don't know how to maximize their benefits.
Of course, knowing what Social Security offers and how to get the highest-possible benefits are two different things. There's a lot you have to know.
For example, Social Security is more than a retirement program. It offers survivor benefits, disability and even a small death benefit.
And, unlike the derisive "entitlement program" title given to it, the program is really social insurance. It's meant to supplement other savings.
Yet a frightening number of Americans don't know how the program works. There are huge gaps in the public knowledge.
According to a recent AARP/Financial Planning Association study, while 60% of those surveyed knew they could begin taking benefits at age 62, less than half knew how retirement benefits would be determined.
Overall, the public's knowledge about Social Security -- at least according to this survey -- is a mile wide and a few inches deep. Here's what's important.
1) Waiting Makes a Different to Boost Your Total Benefits.
The survey reported that while 88% of those polled knew that waiting until "full" retirement age (66 for most people) will result in a higher benefit than age 62, only one-third knew that waiting until 70% will result in the highest-possible benefit.
If you can wait until 70, each year you hold off from full retirement age boosts your benefit 8% per year. When was the last time you got a guaranteed 8% return on anything?
For more on what the program calls a "delayed retirement credit," go here.
2) Spousal Benefits Add Up.
Surprisingly, only half of those surveyed knew that spousal benefits were based on the other spouse's work history. Social Security bases payments on how much you earned over a lifetime.
As with other benefits, how much you receive depends upon your age and that of your spouse. For an estimate of those benefits, go here.
3) You Can Still Collect Benefits If You're Divorced.
Only a quarter of those surveyed knew this. But there's a catch: You have to have been married at least 10 years and be at least 62 and unmarried now.
Your benefits would be based on your spouse's earnings. The rules get tricky if your situation changes: You can't collect benefits if you remarry.
There are other rules on divorcee benefits. For more information, check here.
4) There are plenty of sources of information on Social Security, but most don't know where to go.
Less than half of those surveyed went right to the Social Security web site for information. While I would never say it's user friendly, it can explain the benefits and give you nuts-and-bolts advice.
You can also apply for retirement payments online, estimate other benefits, get a replacement Medicare card and even change your mailing address through the site.
For more detailed breakdowns on how to maximize your Social Security, see my Forbes colleague Laurence Kotlikoff's calculator.
While the benefits formula is complicated, it boils down to this: The more you or your spouse made, the higher the benefit -- up to certain limits, of course.
Do your research before you take benefits. The time you invest now can add tens of thousands of dollars to your retirement income over time.
