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Americans’ Lack of Social Security Knowledge Shows
Tina Ambrozy, president of sales and distribution at Nationwide, warns of a major disconnect between what consumers think their Social Security benefit will be—and what this amount will cover—compared to reality.
Results of a new survey conducted by Harris Poll on behalf of Nationwide show nearly two in three workers admit they are not confident in their knowledge of Social Security.
The data was drawn from among more than 1,000 U.S. adults ages 50 or older who are retired, or plan to retire in the next 10 years. Among this group, more than half (55%) say Social Security will be their main source of retirement income. This is followed far behind by just 18% of older adults relying on their pension.
“A quarter of U.S. adults in retirement say their social security payment is less than expected, and one in four future retirees believe they can live comfortably in retirement on Social Security alone,” observes Tina Ambrozy, president of sales and distribution at Nationwide. “It is problematic that so many people are planning to rely solely on Social Security for income in retirement. There is a major disconnect between what consumers think their Social Security benefit will be, and cover, compared to reality.”
The survey identifies a number of Social Security misconceptions. For example, most adults think they are eligible for Social Security benefits sooner than they actually are. One positive note: A little more than half of the adults not currently collecting Social Security don’t plan to start collecting early, as future retirees expect to collect Social Security benefits at age 66, on average. Despite those plans, Nationwide says, the most common age at which retirees start collecting Social Security is 62—the earliest age a person can do so.
According to the survey, future retirees expect to receive $1,628 on average as a monthly payment from Social Security. This is almost 30% more than what current retirees say they collect ($1,257).
“There are also key differences between how future retirees anticipate spending their Social Security compared to how current retirees actually do,” Ambrozy says. “Four in ten older adults do not expect to spend any of their Social Security income on health care, yet 58% of recent retirees report spending their benefit on health care.”
Retired Americans who decided to draw early report doing so to pay living expenses (52%) and to supplement their income (43%). Other reasons for early filing given to Nationwide include being laid off or otherwise becoming unemployed (24%), having no other source of income (22%) and because of health issues (16%).
“Concerning, nearly nine in 10 older adults don’t know what factors determine the maximum Social Security benefit an individual can receive,” Ambrozy warns. “One of the best ways people can understand what their benefits will cover, and how they can maximize them, is by consulting a professional for advice.”
The survey findings suggest just 13% of older adults say they have a financial adviser who provides them Social Security advice.
“It’s not that they don’t want the advice. In fact, nearly three in four future retirees currently working with a financial adviser say they would likely switch financial advisers to work with an adviser that can help them maximize their Social Security benefits,” Ambrozy notes. “It’s easy to see why. Those working with a financial adviser report receiving over 20% more in Social Security benefits than those who don’t ($1,500 vs $1,234).”
Most current retirees getting Social Security say they relied on the Social Security Administration prior to retiring to identify their maximum monthly benefit. However, Social Security filing strategies are more effective when highly personalized, Nationwide says.
“Social Security is undoubtedly one of the most complex retirement topics facing American workers, and most are likely unable to grasp the thousands of rules that apply to Social Security,” Ambrozy concludes. “Preparing for retirement holistically by working with advisers and online tools can help adults maximize their benefit and achieve personal goals.”
“Social Security is undoubtedly one of the most complex retirement topics facing American workers, and most are likely unable to grasp the thousands of rules that apply to Social Security,” Ambrozy said. “Preparing for retirement holistically by working with advisors and online tools can help adults maximize their benefit and achieve personal goals.”
TGA Capital Management partnering with Nationwide to help you about important claiming decisions, Nationwide’s free Social Security 360 Analyzer® provides a comprehensive look at Social Security filing strategies and helps position Social Security in the context of an individual or family’s retirement income needs.
Talk with us to see how you can make the most of your Social Security benefits and request your Social Security 360 Analysis or visit www.tgacapitalmanagement.com
Our powerful tools will help identify optimal filing strategies that could increase benefits by up to 76%
We can generate a personalized report to guide you through your options.
Receive a broader retirement income plan.
Schedule your consultation with Mike; https://calendly.com/mgreen-5
Michael D. Green,
A Registered Investment Advisor
TGA Capital Management
mgreen@tgacapitalmanagement.com
25 Braintree Hill Office Park~ Suite 200
Braintree, MA 02184
1-508-224-9646
P.S. The full results of the survey are available here.
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Nationwide as of May 2016. Based on an individual with full retirement age of 66, comparing early filing at age 62 and receiving reduced benefits of 75% of primary insurance amount versus delayed filing at age 70 and receiving credits to increase benefits by 32% of primary insurance amount.
Variable life and annuities are issued by Nationwide Life Insurance Company or Nationwide Life and Annuity Company, Columbus, OH. The general distributor is Nationwide Investment Services Corporation, member FINRA. Nationwide Funds distributed by Nationwide Fund Distributors LLC, member FINRA. Nationwide Life Insurance Company, Nationwide Life and Annuity Company, Nationwide Investment Services Corporation, and Nationwide Fund Distributors are separate but affiliated companies.
Nationwide, the Nationwide N and Eagle and Nationwide is on your side are service marks of Nationwide Mutual Insurance Company. Social Security 360 Analyzer and Social Security 360 are trademarks of Nationwide Life Insurance Company. © 2018 Nationwide.
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