Americans expect more from Social Security
Survey indicates ‘major disconnect’ with reality
Americans planning to fund postwork years on an average Social Security check of $1,410 a month may want to rethink their retirement savings plan.
Expectations for a secure retirement financed by monthly Social Security checks alone appear to be overly optimistic. That’s largely because of inflated estimates of what Americans expect to receive and the fact many people retire early and start collecting years before they are eligible for full benefits, a new survey from the Nationwide Retirement Institute shows.
The survey, obtained exclusively by USA TODAY, shows a lack of understanding about how to optimize benefits from the government safety net program and the outsize hopes many people have for Social Security.
Half of current retirees and 42% of future retirees say Social Security “is or will be” their “primary source” of retirement income, according to Nationwide’s online survey of 1,013 U.S. adults 50 years of age or older who currently collect Social Security or plan to.
The big reliance is worrisome, mainly because the monthly stipend from the federal government, which the Social Security Administration says averaged $1,410 at the end of March, likely won’t be enough to fund retirees’ spending needs, according to Tina Ambrozy, president of sales and distribution at Nationwide. “There’s a major disconnect between what consumers think their Social Security benefit will be — and cover — compared to reality,” she says.
For example, future retirees surveyed expect to receive $1,628 on average each month. But people surveyed who are already in retirement say they are only collecting $1,257. “It’s like taking a 25% pay cut,” Ambrozy said.
More than a quarter (27%) of Americans in retirement say their monthly benefit is “less than expected.”
Another reason why Social Security checks are smaller than expected: The most common age current retirees started to collect benefits was 62, the earliest age a person can do so, the survey found. The retirement age to receive full benefits is 67 for those born in 1960 or later. Taking benefits early means less money every month.
Top reasons people who retired within the past 10 years and took Social Security early ranged from having health problems (21%) to losing a job (9%), among others, the survey found.
Nearly six of 10 (57%) future retirees think they’re eligible for benefits sooner than they really are; 63% said they were “not confident” in their knowledge of Social Security. Overall, 88% of those surveyed admitted they don’t know what factors determine how much their monthly benefit will be.