Continued financial repercussions from the pandemic, new concerns over market volatility and high inflation are leading two-thirds of Americans (66%) to worry more now than they did before about their retirement income, according to the Nationwide Retirement Institute’s ninth annual Social Security Consumer Survey. That’s a 10 percentage-point spike from 2021.
Adding to those concerns, most consumers (70%) across generations worry that Social Security will run out of funding in their lifetime. One in three adults (33%) not currently receiving Social Security benefits believe they won’t get a dime of what they’ve earned when they retire.
Despite worries about inflation, the survey also found an important misperception about Social Security: more than two-thirds of Americans don’t realize that Social Security is protected against inflation.
“Every year we find that all generations need more Social Security education, but in this uncertain economic environment it’s more important than ever for people nearing retirement to understand that their Social Security benefits are protected against conditions such as inflation,” said Tina Ambrozy, senior vice president of Strategic Customer Solutions at Nationwide. “There is an immediate opportunity for financial professionals to clear up clients’ misconceptions about Social Security to alleviate their fears and help them stay on track toward their long-term retirement goals.”
Americans Have A Pessimistic Outlook On Their Financial Futures – And They’re Changing Behaviors Accordingly
These worries may be leading many older Americans to tap into their Social Security benefits early. In fact, one in four (26%) Boomers+ who are not currently receiving Social Security plan on filing for Social Security benefits early while continuing to work. Almost two in five (39%) Boomers+ who are not currently receiving Social Security plan on drawing their benefits before their full retirement age.
Survey findings suggest Americans’ concerns about the economy and the pandemic are fueling their fears for the future. Nine in 10 consumers (86%) are concerned about inflation’s impact on the U.S. economy. Older generations are most concerned for the future, with Gen Xers and Boomers+ more likely than Millennials to believe the U.S. economy is getting worse (57%, 67% vs. 36%).
As a result of inflation, Americans across generations are making changes in their daily lifestyles and canceling or postponing life events in the past 12 months because of inflation:
- More than two-fifths (42%) of Americans are eating out less and one-third (35%) are driving less
- 15% have canceled or postponed taking a planned vacation
- 12% have canceled or postponed buying a new or used car
Concerns about COVID-19’s adverse impact on retirement security have accelerated since 2021. Today, Americans are more concerned about the pandemic’s impact on their retirement plans than they were last year, with 20% of non-retired Americans pushing back their retirement start date due to COVID-19 this year, compared to just 15% in 2021. Additionally, almost half (47%) of Americans are re-evaluating their retirement plans to assess the financial impact of COVID-19, a nine-percentage point jump from 2021 (38%).
Most Americans Are Misinformed About Social Security
Survey findings suggest solving Social Security misconceptions may help ease some fears about the future.
Key knowledge gaps include:
- Only 7% correctly identified all the listed factors that determine the maximum Social Security benefits an individual can receive
- Almost half (49%) of adults don’t know or aren’t sure what percent of their income is or will be replaced in retirement by Social Security, and more than two in five (44%) of those not currently receiving Social Security aren’t sure how much their monthly Social Security payments will be
- Only 13% of adults correctly guess their full retirement age based on their year of birth
- Almost half (49%) mistakenly believe if they file early their benefit will automatically go up once they reach their full retirement age
Navigating The Social Security Landscape
These knowledge gaps reveal an immediate opportunity for financial professionals to help their clients better navigate the Social Security landscape. While only about one in three (36%) surveyed currently work with a financial professional, the good news is more Millennials are turning to financial professionals for help, with 50% reporting they work with one in 2022, compared to just 42% in 2021. Additionally, Millennials and Gen Xers are more likely than Boomers+ to say they prefer to learn more about Social Security from a financial professional (30%, 26% vs. 12%).
“It’s understandable that people are worried about retirement in the face of the current economic environment,” continued Ambrozy. “Individuals at all stages of their careers can benefit from educating themselves about the Social Security system and retirement planning and a trusted financial professional can help with that education.”