Nearly two in three (63 percent) future retirees admit they are not confident in their knowledge of Social Security—and it shows. A quarter of U.S. adults (27 percent) in retirement say their Social Security payment is less than expected, and one in four (26 percent) future retirees believe they can live comfortably in retirement on Social Security alone.
The fifth annual survey from the Nationwide Retirement Institute, conducted online by The Harris Poll among 1,013 U.S. adults ages 50 or older who are retired, or plan to retire in the next 10 years, finds that over half (55 percent) say Social Security will be their main source of retirement income, followed far behind by just 18 percent of older adults relying on their pension.
“It’s problematic that so many people are planning to rely solely on Social Security for income in retirement,” said 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.”
For example, most older adults think they are eligible for Social Security benefits sooner than they actually are, including 57 percent of future retirees. They also expect to receive $1,628 on average as a monthly payment from Social Security. However, that’s almost 30 percent more than what current retirees say they collect ($1,257). Concerningly, nearly nine in 10 (88 percent) older adults don’t know what factors determine the maximum Social Security benefit an individual can receive.
“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,” Ambrozy added. However, only 13 percent of older adults say they have a financial advisor who provides them Social Security advice. It’s not that they don’t want the advice. In fact, nearly three in four (72 percent) future retirees currently working with a financial advisor say they would likely switch financial advisors to work with an advisor that can help them maximize their Social Security benefits. It’s easy to see why. Those working with a financial advisor report receiving over 20 percent more in Social Security benefits than those who don’t ($1,500 vs $1,234). Plus, those working with a financial advisor are much more likely than those not working with an advisor to say they were able to do the things they wanted in retirement (83 percent vs 55 percent).
You can find the full press release here and a PDF of the survey results (in inforgraphic form) here.