More than two-thirds of Americans (68%) say optimizing Social Security benefits is more important than ever, yet more than half who work with a financial professional aren’t getting advice on the best time to file, a new study says.
About 53% of respondents 25 and older said their professionals hadn’t given them such advice. However, two-thirds (66%) say they would be likely to switch to one who would, found a recent poll by Nationwide, one of the largest U.S. insurance companies.
“It’s indisputable that Americans across all generations need more Social Security education,” Tina Ambrozy, senior vice president of Strategic Customer Solutions at Nationwide, said in a press release.
Most Don’t Know What Affects Benefit Amount
More than half (54%) of those not yet receiving Social Security said they know how to optimize their benefits. Still, only 6% knew all the factors that determine the maximum payment someone can receive.
Almost two-fifths (39%) did not know the age at which they were eligible to receive full benefits. About half (51%) of respondents not yet receiving benefits were unaware of how much income they will receive when they do file.
Among those already receiving benefits, 55% did not know what percentage of their pre-retirement income Social Security replaces.
Many respondents were incorrect in thinking that if they claimed early, their benefits would automatically be adjusted upward at full retirement age. Nearly half (45%) either incorrectly believed their benefits would automatically be bumped up or did not know that idea was false.
Meanwhile, more than a third of surveyed individuals did not know that Social Security benefits are adjusted for inflation.
“This survey shows us that Social Security is too complex for many Americans to navigate alone, which creates the need for trusted financial professionals to help them determine the best plan for them,” said Ambrozy. “There is an immediate opportunity for professionals to answer clients’ call for help and ensure their strategy aligns with their long-term planning and retirement goals.”
Pandemic Raises Worries
The poll also found that 71% of respondents were concerned that Social Security would run out of money during their lifetimes. Even among baby boomers, 61% believed the program was likely to run out of money in their lifetimes.
The COVID-19 pandemic has increased worries about the Social Security’s financial solvency and resulted in a surge in retirements. In the poll, 59% of respondents stated they worry more now than they did before the pandemic about Social Security running out of funding. About one-fifth of respondents (19%) said they have changed their plans on when to file for benefits. Approximately 9% plan to file earlier and 11% plan to delay filing.
The Harris Poll conducted the survey online on behalf of Nationwide April 19 and May 7, 2021, of 1,931 U.S. adults age 25+. The national sample included 627 millennials (age 25-40), 634 Gen Xers (age 41-56), and 670 boomers (age 57+). Data were statistically weighted as needed to bring them in line with the population of U.S. residents age 25+ from the 2020 Current Population Survey.
Jonas Gryder is a freelance journalist.