COLUMBUS, Ohio, June 30, 2021 /PRNewswire/ -- While many Americans feel confident in their knowledge of Social Security, that assuredness stands in contrast to their actual understanding of its critical components, reveals Nationwide's 8th Annual Social Security Consumer Survey.
Conducted by The Harris Poll on behalf of Nationwide Retirement Institute®, the study finds more than half of Americans not already receiving Social Security benefits (54%) say they know exactly how to optimize their Social Security benefit, however only 6% know all the factors that determine the maximum benefit someone can receive. Other common knowledge gaps include:
Eligibility age: Two in five (39%) don't know the eligible age to receive full benefits
Payments: Half of those not already receiving Social Security (51%) don't have a clear sense of how much they will receive in Social Security income
Spousal/child benefits: 30% don't know that Social Security may offer benefits for spouses and children
Inflation protection: More than a third (37%) incorrectly believe that Social Security benefits are not protected against inflation
No adjustments: 45% mistakenly believe if they claim early, their benefits will go up automatically when reaching full retirement age or don't know this is false
This knowledge gap even extends to Americans currently receiving Social Security benefits. More than half of current beneficiaries (55%) don't know what percentage of their pre-retirement income Social Security is replacing.
"It's indisputable that Americans across all generations need more Social Security education," said Tina Ambrozy, senior vice president of Strategic Customer Solutions at Nationwide. "Unfortunately, failing to close the knowledge gap and correct some of these misconceptions can have costly repercussions. Financial professionals must help their clients understand this bedrock of retirement security in America and plan properly to maximize their Social Security benefit."
Americans are wary of Social Security's sustainability
Americans may not be taking the time to educate themselves about Social Security because they don't think it'll exist when they're ready or need to claim their benefit. Seven in 10 adults age 25+ (71%) worry about the Social Security program running out in their lifetime — especially millennials (77%) and Gen Xers (83%). Surprisingly, even 61% of baby boomers agree. Even more, nearly half of millennials (47%) believe that they "will not get a dime of the Social Security benefits they have earned."
The COVID-19 pandemic has contributed to this pessimistic outlook. Six in 10 Americans (59%) say they worry more now than they did before about Social Security running out of funding. Around one in five (19%) say the pandemic has impacted their plans to file for Social Security benefits, with 9% planning to file for it earlier and 11% delaying filing.
The immediate opportunity for financial professionals
The pandemic has been a wakeup call for Americans to reevaluate their finances and retirement plan, including their reliance on or plan for Social Security benefits. More than two-thirds (68%) say it is now more important than ever to optimize their Social Security. This percentage jumps to 80% for Gen Xers and 71% for millennials.
Today's challenge is that more than half of adults age 25+ (53%) who work with a financial professional say that person doesn't provide advice about how and when to file for Social Security benefits. However, two thirds (66%) say they would be likely to switch to a financial professional who could.
"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."
Ambrozy adds that financial professionals can help consumers effectively and holistically prepare for the future by having more in-depth client conversations around understanding and maximizing Social Security benefits. The Nationwide Social Security 360 Analyzer® can help financial professionals assess a client's goals to better advise on the optimal time to claim Social Security.
Methodology This survey was conducted online within the U.S. by The Harris Poll on behalf of Nationwide between April 19 and May 7, 2021 among 1,931 U.S. adults age 25+ (national sample) including 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 for age by gender, education, race/ethnicity, region, household income, marital status, and household size.
About The Harris Poll The Harris Poll is one of the longest running surveys in the U.S. tracking public opinion, motivations and social sentiment since 1963 and is now part of Harris Insights & Analytics, a global consulting and market research firm that delivers social intelligence for transformational times. We work with clients in three primary areas; building twenty-first-century corporate reputation, crafting brand strategy and performance tracking, and earning organic media through public relations research. Our mission is to provide insights and advisory to help leaders make the best decisions possible. To learn more, please visit www.theharrispoll.com.
About Nationwide Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the United States. Nationwide is rated A+ by both A.M. Best and Standard & Poor's. An industry leader in driving customer-focused innovation, Nationwide provides a full range of insurance and financial services products including auto, business, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; excess & surplus, specialty and surety; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com. Follow us on Facebook and Twitter.
This material is not a recommendation to buy, sell, hold, or rollover any asset, adopt an investment strategy, retain a specific investment manager or use a particular account type. It does not take into account the specific investment objectives, tax and financial condition or particular needs of any specific person. Investors should work with their financial professional to discuss their specific situation.
This information is general in nature and is not intended to be tax, legal, accounting or other professional advice. The information provided is based on current laws, which are subject to change at any time, and has not been endorsed by any government agency.
Nationwide and The Harris Poll are separate and non-affiliated companies.
Nationwide Investment Services Corporation (NISC), member FINRA, Columbus, OH. Nationwide Retirement Institute is a division of NISC.