Most Americans do not think they can depend on Social Security for retirement income, adding to their worries about long-term financial stability, a new study from Allianz Life finds.
According to the firm’s 2023 1Q Quarterly Market Perceptions Study, nearly three in four (74%) respondents do not believe they can count on Social Security benefits when planning retirement income. At the same time, 88% say it is critical to have another source of guaranteed income beyond Social Security benefits in order to have a comfortable retirement.
These findings come as the Social Security Trustees’ latest report shows that the Old-Age and Survivors Insurance (OASI) Trust Fund will be able to pay full benefits only until 2033, one year earlier than reported last year. At that time, that fund’s reserves will become depleted and continuing program income will be sufficient to pay only 77% of total scheduled benefits.
“Social Security benefits are often the backbone of a retirement strategy, but it cannot be your entire strategy,” said Kelly LaVigne, Allianz Life’s Vice President of Consumer Insights. “A strong retirement strategy will ensure you have enough guaranteed income to cover your essential expenses. That guaranteed income can come from Social Security benefits along with other investments and protection products such as annuities.”
Americans are also expressing ongoing concern about the economy and investing. Compared to last year, fewer Americans worry that a major recession is right around the corner (57% versus 66%), yet 41% still say they are concerned they will be laid off because of an economic downturn in 2023.
In addition, nearly two-thirds of respondents (63%) are keeping more money out of the market than they think they should and 62% would rather have their money sit in cash than endure market swings.
Long-term financial health is another area of ongoing concern for most Americans. For example, 78% worry that they might not be able to afford the lifestyle they want in retirement due to the increased cost of living. This is up from 73% last quarter and 68% from the first quarter of 2022.
Meanwhile, 66% of respondents worry that if they don’t increase their retirement savings soon, it will be too late to have a comfortable retirement. These long-term financial concerns seemed particularly acute for Gen Xers who were born between 1964 and 1978.
In this case, Allianz Life reports that 43% of Gen Xers worry their employer will suspend their 401(k) match, compared to 38% of Millennials (born between 1979 and 1996) and 24% of Baby Boomers (born between 1945 and 1963).
Additionally, more than two-thirds (67%) of Gen Xers say they are keeping more money out of the market than they should, compared to 66% of Millennials and 54% of Boomers. Similarly, 85% of Gen Xers worry that they might not be able to afford the lifestyle they want in retirement because of the increased cost of living, compared to 80% of Millennials and 72% of Boomers.
“Gen Xers are entering into and in critical years of retirement preparation,” LaVigne further observes. “Many people are often in their highest earning years in their 40s and 50s and finally able to really save a significant amount of money for retirement. This is when they need to establish strategies and really focus in on how they are setting themselves up for the retirement lifestyle they want.”
The 2023 1Q Quarterly Market Perceptions Study is based on an online survey conducted in March 2023 among a nationally representative sample of 1,005 adult respondents.
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