Concerns about saving enough for retirement and Social Security running out of money were present even before the pandemic, but new survey results show that those fears are becoming even more amplified among consumers.
The Nationwide Retirement Institute conducted two surveys (a COVID-19 flash poll on Social Security and the firm’s seventh annual Social Security survey) during and before the pandemic began. It found that well over a third of Americans (38%) say their retirement plans have been impacted, with the most common responses being that they will have to retire later than planned (19%) or won’t be able to retire at all (10%).
And while many retirees receive Social Security as a source of retirement income, COVID-19 has adults across generations (61%) even more worried than before about Social Security running out of funding. In fact, 63% of respondents think it is more important now than it was before to optimize Social Security and more than one in four who are eligible for Social Security (28%) say the pandemic has caused them to change their decision on when to file for benefits.
“Americans are facing complex retirement scenarios as a result of the COVID-19 pandemic and market volatility,” says Tina Ambrozy, senior vice president of Strategic Customer Solutions at Nationwide. “On top of this, adults across generations lack a basic understanding of Social Security benefits and ways to maximize those benefits.”
Funding Problems
In fact, even before the pandemic, Nationwide found that a majority of adults worried Social Security would run out of funding in their lifetimes (79% Millennials, 81% Gen Xers and 66% Baby Boomers). Millennials are especially skeptical about Social Security funding—44% of Millennial respondents believe they will not get any of the Social Security benefits they have earned, compared to 35% of Gen Xers and 10% of Boomers.
Millennials (67%) and Gen Xers (61%) are also more likely than Boomers (51%) to believe there will be Social Security cuts under the current administration and be concerned about those cuts (71% of Millennials, 68% of Gen Xers and 55% of Boomers). In addition, many believe they will need to continue working because Social Security won’t pay enough (75% of Millennials, 72% of Gen Xers and 48% of Boomers).
The findings also suggest that a better understanding of Social Security is needed because large percentages of respondents across generations do not have a firm grasp of how the program works. Common misconceptions and uncertainties include:
- The (incorrect) belief that if adults claim benefits early, their benefits will go up automatically when they reach full retirement age—only 45% of Millennials, 49% of Gen Xers and 69% of Boomers correctly identify that this statement is false.
- Nearly all Millennials (97%), most Gen Xers (90%) and four out of five Boomers (80%) incorrectly identify the age at which they are eligible for full benefits.
- Fewer than 1 in 10 adults know all the factors that determine the maximum benefit (4% of Millennials, 6% of Gen Xers and 7% of Boomers).
- Half or more say they do not know how much of their income will be replaced in retirement by Social Security (49% of Millennials, 49% of Gen Xers and 57% of Boomers).
Eager to Learn
Given this lack of knowledge, most are open to learning more about Social Security—particularly Millennials (94%) and Gen Xers (92%), compared to Boomers (84%). Among the generations, 29% of Millennials, 25% of Gen Xers and 13% of Boomers would prefer to talk with a financial advisor to learn more about Social Security.
Furthermore, most adults who either work with a financial advisor or plan to ask one about Social Security (86% of Millennials, 93% of Gen Xers and 74% of Boomers) say if the advisor could not show them how to maximize their Social Security benefits, they would find one who could.
“With so much uncertainty, many people are looking for help in identifying ways to take better control of their finances. In fact, in an April poll we found that one in four adults (24%) say they have reached out to a financial professional for the first time as a result of the pandemic,” Ambrozy noted.
Nationwide’s COVID-19 Social Security survey was conducted online by the Harris Poll between May 15-19, 2020, among 2,026 adults aged 18 and over within the U.S. The seventh annual Social Security survey was conducted Feb. 19-March 6, 2020, among 1,727 U.S. adults age 24 or older who currently collect or plan to collect Social Security benefits.
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