Continued financial repercussions from the pandemic, new concerns over market volatility and high inflation are all stoking fears about retirement.
According to Nationwide Retirement Institute’s 9th annual Social Security Consumer Survey, two-thirds of Americans (66%) worry more now than they did before about their retirement income—a 10 percentage-point jump from 2021.
The survey findings suggest that Americans’ concerns about the economy and the pandemic are fueling their fears for the future. Nearly 9 in 10 consumers (86%) are concerned about inflation’s impact on the U.S. economy. Older generations are most concerned for the future, with Boomers (at 67%) and Gen Xers (57%) more likely than Millennials (36%) to believe the U.S. economy is getting worse.
What’s more, Americans apparently are more concerned about the pandemic’s impact on their retirement plans than they were last year, with 20% of non-retired Americans pushing back their retirement start date due to COVID-19 this year, compared with just 15% in 2021. Additionally, nearly half (47%) of Americans are reevaluating their retirement plans to assess the financial impact of COVID-19—a nine-percentage point jump from 2021 (38%), the survey shows.
Social Security Misconceptions
Adding to those concerns, most consumers (70%) worry that Social Security will run out of funding in their lifetime, while a third of adult respondents (33%) not currently receiving Social Security benefits believe they won’t get anything when they retire—a prospect that is highly unlikely even give Social Security’s funding shortfalls.
Still, these worries may be leading many older Americans to tap into their Social Security benefits early, according to the survey. In fact, 26% of Boomers who are not currently receiving Social Security plan on filing for Social Security benefits early while continuing to work. In addition, 39% of Boomers who are not currently receiving Social Security plan on drawing their benefits before their full retirement age.
Another challenge is that many Americans are unfamiliar with how Social Security works. Only 7% correctly identified all the listed factors that determine the maximum Social Security benefits an individual can receive, and only 13% of adults guessed their full retirement age correctly based on their year of birth.
In addition, 49% of adults “don’t know or aren’t sure” what percentage of their income is or will be replaced in retirement by Social Security, and 44% of those not currently receiving Social Security are not certain how much their monthly Social Security payments will be. Similarly, 49% of respondents mistakenly believe that if they file early, their benefit will automatically go up once they reach their full retirement age.
Nationwide suggests that these knowledge gaps reveal an immediate opportunity for financial professionals to help their clients better navigate the Social Security landscape. While slightly more than a third of respondents (36%) currently work with a financial professional, more Millennials are turning to financial professionals for help, with 50% reporting that they currently work with one, compared with just 42% in 2021.
Additionally, Millennials (at 30%) and Gen Xers (26%) are more likely than Boomers (12%) to say they prefer to learn more about Social Security from a financial professional.
“It’s understandable that people are worried about retirement in the face of the current economic environment,” says Tina Ambrozy, Senior Vice President of Strategic Customer Solutions at Nationwide. “Individuals at all stages of their careers can benefit from educating themselves about the Social Security system and retirement planning, and a trusted financial professional can help with that education.”
The survey was conducted online by The Harris Poll on behalf of Nationwide between April 25–May 23, 2022, among 1,853 U.S. adults aged 26 or older, including 674 Millennials, 576 Gen Xers and 603 Boomers.