Social Security: Most Americans Don’t Know the Basics
Social Security benefits are the most important source of U.S. retirement income, but a new Nationwide Retirement Institute survey about retirement planning found that there’s a lot that Americans need to brush up on.
Most Americans feel like they have a solid understanding of Social Security, yet are uncertain how to factor Social Security into their retirement plan or if the program will be there when they retire.
According to the survey, 89% of U.S. adults are at least somewhat confident in their Social Security knowledge; however, only 16% know what age they are eligible for full benefits, 45% believe or don’t know Social Security benefits will go up automatically when reaching retirement age after filing early, 54% don’t know what percentage of their income will be replaced by Social Security and 55% don’t know that Social Security benefits are tax-free.
Knowing how Social Security benefits work can help U.S. workers better prepare for their retirement years. Social Security replaces a certain percentage of a worker’s pre-retirement income based on lifetime earnings, but if you file before full retirement age, monthly social Security benefits are permanently reduced.
Social Security was also never meant to be the only source of income after retirement. According to the Social Security Administration, most financial advisers say you will need about 70% of pre-retirement income to live comfortably in retirement, including your Social Security benefits, investments and personal savings.
The survey also noted that financial professionals can help bridge the knowledge gaps. Two-thirds (67%) of U.S. adults would be interested in talking with a financial professional about creating income streams that would allow them to delay filing for Social Security benefits. Additionally, about half (49%) of U.S. adults would be interested in discussing spousal benefit strategies for Social Security with a financial professional.
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