Do your clients know what percentage of their retirement income will come from Social Security?
If the answer is no, they’re not alone. A recent Social Security retirement benefits quiz from MassMutual found that 69% of near retirees failed or barely passed when asked about their retirement income sources. More than one third (35%) failed and another 34% hardly passed with a D score.
Even as employees believe they can’t count on Social Security for retirement, MassMutual connects the findings to the overarching theme of retirement planning, and how many Americans are unprepared for the long-term.
“One of the most concerning findings was that 43% of near retirees do not know what percentage of their income in retirement will be coming from Social Security benefits,” said Paul LaPiana, CFP, head of product with MassMutual, in a press statement. “Knowing your total retirement income and where it will come from is part of the foundation of retirement planning.”
MassMutual’s findings showed that most respondents knew little about the nuances behind Social Security benefits. Twenty-eight percent of near retirees were not aware that if they have a spouse, the other spouse can receive benefits even if they have no individual earning history. Another 35% did not know that if they had a spouse and the spouse passes away, the surviving spouse will not receive both their full benefit and their deceased spouse’s full benefit. An additional 44% were unaware that if they were to divorce, there is a possibly to collect Social Security benefits based on their ex-spouse’s earnings history.
Additional key findings
MassMutual’s research also found:
- The majority (84%) know that if they take benefits before full retirement, their benefits will be reduced (vs. 89% in 2022). Fewer (77%) know that if they receive benefits before their full retirement age and continue to work, their benefits may be reduced based on how much they make (vs. 82% last year).
- Two out of five (42%) plan to rely on Social Security as their largest source of income in retirement, despite the possibility that benefits could be reduced by 2035. Just over one half (55%) are aware that Social Security benefits could be reduced by 2035 (vs. 60% last year).
- Over one quarter (27%) believe that their income can sustain them 10 or fewer years in retirement. Less than half (42%) believe their income can sustain them 21 years or more. More than a quarter (28%) of near retirees do not know how much money, in addition to Social Security benefits, they will need to retire.
- More than one quarter (28%) believe their retirement income plans account for inflation and market volatility (vs. 17% last year). Just under one quarter (24%) feel they are not at all exposed to stock market fluctuations in retirement.
The online poll was conducted by PSB Insights from March 31 to April 5 among 1,500 Americans nearing retirement (age 55-65) who have not filed for Social Security retirement benefits.
SEE ALSO:
- Most Americans Not Counting on Social Security for Retirement Income
- Debt Limit Standoff: Are Social Security Benefits at Risk?
- 3 Proposals to ‘Fix’ Social Security
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
