Americans appear to be conflicted when it comes to collecting Social Security while many are also struggling to have a strategy or knowledge about how best to generate retirement income.
In its just-released 2021 US Retirement Survey, global investment management firm Schroders says that 46% of non-retired Americans ages 45 and older are unsure when they will claim Social Security.
They also found that with only 10% planning to maximize their benefits by waiting until age 70, many Americans may be leaving “money on the table”.
Other insights include:
- 30% plan to begin taking Social Security between the ages of 62-65
- 14% plan to file between ages 66-69
- 13% of non-retired respondents among the ages of 60-67 plan to wait until age 70 to take the benefits with just over a quarter of them remaining unsure of when they would take Social Security
Social Security is cornerstone of retirement
For 52% of non-retired Americans and 58% of retirees, Social Security will be, or is, their primary source of income in retirement – but it won’t be enough to live on, according to 64% of those not retired and 62% of retirees. Respondents have additional sources of income, including cash savings (58%); investment income (48%); pension plan (40%); annuities (19%); and rental income (12%).
Lack of knowledge, retirement strategy
The report highlights some alarming, but not totally unexpected, views about the lack of preparedness when it comes to planning for retirement and how best to use savings and benefits.
Social Security has long been a confusing quagmire to many and the study found that 7 in 10 wish they were more knowledgeable about it. And yet, the decision to pass up larger monthly payments appears to be a deliberate one, as 74% of non-retired respondents (and 84% non-retired aged 60-67) understand that the longer they wait to take Social Security, the more they will receive.
As concerning is that 50% of retirees have no strategies to generate income in retirement and have a “just take money when I need it.” approach. A whopping 74% expressed concerns that they don’t know how to best generate income and/or draw down their assets in retirement.
“Social Security is the primary source of income for the majority of Americans we surveyed, which is why we were surprised to see so many deciding not to wait until seventy for larger monthly payments; or worse, sacrificing their full benefits by tapping into them early,” said Joel Schiffman, Head of Intermediary Distribution, North America, Schroders.
Lynn Brackpool Giles is a contributing editor to 401(k) Specialist. Giles is a former Managing Director of Communications and Consumer Services for the Financial Planning Association (FPA), where she oversaw all corporate, legislative, and consumer communications. In her current journalistic practice, she is a frequent contributor to numerous financial services industry publications.
