According to Nationwide Retirement Institute’s 2022 Social Security Consumer Survey, two-thirds (66%) of Americans are more concerned than ever before about their ability to fulfill their retirement income needs. That number increased by ten percentage points from the 2021 survey. Two of the reasons for this are new concerns over high inflation as well as continued pandemic aftershocks. A continuing knowledge gap about Social Security benefits is also helping to fuel retirement income concerns.
High Inflation Driving Lifestyle Adjustments
As a result of continuing high inflation, the survey reports that:
- 42% of Americans are eating out less and 35% are driving less
- 15% have cancelled or postponed taking a planned vacation
- 12% have cancelled or postponed buying a new or used car
Pandemic Aftershocks Fueling Pessimistic Financial Outlooks
The survey found that Americans are more concerned about the pandemic’s impact on their retirement plans than they were last year. Many continue to be pessimistic about their financial outlook in general:
- 20% of non-retired Americans are pushing back their retirement start date due to COVID-19 this year, compared to just 15% in 2021.
- 47% of Americans are re-evaluating their retirement plans to assess the financial impact of COVID-19, a nine-percentage point jump from 2021 (38%).
- 26% of Baby Boomers who are not currently receiving Social Security plan on filing for Social Security benefits early while continuing to work.
- 39% of Boomers who are not currently receiving Social Security plan on drawing their benefits before their full retirement age.
Social Security Knowledge Gaps Continue
When it comes to Social Security, survey respondents were not optimistic. Seventy percent across generations worry that Social Security will run out of funding in their lifetime. On top of that, one in three adults (33%) not currently receiving Social Security benefits believe they won’t receive any benefits when they retire. In addition, many of the knowledge gaps identified in last year’s survey continue to persist in 2022:
- 49% of adults don’t know or aren’t sure what percent of their income is or will be replaced in retirement by Social Security.
- 44% of those not currently receiving Social Security aren’t sure how much their monthly Social Security payments will be.
- Only 13% of adults correctly guess their full retirement age based on their year of birth.
- 49% mistakenly believe if they file early their benefit will automatically increase once they reach their full retirement age.
- 67% don’t realize that Social Security is protected against inflation.
An Opportunity to Help Your Employees
Survey results like these offer opportunities for you to help your employees stay on track with their retirement planning efforts. Consider using the survey results to help inform your retirement planning education focus for the next several months. You can work with your advisor and plan recordkeeper to provide education materials that cover areas such as the following:
- Definition of inflation, how it’s measured, historical perspective and how to best manage inflation risk in an investment strategy.
- Financial wellness basics, such as budgeting, debt management and building an emergency savings fund, to help relieve continuing financial aftershocks and stress resulting from the pandemic.
- Social Security basics, including:
- Accessing ssa.gov and setting up an account to view future benefit projections as well as other important details.
- Realistic Social Security pre-retirement income replacement expectations.
- Eligible ages to receive retirement benefits (the range of eligible ages is 62-70).
- Definition and clarification of “full retirement age” (for the majority of employees, this will be age 67).
- Factors to consider when deciding whether to take benefits earlier versus later.
- Annual COLA adjustments to Social Security benefits (as an example, in 2022 the COLA is 5.9%; many industry analysts anticipate an even higher number for 2023).
Nationwide’s 2022 Social Security Consumer Survey can be found at: https://tinyurl.com/4w3ud43a
Nationwide. (2022, July). 2022 Social Security Consumer Survey. Social Security Consumer Survey Results – Nationwide