Nationwide’s “Social Security Consumer Survey,” which detailed its latest findings on payable benefits, says uncertainty on Social Security and the coronavirus pandemic have fueled an interest in younger adults seeking financial advice.
The latest Social Security Board of Trustees findings estimate that benefits will remain fully payable until at least 2034, but that the trust funds’ surplus could be depleted by 2035. If that’s the case, the administration says 79% of benefits will be payable thereafter.
Still, the Nationwide study found that, of its nearly 2,000 participants surveyed, most continue to place confidence in the Social Security Administration and feel that they have a good understanding of the benefit.
According to the report, 89% of U.S. adults say they are at least somewhat confident in their Social Security knowledge. However, the findings suggested that confidence could be misplaced. Only 16% say they know what age they will be eligible for full Social Security benefits, and 45% either mistakenly believe or don’t know it’s false that if they file early, their benefits automatically go up when they reach full retirement age. Additionally, more than half (54%) of adults don’t know what percentage of their income will be replaced by Social Security, and 55% are not aware that Social Security benefits are tax-free for low-income taxpayers.
Younger adults, including Millennials, were less confident in Social Security than their older counterparts, as 47% in the study believe they won’t earn a single dime in benefits once they reach full retirement age. Ninety percent instead say they have additional sources of retirement income to rely on in the latter portion of their lives. Others (44%) said that if they do receive Social Security benefits, they will file early but continue to work after.
In its report, Nationwide highlights actionable steps plan sponsors and plan advisers can take to make sure employees understand what to expect when preparing for retirement and Social Security. The report recommends defining any essential income needs for employees’ post-career lives, planning for potential reduced amounts of Social Security benefits and taking advantage of current employer-sponsored retirement plans.
As a result of their waning confidence in Social Security and impacts of the coronavirus pandemic, more adults say they’re interested in working with financial professionals. In fact, Millennials were the largest group who say they currently work with a financial adviser (42%).
Yet only about half who work with a financial planner say their provider gives advice on Social Security, even as 43% all adult respondents say advice on the topic is a service they expect from the professionals, and 72% say they would likely switch their financial planner if theirs couldn’t show them how to maximize Social Security benefits. Additionally, respondents ranked talking with a financial professional second when it came to learning more about benefits, as their first choice was contacting the Social Security Administration directly.
When asked about the most important topics to discuss with a financial professional, 67% of respondents said they want to learn how to use different income streams to delay filing for Social Security until full retirement age, and 49% reported that they’re interested in spousal benefit strategies for Social Security.