Do you feel insecure about social security? You are not alone.

It’s probably not surprising that the ongoing economic fallout from the pandemic, including inflation, market volatility, and the threat of a recession, has led millions of Americans to reevaluate their retirement plans. New research of the National Retirement Institute┬« shows that two-thirds of Americans (66%) say they worry more now than before about their retirement income – that’s a 10-point increase from 2021!

In unstable times like the ones we are experiencing, it is easy to make emotional decisions with lifelong implications. Unfortunately, according to the survey, misconceptions about social security, which forms the basis of nearly all American retirement income strategies, are all too common. The good news is that with the right advice from a trusted financial professional, you can avoid unwanted consequences that could result from an uninformed decision.

What people are wrong about social security

About half (49%) of consumers believe that if they apply for social security early, their benefit will automatically increase once they reach full retirement age, but it won’t. A sizeable number of boomers (39%) who are currently not receiving a social security plan to qualify for their benefits before full retirement age, a decision that could cost them in the long run and should only be made with an eye on the issues. implications for the future.

Misperceptions like this could make a huge difference in maximizing retirement income. That’s why I think it’s important that even the most seasoned retirement savers involve an advisor or financial professional in their social security decision making.

While 91% of respondents said they are at least somewhat confident in their social security knowledge, only 7% are able to identify the factors that determine maximum benefit, including:

  • Work history. Your benefits are based on your average indexed monthly earnings over the 35 years you earned the most.
  • Age. Although you may start receiving benefits as early as the age of 62, you are not entitled to the full benefit until you reach full retirement age, which varies by year of birth, and to qualify for the benefit maximum you should wait until the age of 70.
  • Benefit of the breakeven age. If you start receiving benefits before full retirement age, you will receive a lower benefit for a longer period; if you wait until your full or later retirement age, you will receive a higher monthly allowance for a shorter period. For those waiting to reap the benefits, if you live long enough, there comes a point where your total benefits will exceed the total you would get from starting them earlier. This is the age of social security breakeven.
  • Marital status. The maximum individual retirement benefit is based on the employee’s top 35 years of income subject to social security taxes. Both spouses in a married couple may be eligible to receive the maximum individual pension benefit, depending on their individual earning history. In 2022, the maximum monthly benefit ranges from $ 2,364 for those retiring at age 62, to $ 4,194 for those waiting up to age 70. It is also worth noting that deciding to benefit early can have huge implications for surviving spouses. When a spouse applies before full retirement age (FRA), you are potentially blocking a lower survivor’s pension for the other spouse.

Almost half of adults (49%) do not know or do not know what percentage of their income is or will be replaced in retirement by social security. This makes it difficult to build a plan to ensure your retirement income is enough to help you maintain the standard of living you might expect.

A little help goes a long way

A financial professional can help you estimate the income you will receive from Social Security and identify additional sources of income to supplement your Social Security benefits or provide income that allows you to delay applying until full retirement age. This could include potential solutions such as annuities, life insurance, mutual funds, or exchange traded funds (ETFs).

There was a widely held misconception in our survey that could be good news for many retired savers, particularly at a time when inflation is at the forefront of almost everyone. More than two-thirds of Americans don’t realize that Social Security is protected from inflation. Recent estimates say that the cost of living (COLA) adjustment in 2023 could reach 10.5% or more, providing a potentially crucial buffer for many against rising interest rates and 10-year inflation.

With financial news headlines continuing to provide daily reminders that few of us are on the straight line to retirement safety, remember that you don’t have to navigate this difficult scenario alone. Working with a trusted and qualified financial professional can help you feel more informed, prepared and confident in making the best decisions for your unique circumstances.


Senior Vice President, Nationwide Retirement Institute, Nationwide

Kristi Martin Rodriguez is currently senior vice president of the Nationwide Retirement Institute® for Nationwide Financial, leading the defense and training teams of members, partners and industry leaders on issues that impact their ability to have a secure financial future. She was a founding member of the Ohio branch of the National Association of Securities Professionals (NASP), an organization that helps people of color and women achieve industry inclusion.

Leave a Reply

%d bloggers like this: