Columbus, OH - When it comes to Social Security, there is a lot that America’s workers nearing retirement don’t know. Future retirees expect to receive $1,805 a month in Social Security benefits, but retirees currently collecting Social Security receive $1,408 a month on average – a 28% difference. Additionally, more than one in four older adults (26%) believe the can live comfortably in retirement on Social Security alone.

The sixth annual surveyfrom the Nationwide Retirement Institute®, conducted online by The Harris Poll among 1,315 U.S. adults ages 50 or older who are retired, or plan to retire in the next 10 years, finds that nearly half (44%) say Social Security will be their main source of retirement income, followed by just 23% of older adults relying on their pension.

“Social Security is one of the most confusing retirement topics that America’s workers are facing today,” said Tina Ambrozy, president of sales and distribution at Nationwide. “In fact, our survey reveals fewer than one in 10 older adults know what factors determine the maximum Social Security benefit an individual can receive.”

To combat consumer misconceptions, there’s a need for greater understanding and education around Social Security. In fact, seven in 10 older adults (70%) believe they are eligible for full benefits before they actually are. On average, future retirees incorrectly believe they will be eligible for full benefits at age 63, and 26% think if they claim early, their benefits will automatically go up once they reach full retirement age.

Life events impact Social Security drawing decisions

On average, retirees say they began collecting Social Security at age 62. Current retirees that drew early say they needed the money to pay for living expenses (61%), to supplement their income (36%), because they were laid off (26%), had no other source of income (24%) or had health issues (22%). By contrast, future retirees expect to begin collecting benefits at age 65, on average. As a result of collecting benefits early, retirees are foregoing a progressively higher annual Social Security benefit (for each year they wait up to age 70) to be received over the course of their lifetime.

It’s no wonder workers take their Social Security benefit early; it is typically due to health reasons. One-third of retirees (33%) say health problems keep them from living the retirement they expected, and of those, more than three quarters (78%) say their health problems occurred earlier than expected (most often by 5 years or more). In addition, health care expenses keep nearly a quarter (24%) of retirees from living the retirement they expected.

“This data brings to light the importance of planning for health care costs in the years leading up to, as well as through retirement, to help decrease the likelihood of filing for Social Security benefits early and ensuring retirees are financially able to live the retirement they expected,” Ambrozy said.

Confidence in the market and Social Security is low

Retirees also expect a market downturn and have concerns about impacts to their investment portfolio. Nearly six in 10 future retirees (57%) think a recession will hit the U.S. in the next two years, and over one-fourth (26%) foresee it occurring in the coming year.

Future retirees’ worries also expand beyond market volatility and a potential recession – two-thirds (66%) worry that Social Security will run out of funding in their lifetime, 40% believe there will be cuts under the current administration and 83% believe the Social Security system needs changing.

Of those who recommend a change, about half believe the changes should include increased taxes on higher earners to increase funding (53%) and less taxation of benefits (47%). Even those with more investible assets agree: 55% of those with $250,000 or more and 48% of those with $1 million or more believe higher earners should be taxed more to increase Social Security funding.

“Many people feel the best way to improve the Social Security program is to raise taxes on high-earners to increase funding,” Ambrozy said. “Interestingly, our survey reveals that 69% of future retirees were surprised to find out a person making $150,000 a year pays as much in Social Security taxes as millionaires.”

Financial advisors can help

Only 22% of future retirees have a formal written retirement plan, and almost a third (30%) say they did less Social Security planning because it’s too confusing.

About one in three future (37%), recent (28%), and longer-term (30%) retirees currently work with a professional financial advisor. Those working with a financial advisor report:

• Receiving almost 15% more in benefits than those who do not – $1,551 versus $1,324
• Being less likely to plan to draw benefits before full retirement age – 68% versus 55%
• Being significantly less likely to draw Social Security early due to health problems – 7% versus 25%
• Being more able to do the things they wanted in retirement – 90% versus 56%

Of those who work with a financial advisor, around half (46%) of future retirees have received advice on how to handle Social Security.

Of those who have not received advice on Social Security from their advisor, 34% say that advice is something they expect. If a financial advisor could not show them how to maximize Social Security benefits, 76% of future retirees who currently work with – or plan to work with – an advisor say they would likely switch and find an advisor who could advise on Social Security.

“Social Security is a complex source of retirement income, often causing a disconnect between what consumers think their benefit will be compared to reality,” Ambrozy said. “Preparing for retirement holistically by working with advisors and taking advantage of online tools can help older adults maximize benefits and achieve personal goals.”

To help advisors work with clients on important claiming decisions, Nationwide’s free Social Security 360 Analyzer® provides a comprehensive look at Social Security filing strategies and helps position Social Security in the context of an individual or family’s retirement income needs.

Learn how to make the most of your Social Security benefits at www.nationwide.com/ssinsights. Advisors can visit www.nationwidefinancial.com/ssinsights

About the survey

The 2019 Social Security Survey was conducted online by The Harris Poll on behalf of Nationwide from February 11 to 21, 2019 among 1,315 U.S. adults aged 50 or older who currently collect or plan to collect Social Security benefits, and plan to retire within the next 10 years (“Future Retirees”, n=455), retired within the last 10 years (“Recent Retirees”, n=439), or retired more than 10 years ago (“10+ Retirees”, n=421). Data are weighted where necessary on age by gender, race/ethnicity, region, education, income, size of household, marital status, retirement status, and propensity to be online, to bring them in line with their actual proportions in the population.

About The Harris Poll

The Harris Poll is one of the longest running surveys in the U.S. tracking public opinion, motivations and social sentiment since 1963 that is now part of Harris Insights & Analytics, a global consulting and market research firm that delivers social intelligence for transformational times. We work with clients in three primary areas; building twenty-first-century corporate reputation, crafting brand strategy and performance tracking, and earning organic media through public relations research. Our mission is to provide insights and advisory to help leaders make the best decisions possible. To learn more, please visit www.harrisinsights.com and connect with The Harris Poll on Twitter and LinkedIn.