Many middle-income Americans are woefully under-informed about Social Security; have yet to calculate how much monthly income they will need in retirement or given much thought to their probable lifespan.
Those perceptions came to light in a recent study, “Longevity Risk and Reward for Middle-Income Americans,” sponsored by the Bankers Life and Casualty Company Center for a Secure Retirement and conducted by independent research firm the Boomer Project. For the Internet-based survey, 500 Americans between the ages of 55 and 75 with an annual household income of $25,000 to $75,000 were polled in November.
Some key findings of the survey, which have major implications for retirement planning, were:
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Although nearly three out of four (72 percent) middle-income Americans who receive Social Security benefits said that the program accounts for at least half or more than half of their retirement income, many are misinformed about how Social Security actually works. For example, 34 percent of those over age 55 did not understand that by delaying the start of Social Security payments, they can vastly increase future benefit amounts. Further, 36 percent incorrectly believed that full Social Security benefits start on their 65th birthday. However, full retirement age for baby boomers born in 1946 is now age 66, while younger boomers born in 1964 will not reach full retirement age for Social Security payments until they reach age 67.
Also, roughly half (47 percent) falsely thought that annual cost of living increases in Social Security payments were guaranteed, when in fact no COLA (cost of living adjustment) hikes were made in 2010 and 2011.
“Most Americans will rely on Social Security to fund their retirement years but the program was never designed to replace all of [their] income,” stated Chris Campbell, vice president of marketing and business development at Bankers Life, in a release about the study. Therefore, it’s important for consumers to know their full retirement age and explore other income options. “Many products and services exist for people with virtually any level income and assets that can help ensure [they] will not outlive their money.”