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Retirement Planning > Social Security > Claiming Strategies

Just 11% of Near-Retirees Plan to Delay Social Security Benefits Until 70

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What You Need to Know

  • Forty-eight percent of non-retirees surveyed said they planned to apply for benefits between the ages of 62 and 65, before reaching full retirement age.
  • Almost half of all retirees said they did not have a strategy to generate income but will withdraw money as needed.
  • Lifetime income is the most popular feature retirement plan participants look for in an in-plan retirement income solution.

Eighty-six percent of non-retired Americans 45 and older know they could receive higher Social Security payments by delaying the start of their benefits until age 70, the age at which individuals reach their maximum monthly benefit, according to the Schroders U.S. retirement survey released Tuesday. Yet, only 11% of respondents said they plan to wait that long.

Among survey participants who said they would take benefits before they reach 70, 32% were concerned that Social Security may run out of money or stop making payments. Thirty-one percent expected to need the money sooner.

Forty-eight percent of non-retirees surveyed said they plan to apply for benefits between the ages of 62 and 65, that is, before reaching full benefit age; 19% plan to file when they are between 66 and 69; and 22% are unsure when they will claim Social Security.

Even among respondents who are not yet retired but are approaching retirement age — those in the 60 to 65 age group — only 11% said they will take their benefits at age 70. Why? Thirty-eight percent said they will need the money sooner.

The survey asked non-retired participants what period of life after age 65 they expect to be the most expensive:

  • Ages 65 to 74: 49%
  • Ages 75 to 84: 30%
  • Ages 85 and above: 21%

Joel Schiffman, head of strategic partnerships at Schroders, noted in a statement that the new findings validate what last year’s retirement survey found, namely, that only 10% of respondents planned to wait until age 70 to take higher benefits.

“Delaying Social Security to increase your benefit is a tried and true means of generating more income in retirement, but it’s a path few are prepared to take,” he said.

8 Acre Perspective conducted the survey in February among 1,000 U.S. investors nationwide ages 45 to 75. The median household income for working Americans surveyed was $75,000. The survey included 317 respondents with employer-provided defined contribution retirement plans.

At Retirement’s Doorstep

Among non-retired survey participants nearing retirement, 55% said they did not think they would be able to replace three-quarters of their last paycheck in retirement income. But then, most did not believe they would need to do so.

Just 23% said they would need to replace 75% of their final paycheck to live comfortably. Twenty-seven percent said they would need to replace less than 50% of their final paycheck.

Schroders noted a survey finding of significant concern: Twenty-three percent of those aged 60 to 65 reported that they had no idea how much monthly income they would need to generate in retirement to live comfortably.

What’s more, 53% said they were concerned and 33% said they were terrified by the idea of no more regular employment paychecks.

The survey found that the three strategies retirees reported using most to generate income were systematic withdrawals from retirement accounts, dividend-producing stocks or mutual funds, and annuities.

But it also found that almost half of all retirees said they did not have a strategy to generate income but instead withdrew money as needed.

Demand for Retirement Income Solutions in DC Plans

Among survey respondents who currently participate in a workplace retirement plan, 48% reported that their plan offered retirement income products, while 19% said their plan did not offer such products, and 33% were unsure.

Among the latter two groups, 62% said they wish their plan offered retirement income products.

Nine in 10 of those whose plan includes a retirement income product said they were likely to use the product when they retired, keeping assets in their employer plan. The main features retirement plan participants in the survey look for in an in-plan retirement income solution are:

  • Lifetime income: 52%
  • Consistent monthly paycheck-like income: 49%
  • Low fees/cost: 42%
  • Liquidity/access to money whenever they want: 40%
  • Protection from market corrections/down markets: 39%

“The SECURE act was a crucial step toward putting retirement income front and center and made it easier for plan sponsors to introduce insured solutions into DC plans,” Schiffman said. “However, more needs to be done to educate participants on the importance of higher income replacement, and that comes from planning for retirement income early in their careers.”

(Image: Adobe Stock)