Americans are feeling more optimistic about the future of Social Security: survey
Americans are generally more optimistic about Social Security, a recent survey said. (iStock)
A growing number of working Americans expect to receive Social Security when they retire, according to a recent Gallup survey.
Half of the respondents expect the Social Security system to pay them a benefit when they retire, while 47% do not, the survey said. In three prior readings from 2005 and 2015, non-retirees were more inclined to predict they would not receive Social Security retirement benefits. Moreover, 53% of current U.S. retirees believe they will continue to receive their full Social Security benefits, up from 37% in 2010 and 49% in 2015.
The improvement comes despite projections that show Social Security benefits could be cut by 20% as soon as 2034 if no changes are made to the system, according to the annual trustees' report recently released by the Treasury. In 2034, the system is projected to be able to pay 80% of benefits to recipients.
"President Joe Biden brought up the future of the system in his 2023 State of the Union speech and appeared to receive support from both parties to protect Social Security from near-term cuts in federal budget negotiations," the Gallup survey said. "It is unclear to what extent this recent display of bipartisan consensus on the issue has influenced Americans' opinions about their future Social Security benefits. Greater optimism about the future of Social Security in recent years comes at a time when Americans' satisfaction with the Social Security system has also been higher."
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Social Security leads other retirement funding sources
One in five (21%) adults age 50 or older said they have no source of retirement income besides Social Security, up from 13% in 2014, the Nationwide survey said. A decade ago, 48% of respondents in this age group said they had a pension in addition to Social Security, compared to just 31% in 2023, the survey said.
However, only 8% of respondents understood how to maximize their Social Security benefits, according to the survey. For instance, only 13% of adults correctly guessed their full retirement age based on their birth year. On average, Americans said it was 60 years of age; Generation Z and millennials thought 54 and 55, respectively. The correct age is 66 or 67, depending on the year a person is born.
Nearly half (49%) of adults also erroneously believed that if they filed for Social Security early, their benefits would automatically increase once they reached their full retirement age. These misconceptions could cost Americans money.
"Social Security is a complex system, and it can be difficult to know what you are entitled to," Tina Ambrozy, Nationwide senior vice president of strategic customer solutions said in a statement. "The past ten years of research have been about providing insights to aid that effort, and while we have made notable progress, we still have work to do."
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Biden cracks down on retirement junk fees
President Joe Biden is cracking down on junk fees in retirement investment advice that can cost Americans as much as $5 billion per year over a lifetime.
The retirement security rule would update the definition of an investment advice fiduciary under the Employee Retirement Security Act. The proposal would require trusted investment advisers to adhere to high standards of care and loyalty when they make investment recommendations and avoid recommendations that favor their financial and other interests at the expense of retirement savers.
Requiring advisers to make recommendations in the savers' best interest could increase retirement savers' returns by between 0.2% and 1.2% per year. Over a lifetime, that can add up to 20% more retirement savings – potentially tens or even hundreds of thousands of dollars per impacted middle-class saver that could otherwise have been lost to junk fees.
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