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Americans need more knowledge and guidance on Social Security

June 29, 2021

One year after the start of the pandemic, many Americans are taking time to re-evaluate their choices about their financial futures. In a new Nationwide Retirement Institute® survey of nearly 2,000 U.S. adults across different generations, one in four (28%) said the pandemic impacted their plans for retirement. That’s a significant number of Americans who are dealing with financial disruption, but it’s an improvement over the previous year. In our 2020 survey, 38% said COVID-19 had impacted their retirement plans.

The pandemic also affected Americans’ plans around Social Security. In our 2021 survey, one in five (19%) said they have reconsidered the timing of when they would file for Social Security, with 11% delaying or planning to delay benefits and 9% choosing to claim early. Again, these percentages are down from 2020, when 28% of adults said COVID-19 altered their plans for claiming benefits. One year ago, 14% were looking at early filing and 11% were considering a delay.

It’s not unusual for investors to re-evaluate their financial decisions in the wake of unplanned events. A global pandemic is surely an extreme example of an unplanned event, but more common disruptions such as job loss, illness or the need to provide care for a family member can disrupt our plans for the future.

Solving Social Security misconceptions

According to a May 2021 Federal Reserve study1, 45% of current retirees said health problems, caregiving responsibilities or job changes pushed them to retire on a different schedule than they had wanted. For retirees who find themselves in this situation, Social Security quickly becomes more important as a source of retirement income. Yet many people don’t have a basic understanding of how claiming Social Security benefits early can haunt them throughout retirement.

As one example, our survey found that 45% of U.S. adults mistakenly believe they can file early for reduced Social Security benefits and have them restored to a higher level once they reach their full retirement age. This isn’t true—claiming Social Security early locks you in for reduced benefits for the rest of your life.

With over 2,700 rules for Social Security, it’s not surprising to encounter misconceptions among clients. The complexity of different retirement scenarios can increase the likelihood that they’ll slip up when deciding when to claim benefits. Their decision-making ability can also be clouded by unexpected events—and it doesn’t have to be extreme like a global pandemic.

Your opportunity in Social Security planning

While more Americans are seeking Social Security guidance from a financial professional, our latest survey finds that only one-third of U.S. adults (35%) are currently working with a financial professional. Millennials are more likely to seek help (42%) compared to Gen X investors (36%), so financial professionals should not overlook this group that’s quickly growing their wealth.

However, only about half (47%) of the investors we surveyed said they receive guidance from a financial professional on how and when to claim Social Security benefits. Moreover, 72% said if their current financial professional couldn’t help them maximize their Social Security benefits, they’d switch to one who could.

For financial professionals, there’s an opportunity to help clients boost their Social Security knowledge, while building stronger relationships around Social Security and retirement income planning. Many clients would find value in learning how the program works, planning a personalized filing strategy and integrating their benefits into their retirement income plan.

Financial professionals can turn to the Nationwide Retirement Institute for help. From continuing education opportunities for you and shareable guides for clients, we can help you meet the challenges of planning Social Security filing strategies for your clients. The Nationwide Social Security 360 Analyzer® can help you show clients how an optimized filing strategy can lead to as much as a 77% permanent increase in annual benefits.2

Sources / Disclaimers

  • 1

    “Economic Well-Being of U.S. Households in 2020.” Board of Governors of the Federal Reserve System, May 2021.

  • 2

    “When to Start Receiving Retirement Benefits.” Social Security Administration, January 2021.

  • The Nationwide Retirement Institute® 2021 Social Security Survey was conducted online within the U.S. by The Harris Poll on behalf of Nationwide between April 19 and May 7, 2021 among 1,931 U.S. adults age 25+ (national sample) including 627 Millennials (age 25-40), 634 Gen Xers (age 41-56), and 670 Boomers+ (age 57+).  Data were weighted as needed to bring them in line with the population of U.S. residents age 25+ from the 2020 Current Population Survey for age by gender, education, race/ethnicity, region, household income, marital status, and household size. To ensure the national sample was representative, the data were initially weighted by generation (Millennials 25-40, Gen Xers 41-56, and Boomers+ 57+) and then combined into a total 25+ group. Data for Black adults were weighted as needed for age by gender, education, region, household income, marital status, and household size. Our weighting algorithm also included a propensity score which allows us to adjust for attitudinal and behavioral differences between those who are online versus those who are not, those who join online panels versus those who do not, and those who responded to this survey versus those who did not.

    This material is not a recommendation to buy, sell, hold, or rollover any asset, adopt an investment strategy, retain a specific investment manager or use a particular account type. It does not take into account the specific investment objectives, tax and financial condition or particular needs of any specific person. Investors should work with their financial professional to discuss their specific situation.

    This information is general in nature and is not intended to be tax, legal, accounting or other professional advice. The information provided is based on current laws, which are subject to change at any time, and has not been endorsed by any government agency.

    Nationwide and The Harris Poll are separate and non-affiliated companies.

    Nationwide Investment Services Corporation (NISC), member FINRA, Columbus, OH. Nationwide Retirement Institute is a division of NISC.

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