While Social Security can play a big role in helping retirees handle their living expenses, a new survey suggests many Americans believe they will receive more in benefits than they are likely to get.
According to the poll from financial services company Nationwide, future retirees, on average, expect to receive $1,805 per month in Social Security benefits. However, respondents who currently collect Social Security benefits receive an average of $1,408 per month.
That’s a difference of 28%, which could be significant if you're planning your future lifestyle based on those Social Security projections.
The Nationwide 2019 Social Security Survey, conducted by opinion research firm Harris Poll, questioned 1,315 adults who are at least 50 years old and are either currently collecting Social Security or planning to do so in the near future.
The survey found that “future retirees”—those respondents who plan to retire within the next 10 years—have other misconceptions about Social Security as well. For example, 62% of future retirees believe they will be able to collect full Social Security benefits earlier than they in fact can.
Say, for example, you were born between 1943 and 1954—in that case, your “full retirement age” is 66, although you could have still opted to begin collecting benefits as early as when you turned 62. However, if you access Social Security before the full retirement age, your monthly benefits will be permanently reduced. On the flip side, if you delay collecting Social Security up to age 70, your monthly benefit would grow to 132% of what you would have received if you started taking the money at 66.
Another 26% of future retirees wrongly believed that if they elected to receive Social Security benefits early, their monthly benefit would go up to the full amount once they turned 66. In reality, if you elect to receive Social Security benefits early, you’ll likely have a reduced monthly benefit for the rest of your life.
This is actually the norm rather than the exception, at least for those already retired. The average age that currently retired respondents began collecting Social Security benefits was 62, Nationwide said. But future retirees, on average, said they expected to begin collecting benefits at 65.
One of the most important decisions you can make when planning for retirement is determining when you will begin collecting Social Security benefits. Since your decision will determine the amount of your monthly benefit, it’s critical to also understand the rules around Social Security disbursement.
Take a look at what your benefit would be at different retirement ages and decide whether you could afford to live off of that amount. If not, take the time to figure out how much you do need to retire so that you can start planning a way to get there.