According to a recent report from the Columbus, Ohio-based Nationwide Retirement Institute, Americans have serious misconceptions about Social Security and retirement even as they approach their retirement date.
The Nationwide survey of U.S. adults over age 50 reveals that the expectations of pre-retirees aren’t realities for current retirees. Most pre-retirees believe that they will wait until 65 to collect Social Security benefits, while most of the current retire respondents began receiving their benefits at age 62. The future retirees estimated Social Security income of $1,578 a month, but current retirees report an average monthly benefit of $1,487.
While many Americans now seek financial assistance from an advisor, a roboadvisor or another channel, only 17 percent of the survey’s respondents have received advice related to Social Security from an advisor.
Retirees and near retirees are pessimistic about the future of Social Security, with more than three-quarters of the study’s respondents reporting concerns that Social Security funding will run out during their lifetime. About half of the study’s respondents, 52 percent, believe that the administration of President Donald Trump will cut Social Security benefits.
Pre-retirees may drastically underestimate their cost of living, according to the report. Most non-retired respondents anticipated spending 29 percent of their benefits on housing, 23 percent on groceries and 20 percent on health care; however, most of the current retirees report spending more of their benefits on health care than housing.
More than half of future retirees, 53 percent, said that they expect to cover half or more of their living expenses in retirement with their Social Security benefits – yet the program is designed to replace 40 percent of an average retiree's pre-retirement income, according to Nationwide.
Overall, Americans’ views on retirement may depend on which side of their retirement date they’re on. Only 21 percent of non-retirees believe that life in retirement will be better than it is now. At the same time, just 28 percent of respondents currently in retirement say that their life has gotten worse since they left the workforce.