The overwhelming majority of non-retirees said they will not wait around until 70 to claim the maximum Social Security benefits, according to a new survey.
Only 10% of non-retired Americans indicate that they will wait until 70 to receive their maximum Social Security benefit payments, and that includes 17% of respondents between the ages of 60 and 65. according to the 2023 Schroders US Retirement Survey.
The survey of 2,000 investors further noted that 40% of respondents overall plan to take their Social Security benefits between 62-65, leaving them short of qualifying for their full retirement benefits.
U.S. retirees can start collecting retirement benefits as early as age 62. But when they reach full retirement age, which is either 66 or 67, depending on their birth date, they can get an 8% bonus for each year that they delayed claiming until age 70.
For example, for someone who retires at age 62 in 2023, the maximum monthly benefit would be $2,572. For someone who files at 66, the maximum in 2023 is $3,627 per month. But someone who waits until age 70 gets a maximum benefit of $4,555.
Survey respondents indicated that they would need an average monthly income of $4,940 to enjoy a comfortable retirement. For millennials, it was $5,135 per month; and $4,855 for those between 60 and 65.
Retired survey respondents said that, including Social Security, their average total monthly income is $4,170. Another 37% said their monthly income is less than $2,500.
Most Americans know about the benefits of waiting to age 70, with 72% of non-retired investors, and 95% of non-retired Americans between the ages of 60 and 65, saying they are aware of the Social Security rules.
Asked why they don't plan on waiting for the full benefit, 44% said they were concerned Social Security may run out of money or stop making payments; 36% said they will need the money; 34% said it was their money and they wanted access to it as soon as possible; and 13% said they were advised to take it earlier than age 70.
“We have a crisis of confidence in the Social Security system and it’s costing American workers real money,” Deb Boyden, head of US Defined Contribution at Schroders, said in a statement. “Fear about the stability of Social Security has people walking away from money that could improve their quality of life in retirement … which means they will have to create more income on their own."
Nearly one-third of respondents participating in a workplace retirement plan said their plan provided a retirement income solution; 39% said they didn’t know; and 29% said their plan does not.
Eighty-two percent of those who are offered an income solution in their plan are likely to use it, the survey said. It also noted 55% of those who don’t know or do not have a retirement income solution in their plan said they wish they did, including 64% of those nearing retirement.
“Americans are increasingly looking to their employers for insights and solutions to their retirement income challenges,” Boyden said.
More than half of non-retired respondents said they are concerned about not having a regular paycheck in retirement and 23% are terrified of that thought.
Only 23% of respondents believe they will need to replace 75% or more of their final paycheck with other sources of income in retirement. Thirty-two percent said they would need to replace between 50-74%; 23% said they needed to replace less than 50%; and 22% had no idea.
Besides Social Security, the top three sources non-retired Americans say they will generate income from are cash savings (58%), workplace retirement plans (53%), and investment income outside of employer provided retirement plans (40%), the survey said.
Other income sources included defined benefit/pension plans (20%), rental income (14%), annuities (10%), cash value of life insurance (10%) and reverse mortgages (4%).
The Schroders 2023 US Retirement Survey was conducted by 8 Acre Perspective in February and March. It included 2,000 U.S. investors nationwide ages 27-79 with a median household income of $75,000.