As you may have seen, social security will be have a record increase this year. Millions of Americans count on Social Security to help them financially during retirement. However, it’s easy to expect too much out of Social Security, as a recent survey from Allianz Life Insurance Co. of North America discovered.
In the survey, 1,000 adults ages 25 and older were asked to talk about their Social Security strategy. Their answers show a clear gap between expectations about retirement and the actual reality of how today’s retirees live.
Money Talks News’ recent article entitled “4 Social Security Expectations That Are Far From Reality” provides 4 commonly held expectations about Social Security that aren’t likely to be realized.
- Working past retirement age. Near-retirees who plan to do this: 59%, and the retirees who actually did this: 11%. Many of us plan to work well into our golden years. Some seniors love their jobs and never want to give them up. On the other hand, there are others who think they must work just to pay the bills. However, the reality is that working deep into your golden years is a long shot. Obstacles such as age discrimination and health concerns can upend dreams of an extended career.
- Living on Social Security alone. Near-retirees who plan to do this: 40%, and the retirees who actually did this: 10%. It’s a bit disconcerting that four in 10 near-retirees think they can live on a Social Security check alone. The Social Security Administration emphasizes that Social Security was never meant to be the only source of income for people when they retire. The average Social Security benefit is well under $2,000, so it’s impressive that even 10% of retirees are able to live on the program alone. However, that leaves 90% of retirees counting on additional sources of income.
- Claiming benefits at full retirement age. Near-retirees who plan to do this: 57%, and the retirees who actually did this: 46%. The gap between expectation and reality is a bit narrower for this myth. Fewer people than planned apply for Social Security at their full retirement age. It’s believed that some were forced to apply earlier. That results in a smaller monthly check throughout their retirement. Deciding when to apply for Social Security isn’t easy. There are pros and cons to applying either early or late in retirement.
- Claiming benefits early. Near-retirees who plan to do this: 33%. Retirees who actually did this: 49%. Many people are determined not to claim Social Security benefits early. However, for many people, that’s not a viable choice. About a third of those near retirement expect to take Social Security early. However, in reality, more people file for benefits earlier than originally planned. It’s not necessarily the wrong decision for some. However, it does mean their monthly Social Security check will be smaller throughout retirement.
Book a call with Vick Law, P.C. today to discuss how your estate planning and social security may interact.
Reference: Money Talks News (Aug. 12, 2022) “4 Social Security Expectations That Are Far From Reality”