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Retirement Planning > Social Security > Claiming Strategies

90% of Americans Plan to Claim Social Security Before 70: Survey

By Michael S. Fischer

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What You Need to Know

  • Only 10% of non-retired respondents said that they would wait until age 70 to receive their maximum Social Security payments.
  • The choice to decline larger Social Security payments is a deliberate one, the survey found.
  • Fear about the stability of Social Security has people walking away from more money for retirement, Schroders says.

Forty percent of non-retired Americans plan to take their Social Security benefits between the ages of 62 and 65, leaving them short of qualifying for their full retirement benefits, according to a survey released Tuesday by Schroders.

Only 10% of non-retired respondents said that they would wait until age 70 to receive their maximum Social Security benefit payments, including 17% of non-retirees between 60 and 65.

The choice to forgo larger Social Security payments is a deliberate one, the survey found. Seventy-two percent of non-retired investors — and 95% of non-retirees between 60 and 65 — indicated that they were aware that waiting longer means higher payments.

Those who plan to take benefits before age 70 gave various reasons for doing so:

“We have a crisis of confidence in the Social Security system and it’s costing American workers real money,” Deb Boyden, head of U.S. 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.”

Not waiting for their full benefit let alone the maximum means they will have to create more income on their own, Boyden said.

The survey was conducted by 8 Acre Perspective from Feb. 13 to March 3 among 2,000 U.S. investors ages 27 to 79, including, for the first time, respondents between 27 and 44. The median household income for working Americans in the survey was $75,000.

Average Monthly Retirement Income

Pollsters asked non-retired participants to forecast how much monthly income they will need to enjoy a comfortable retirement. On average, they said they will need $4,940.

Non-retired millennials predicted that they will need $5,135 per month, while near-retirees ages 60 to 65 said $4,855 per month.

Retired participants said their total monthly income, including Social Security, is $4,170 on average, though 37% said their monthly income is less than $2,500.

The survey found that having a financial advisor and a plan pays off. The average monthly income, including Social Security, for retirees with an advisor is $5,075.

Retirees with a formal financial plan report that their monthly income is $5,810 on average. This is nearly twice the $3,000 per month of income those without a financial plan reported.

The survey found that Americans are increasingly looking for retirement income insights and solutions from their employers.

Among working respondents participating in a workplace retirement plan, 32% said their plan provides a retirement income solution, 29% said it does not and 39% did not know whether it does.

Eighty-two percent of those who are offered an income solution in their retirement plan are likely to use it, according to the survey.

Among those who said they do not have a retirement income solution in their plan or did not know, 55% said they wish they did have one, including 64% of near-retirees, while 33% were unsure and 12% said it was unnecessary.

Terrifying Prospect: No More Paycheck

Fifty-seven percent of working respondents expressed concern about no longer receiving regular paychecks in retirement, and 23% said the prospect was terrifying.

The survey found that they also have low final paycheck income replacement expectations. Twenty-three percent believe they will need to replace 75% or more of their final paycheck with other sources of income in retirement. Thirty-two percent said between 50% and 74%, and 23% said they would need to replace less than 50%.

Twenty-two percent had no idea how much they would need to replace.

Among retirees, 51% said they are able to replace less than 50% of their last paycheck, 26% are able to replace 50% to 74%, and 24% can replace 75% or more.

How will non-retired Americans generate income in retirement? Aside from Social Security, they expect to also use these things:

  • Cash savings: 58%
  • Workplace retirement plan: 53%
  • Investment income outside of employer-provided retirement plan: 40%
  • Defined benefit/pension plan: 20%
  • Rental income: 14%
  • Annuities: 10%
  • Cash value of life insurance: 10%
  • Reverse mortgage: 4%

Retirees use a variety of specific strategies to turn their savings into income, including systematic withdrawals from retirement accounts, dividend-producing stocks or mutual funds, annuities, individual bonds or bond mutual funds and CDs.

However, 49% of retirees said they do not have any retirement income strategies; they just take money when they need it.

Credit: Adobe Stock

Michael S. Fischer

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