Affluent Americans support raising the Social Security age because people are living longer, according to a Bank of America Corp. survey.
About 59% of those with more than $250,000 in investible assets said that the government should increase the eligibility age for collecting retirement benefits, according to the study, for which 1,000 individuals were interviewed in December.
Social Security allows recipients to take reduced payments as early as 62. It provides full benefits at 66 and increases payouts for those who wait until 70.
“Many don't think they'll start taking benefits until later,” said David Tyrie, head of personal wealth and retirement for Bank of America Merrill Lynch. “They're living longer and are still working or plan to be working when they become eligible, and don't need it yet.”
The trust fund that pays for Social Security benefits is projected to begin shrinking after 2022, as people are living longer and there are fewer workers supporting each retiree, according to a report by the Social Security and Medicare boards of trustees. The program is funded by payroll taxes.
Congress this month voted to extend through this year a 2-percentage-point cut in that levy on workers' wages to 4.2%.
Many employees 55 and older are remaining on the job to save enough for retirement, as fewer businesses offer retiree health benefits and traditional pensions that guarantee a stream of income, the Employee Benefit Research Institute said in a report released Feb. 16. There also is a desire by some, particularly those with more education, to keep working if they enjoy their positions and are physically able to do them, according to EBRI.
For those 55 and older, the labor participation rate, which means those either working or looking for employment, was about 40% last year, compared with about 29% in 1993, based on Labor Department data.
“People aren't saying retirement is about hitting an age,” Mr. Tyrie said.
Less than 15% of respondents over 50 in the Merrill study said that age will be a primary cause in their decision, he said.
About 62% of survey respondents who aren't yet retired and younger than 62 said that they will wait until full retirement age or after to begin collecting Social Security. About 20% said that they will begin collecting before full retirement age.
DEFICIT A CONCERN
A separate study of affluent Americans released in December by Wells Fargo & Co. found that about half, or 47%, would be willing to take a cut in Social Security or Medicare benefits if the money went to reducing the U.S. debt.
Wealthy Americans estimate that on average, Social Security will cover about 23% of their monthly retirement income, according to the Wells Fargo survey, which polled 801 individuals with at least $100,000 in investible assets.
The bank has about $280 billion in individual retirement account assets, said Karen Wimbish, director of retail retirement for Wells Fargo.
Although Americans are worried about having enough saved for retirement, they are also concerned about the U.S. deficit and solvency of Social Security, she said.
“The country's debt and its spending beyond its revenue capacity is clearly on the minds of people,” Ms. Wimbish said.