All due respect to Meat Loaf, but two out of three ain’t good when it comes Americans' retirement fears.
According to the Nationwide Retirement Institute's ninth annual Social Security Consumer Survey, two-thirds of Americans (66%) worry more now than they did last year about their retirement income as result of market volatility and high inflation. That's a 10-percentage-point spike from 2021.
Not helping their anxiety is the survey’s takeaway that most consumers (70%) across generations worry Social Security will run out of funding in their lifetime. In fact, the study showed that one in three adults (33%) not currently receiving Social Security benefits believe they won't get a dime of what they've earned when they retire. Furthermore, more than two-thirds of Americans don't realize that Social Security is protected against inflation, according to Nationwide’s study.
"Every year we find that all generations need more Social Security education, but in this uncertain economic environment it's more important than ever for people nearing retirement to understand that their Social Security benefits are protected against conditions such as inflation," Tina Ambrozy, senior vice president of strategic customer solutions at Nationwide, said in a statement.
Added Gunnar Ildhuso, wealth manager with Coldstream Wealth Management: "Misconceptions about Social Security can hurt retirees. Seeking additional financial education and working with a financial adviser can help Americans make the best choices for themselves and their families as they face retirement."
Americans' increasing pessimism about their financial futures has caused them to change their behaviors. Most notably, many older Americans will likely be tapping into their Social Security benefits early.
The results show that one in four (26%) boomers who aren't currently receiving Social Security plan on filing for Social Security benefits early while continuing to work. And almost two in five (39%) boomers who aren't currently receiving Social Security plan on drawing their benefits before their full retirement age, according to the survey.
Finally, concerns about Covid-19's adverse impact on retirement security has accelerated since 2021. According to the study, Americans are currently more concerned about the pandemic's effect on their retirement plans than they were last year, with 20% of working Americans pushing back the date at which they plan to retire as a result of Covid-19 this year, compared to just 15% in 2021. Furthermore, almost half (47%) of Americans are reviewing their plans for retirement to assess the financial impact of Covid-19, a nine-percentage-point jump from 2021 (38%).
“It's no surprise that investors are keeping an eye on their portfolios after the events of the past two years and the current market volatility. The Covid-19 pandemic had a profound effect on our lives, from the way we work and gather and how we prioritize our needs," said Jeremy Paul, president of Perigon Wealth Management. "That said, investors should evaluate their portfolios at least once a quarter to ensure they are still on target to meet their retirement goals.”
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