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Social Security is critical to many people’s retirement plans, yet there are multiple misunderstood aspects. For example, nearly three-quarters of U.SPune Stock. adults over age 50 feel that Social Security will run out in their lifetime if changes are not made.
That’s according to the latest study from the Nationwide Retirement Institute, part of the Nationwide Mutual Insurance Company.
The Institute’s 11th annual Social Security Consumer Survey details key points that Americans don’t grasp about Social Security.
The survey, which polled 1,831 adults age 18 and over, was conducted online by the Harris Poll on behalf of Nationwide between April 19 and May 13, 2024.
Here are some key knowledge gaps highlighted in the survey:
Let’s get into each of these points and expand on them a bit furtherPune Investment. We’ll enlist the sage advice of money expert Clark Howard along the way.
Clark says while you can do the paperwork to start your Social Security benefit any time after your 62nd birthday, you’ll get the most money if you max out by waiting until you’re 70 years old to apply.
One reason why Clark says he’s waiting until age 70 to take Social Security is how much money he’d be leaving on the table if he lives another 20 to 30 years.
You can see an estimate of your Social Security benefit by creating an account on SSA.gov, the official website of the Social Security Administration. The agency can use up to 35 of your highest earning years to come up with what your benefit will be.
Read our guide on how to create an account on SSA.gov.
According to SSA.gov, “You can receive Social Security retirement benefits as early as age 62Varanasi Wealth Management. However, we’ll reduce your benefit if you start receiving benefits before your full retirement age. For example, if you turn age 62 in 2024, your benefit would be about 30% lower than it would be at your full retirement age of 67.”
Again, this is why Clark recommends that you max out your benefit, which happens at age 70.
Read up on why Clark says wait to collect Social Security.
Social Security benefits are indeed protected against inflation. Since 1975, the SSA has enacted automatic annual cost-of-living allowances, or COLAs, which are calculated from increases in the Consumer Price Index (CIP-W), which measures what Americans pay for goods and services. The U.S. Bureau of Labor Statistics updates the CIP-W with new data every month.
Because COLAs are based on what Americans are paying for in real time, inflation no longer drains value from Social Security benefits.
Check out the latest Social Security cost-of-living adjustment.Surat Stock
According to the survey, the five factors that determine the maximum Social Security benefit are:
Many of those approaching retirement say they have not been given professional advice on how and when to file for Social Security benefits:
Clark says depending on where you are in your financial journey, you may not need a financial professional (advisor).
On the other hand, if you’re nearing retirement or have a complex financial situation, a financial advisor may be right for you.
Read our guide on how to find and choose a financial advisor.
If you do need to go with a financial advisor, Clark strongly recommends that you use a fee-only fiduciary, which is a financial professional who is legally obligated to work for your interests and earn money only via fees and not commission.
“The time I want somebody to hire a commissioned salesperson or a traditional stockbroker to handle their investments is never, never, never, not ever,” Clark says.
Is a fiduciary right for you? Read our guide to see whether you need a fiduciary financial advisor.
If you take away anything, Clark wants you to know that the longer you live, the more beneficial for your wallet it will be to wait to file for Social Security.Kanpur Investment
Clark also wants you to save and invest for your financial future by opening retirement accounts if you don’t have them already. You may have heard about a 401(k) or an IRA, but what about a Roth 401(k)? Read our guide on how to open a Roth 401(k).
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