Social Security Misconceptions Threaten Middle-Income Americans' Financial Security, New Study Says
Tuesday, December 3, 2013
CHICAGO, IL (March 12, 2013) - A majority of our nation's middle-income Americans are relying heavily on Social Security to fund their retirement; however, there are gaps in understanding how it works, according to a new study released by the Bankers Life and Casualty Company Center for a Secure Retirement® (CSR).
Nearly three-fourths (72 percent) say Social Security benefits make up at least half or more of their retirement income, which exceeds the national average of 65 percent, reported by the Social Security Administration. In fact, 29 percent count on Social Security for 75 percent or more of their retirement income.
Although Social Security has traditionally been the cornerstone of retirement income for Americans of all income levels, for those with household incomes between $25,000 and $50,000, one in ten (10 percent) rely on Social Security for all of their retirement income.
Despite relying on Social Security to fund much of their retirement income, knowledge of specific benefits varies widely among middle-income Americans.
The Longevity Risk and Reward for Middle-Income Americans study, which focused on 500 Americans ages 55 to 75 with an annual household income of between $25,000 and $75,000, found one in three (34 percent) do not understand that delaying when they start to collect Social Security benefits can increase their future benefit amount.
Furthermore, nearly half (47 percent) incorrectly believe that an annual cost-of-living increase to their Social Security benefits is guaranteed and 36 percent falsely believe that full Social Security benefits start with their 65th birthday.
In addition to gaps in understanding of benefits, some middle-income Americans are also not paying attention to their individual Social Security statements. One in three (35 percent) middle-income Americans age 55 and older who are not yet receiving Social Security do not know what their monthly benefit amount will be when they retire.
"Most Americans will rely on Social Security to fund their retirement years but the program was never designed to replace all of your income," said Chris Campbell, vice president of marketing and business development at Bankers Life and Casualty Company, a national life and health insurer. "Know your full retirement age and explore your income options. Many products and services exist for people with virtually any level of income and assets that can help ensure you will not outlive your money."
When it comes to the future of Social Security, nearly eight in ten (78 percent) middle-income Americans age 55 and older say they are concerned about the future of Social Security. In fact, most (38 percent) do not believe that Social Security as we know it will exist in 20 years.
Moreover, the majority (67 percent) of respondents are unsure that the federal government will fix the Social Security system in their lifetime. One-fifth (20 percent) believe that the government will fix the system, while 13 percent feel Social Security is not broken and should remain untouched.
Proposed changes to the current system do not provide middle-income Americans over age 55 with optimism. In fact, more than half (56 percent) do not think that changes or reforms to the current Social Security program will benefit them.
To learn more about your Social Security benefits, visit www.SocialSecurity.gov.
The Bankers Life and Casualty Company Center for a Secure Retirement's study Longevity Risk and Reward for Middle-Income Americans was conducted in November 2012 by the independent research firm The Boomer Project. The full report can be viewed at www.CenterForASecureRetirement.com.
A nationwide sample of 500 Americans ages 55 to 75 who have an annual household income of between $25,000 and $75,000 participated in the Internet-based survey.
Responses were weighted to match U.S. Census data on the selected age segment. The margin of error was 4.47 percentage points at the 90% confidence level.
About the Center for a Secure Retirement
The Bankers Life and Casualty Company Center for a Secure Retirement is the Company's research and consumer education program. Its studies and consumer awareness campaigns provide insight and practical advice for how everyday Americans can achieve financial security during retirement. To learn more, visit www.CenterForASecureRetirement.com.
Established in 1879 in Chicago, Bankers Life and Casualty Company focuses on the insurance needs of the retirement market. The nationwide company, a subsidiary of CNO Financial Group, Inc. (NYSE: CNO), offers a broad portfolio of health and life insurance and annuities designed especially for retirees. To learn more, visit www.Bankers.com.