American workers won’t wait for maximum Social Security checks: Schroders

Only 11% of Americans 45 and older plan to wait until they're 70 to start receiving their Social Security benefits.

When it comes to Social Security, most working Americans prefer to take the bird in hand.

According to the Schroders 2022 U.S. Retirement Survey released today, a mere 11% of Americans 45 and older who aren’t yet retired plan to wait until age 70 — the age at which an individual reaches their maximum monthly benefit — to start receiving their Social Security benefits. Almost one-third (32%) said they would take benefits before the age of 70 because they’re concerned Social Security may run out of money, while 31% said they expected they would need the money sooner.

Along those lines, nearly half (48%) of those surveyed plan to take their Social Security benefits between the ages of 62 and 65, 19% plan to file between ages 66 and 69, and 22% are unsure when they will claim Social Security.

It’s not that people don’t know that they’ll get more money if they postpone their Social Security payments. Eighty-six percent of respondents said they’re aware they could receive larger checks by delaying the start of their benefits.

“There are many nuances when deciding the optimal time to turn on Social Security benefits. My clients are very appreciative when I provide them with a visual of how their Social Security benefit scenarios interact with supplemental withdrawal needs in retirement,” said Jared Remesz, wealth adviser with SageView Advisory Group.

On the issue of the solvency of the Social Security program, Remesz added that “ultimately, Congress will need to address and act on the projected shortfalls in a timely manner to increase the viability of Social Security benefits for future generations.”

Among the survey’s other findings, 55% of respondents nearing retirement (age 60-65) don’t believe they will be able to replace 75% of their last paycheck in retirement income. More concerning, almost one-quarter (23%) of those nearing retirement (60-65) have no idea how much monthly income they’ll need to generate in retirement to live comfortably. In fact, most are concerned (53%) or terrified (33%) by the idea of no longer getting regular paychecks from an employer.

“Clients should look at the totality of factors in their life when making this decision. Family longevity, cash flow needs, other assets, personal preferences, and other factors are important,” said Josh Strange, wealth adviser at Good Life Nova. “I do not think that clients should make this choice based on fear about the solvency of the Social Security system. We don’t know what the future holds there. As with all aspects of financial planning, focusing on what we can control when making decisions usually leads to better outcomes than dwelling on factors beyond our ability to influence or control.”