Even though 50% of people aged at least 65 receive at least half of their income from Social Security, a recent T. Rowe Price survey found that many workers—young and old—lack a basic understanding of how the program works.

Along with releasing its survey results, T. Rowe Price also launched Social Security Analyzer, a tool designed for advisers that could be used to help educate their plan sponsor clients on Social Security claiming strategies.

The vast majority (92%) of pre-retirees, aged at least 50, reported understanding that benefits are reduced if Social Security is claimed before reaching full retirement age, but only 62% understood the advantages of delaying claims beyond full retirement age.

In addition, 28% of those aged at least 62 mistakenly believed that Social Security benefits start automatically at age 65 if not claimed earlier. According to T. Rowe, this suggests that some workers are confusing Social Security’s full retirement age (which varies by birth year) and the Medicare eligibility age (65 for nearly everyone).

The full retirement age for Social Security benefits depends on one’s birth year, increasing gradually from 65 to 67 over a period of years. Those born in 1960 or later have a full retirement age of 67.

Many Younger Workers ‘Unaware’ of Key Details

Generation Z and Millennial workers answered fewer Social Security questions correctly in the survey. While more than 80% knew that Social Security is funded by payroll taxes and 73% understood the 10-year work requirement, T. Rowe found that many were unaware of key details. For example, a majority of workers younger than 50 did not know that benefits are adjusted for inflation, and two-thirds incorrectly believed that benefits start automatically at age 65 if not claimed earlier.

“This lack of understanding could cause them to overlook the positive impact these benefits can have on their long‑term retirement outlook and diminish their perceived value of the system as a whole,” the T. Rowe Price summary stated.

T. Rowe also found that although most respondents said they rely on their employer-sponsored retirement plans for advice, only 33% used retirement plan resources to learn about Social Security benefits.

Momentum Growing for Social Security Strategy

PGIM, in its latest “DC Landscape” survey, fielded in September and October 2024, also found that only 20% of plan sponsors currently offer a Social Security claiming tool for participants, but 43% reported they may consider adding one. The number of sponsors offering a Social Security strategy increased significantly from 13% in last year’s survey, suggesting there has been positive momentum over the last few years, according to David Blanchett, portfolio manager and head of retirement research at PGIM DC Solutions.

A concerning trend identified by T. Rowe Price came among respondents with household investable assets less than $50,000, as they were less likely to cite having any sources for Social Security information.

“Given that Social Security will likely make up a large portion of retirement income for this cohort, this lack of engagement is troubling,” the summary stated.

Survey respondents also expressed concerns about Social Security’s sustainability, as only 38% said they felt confident in the program’s ability to pay out currently anticipated benefits. This pessimism was particularly present among younger workers, with Gen Z workers saying they expect to receive only 53% of their currently scheduled benefits.

But on the positive side, the study found that only 10% of workers aged at least 50 intend to claim their benefits earlier than planned due to concerns about the system’s funding challenges. In fact, a greater percentage of individuals revealed that they would consider delaying their claims in response to these challenges, indicating a more measured approach to their retirement planning, T. Rowe found.

T. Rowe Expands Toolkit

T. Rowe’s new Social Security Analyzer tool is free to advisers and allows them to provide clients with side-by-side comparisons of various Social Security claiming strategies. The tool also includes evaluating spending needs against Social Security income; viewing lifetime, annual and monthly income; evaluating longevity risks with several life expectancy outlooks; and analyzing the impact of taxes, cost-of-living adjustments and inflation.

As a companion to the Social Security Analyzer, T. Rowe Price developed “The Power of Social Security,” intended to provide advisers with a range of educational content to help navigate the complexities of Social Security benefits with their clients. The resources include educational videos, presentations and white papers for advisers, as well as a library of presentations, workbooks and articles for clients.

The launch of Social Security Analyzer follows the 2024 launch of Social Security Optimizer, a tool specifically designed for T. Rowe Price individual investors and 401(k) plan participants.