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Data and Research August 8, 2022
Workers Worry About Retirement Income as Prices Spike
Millennials lead Generation X and Baby Boomers in believing that they won’t receive any benefits from Social Security upon retirement.
Reported by Noah Zuss
Market volatility and rising prices are driving two-thirds of workers surveyed to feel more anxiety about their retirement income, the Nationwide Retirement Institute Social Security Consumer Survey shows.
The concerns have led to a 10 percentage-point spike in anxiety among those surveyed from 2021, the survey found.
Highlighting workers’ worries about retirement income, individuals are also anxious about Social Security, Nationwide found. Across generations, 70% of workers worry that Social Security will run out of funding in their lifetime and 33% of individuals who are not currently receiving benefits believe they won’t receive any benefits from the entitlement program when they retire.
Additionally, the survey found that 32% of respondents reported thinking—incorrectly—that Social Security is not protected against inflation, exacerbating current inflation worries. The survey did not reveal why survey respondents believed that Social Security benefits are not indexed to inflation.
Per rules from the Social Security Administration, “Old-Age, Survivors, and Disability Insurance (OASDI, Social Security) benefits are indexed for inflation to protect beneficiaries from the loss of purchasing power implied by inflation.”
The survey also found that large knowledge gaps exist for general Social Security topics. Among the areas tested, taxes, protection against inflation and enrollment details were the topics where respondents had the lowest knowledge.
Among the lowest-knowledge topics—on which fewer than 35% of respondents answered correctly—were other misperceptions. For example, 27% falsely believe that workers pay Social Security taxes on all their income, and 34% incorrectly said that workers cannot sign up for Medicare unless enrolled in Social Security, which in fact they can do.
Among the different cohorts, 78% of Generation X respondents surveyed said they believe that Social Security will run dry before they can retire and receive benefits, followed by 71% of Millennials and 64% of Baby Boomers.
“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 release. “There is an immediate opportunity for financial professionals to clear up clients’ misconceptions about Social Security to alleviate their fears and help them stay on track toward their long-term retirement goals.”
The survey also uncovered other misperceptions among respondents, including that 33% incorrectly believe that a worker who makes $150,000 pays the same amount in Social Security taxes as a millionaire does. Additionally, 32% believe that a Social Security claiming decision cannot be undone within the first 12 months, data show.
Baby Boomers and those of older ages were more likely than Millennials and Gen Xers to provide the correct answer on the topics that received correct answers 35% of the time or more, according to Nationwide.
The online survey was conducted by The Harris Poll on behalf of Nationwide between April 25 and May 23 of this year among a national sample of 1,853 U.S. adults age 26 and older, including 674 Millennials, 576 Gen Xers and 603 Boomers/older respondents.
