Americans are so worried about Social Security running out of money, they are giving up their full retirement benefits.
Only 10% of non-retired Americans plan on waiting until they’re 70 years old to receive the maximum payment from the government, according to the 2023 Schroders U.S. Retirement Survey. This includes 17% of people who are already near retirement age.
The decision is deliberate, said Deb Boyden, head of U.S. defined contribution at Schroders. Nearly three-quarters of non-retired investors — including 95% of people between the ages of 60 and 65 — are aware that waiting longer results in higher payments.
Just 13% said they were advised to begin taking benefits earlier than age 70, and around a third of respondents said they either wanted or needed access to the money. But the biggest reason, cited by 44% of respondents, is that they worry that the Social Security program will run out of money.
“We have a crisis of confidence in the Social Security system and it’s costing American workers real money,” Boyden said in a statement. “Fear about the stability of Social Security has people walking away from money that could improve their quality of life in retirement. Many are not even waiting for their full benefit let alone the maximum, which means they will have to create more income on their own, making it even more important to save and invest earlier for retirement.”
The Congressional Budget Office estimates that the main Social Security trust fund will be depleted within a decade. Congress has been unable to pass a long-term solution to continue financing the program.
In July, President Joe Biden nominated former Maryland Governor Martin O’Malley as the next commissioner of the Social Security Administration to protect the program “for generations to come.” His appointment needs to be confirmed by the Senate, which could be difficult thanks to partisan divides.
Schroders’ retirement study includes responses from 2,000 U.S. investors between the ages of 27 and 79 with a media household income of $75,000.
The study also found that working with a financial advisor pays off in the form of higher average monthly incomes in retirement than for those who don’t work with a financial advisor.
Having a financial plan goes even further. Those with a formal financial plan reported an average monthly income of $5,810, nearly twice the average income of those without a financial plan.