Savings Shortfall and Fear Over Social Security’s Future Have Americans Leaving Money on the Table

38% Fear Social Security Will Run Out

88% of Non-Retired Americans Concerned With Not Knowing How to Generate Income in Retirement As Demand for Solutions Rises

According to the Schroders 2024 U.S. Retirement Survey, half of non-retired Americans (51%) report they are “concerned” or “very concerned” about outliving their assets in retirement, yet the most popular ages non-retirees plan to file for Social Security benefits are ages 65 (23%) and 62 (12%). Forty-three percent plan to take Social Security before age 67 – the full retirement age for everyone born in 1960 or later, and just 1 in 10 plan to wait until at least age 70 – the age at which an individual reaches their maximum monthly benefit.

The decision to sacrifice Social Security income is not an oversight for most, as 74% of non-retired investors are aware that waiting longer earns higher payments. The reasons non-retirees cite for planning to take benefits before age 70 include:

• Will need the money (39%)
• Concerned Social Security may run out of money or stop making payments (38%)
• Want access to the money as soon as possible (36%)
• Advised to take it earlier than age 70 (12%)

“There is no one-size-fits-all answer for when to file for Social Security, however, delaying benefits for as long as possible can add several hundred dollars to those monthly checks,” said Deb Boyden, Head of US Defined Contribution, Schroders. “With so many Americans behind on retirement savings, waiting to collect Social Security benefits can have a significant impact on your quality of life during your decumulation years.”

Retirement Income a Challenge

According to the research, 88% of non-retired Americans are at least slightly concerned about not knowing how to best generate income during retirement.

Asked to forecast how much monthly income will be required to live comfortably, non-retirees said $4,947 on average, which is higher than the $4,258 of monthly income today’s retirees report they are generating.

Among Americans participating in a workplace retirement plan, 50% said their primary investment objective was to generate steady income; 41% said it was to grow assets; and 9% said to protect assets. Consistent with these objectives, 94% said they would be interested in a retirement investment product from their employer that actively manages the risk of loss while seeking to grow assets at a rate equal to the current cash rate plus 5%.

More than one-third (38%) of plan participants said their plan provided a retirement income solution (up from 31% in 2023); 36% said they didn’t know; and 26% said no. Notably, 9 in 10 (90%) of those who are offered an income solution in their plan say they are likely to use it.

Among those who don’t know or do not have a retirement income solution in their plan, 62% wish their plan did; 29% were unsure; and 9% said it wasn’t necessary.

Terrified By Loss of Paycheck

The majority of non-retired Americans (57%) said the idea of no more regular paychecks is concerning and 22% describe it as terrifying. Responses were mixed when asked if they will be able to replace at least 75% of their last paycheck in retirement income:

• Definitely (10%)
• Probably (41%)
• Probably not (37%)
• Definitely not (12%)

In addition to Social Security, the top five income sources non-retired Americans expect to draw upon after retiring include:

• Cash savings (60%)
• Workplace 401k, 403b or 457 plan (48%)
• Spouse’s workplace 401k, 403b or 457 plan (37%)
• Investment income (36%)
• Spouse’s pension plan (27%)

A majority of retirees don’t have any specific strategies to generate income in retirement, as 53% say they just take money when they need it. Among those with a more formal approach, the top three strategies for generating income include:

• Dividend-producing stocks or mutual funds (23%)
• Systematic withdrawals from retirement accounts (22%)
• Certificates of Deposits (CDs) (17%)

“The transition from retirement savings accumulation to the decumulation phase is not an easy one to make,” said Boyden. “With working Americans increasingly looking to their employers for answers, plan sponsors and assets managers have an opportunity to work together to develop solutions that create a stronger bridge between the asset accumulation and decumulation phases to grow and preserve plan participant wealth while simultaneously providing an opportunity to optimize the timing of their Social Security benefits.”

For more information on the Schroders 2024 U.S. Retirement Survey, visit here.

About the Survey

The Schroders 2024 US Retirement Survey was conducted by 8 Acre Perspective among 2,000 US investors nationwide ages 28-79, including 780 Americans who currently participate in a workplace retirement plan (e.g. 401k, 403b, or 457 plan). The survey was conducted from March 15 to April 5 in 2024.

Note to Editors

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