Many recent retirees are regretting not waiting to retire because of unexpected costs from health issues and life events. When people retire too soon and start collecting Social Security income, they give up extra money that could help them later on.
Harris Poll conducted its third Nationwide Retirement Institute survey of more than 900 adults who were over the age of 50 and were either retired or nearing retirement. Their research showed that about 25 percent of retired respondents would wait to start collecting Social Security if they could turn back the clock. Of those who did not regret waiting, almost 40 percent said that a life event compelled them to start collecting.
Almost 40 percent of retirees said that health problems prevented them from living up to their expectations in retirement. Another 80 percent of respondents reported experiencing major or multiple health problems sooner than expected. Health care costs alone kept about 25 percent of the participants from living how they hoped to live during retirement.
According to researchers, the average American who starts drawing Social Security income at age 62 will spend over 60 percent of that money on health care costs. By waiting longer, retirees are eligible for a larger monthly income. Nearly 25 percent of future retirees are unsure about the amount of their expected Social Security income. Of the participants who recently started collecting a benefit, about 30 percent reported receiving less than expected. Another troubling factor to researchers is that many soon-to-be retirees do not know what factors affect their benefit amount.
Researchers said that even those who could identify the factors affecting benefit amounts were unlikely to fully grasp the many applicable rules and what they mean for future income. Financial advisers, Social Security tools and other helpful additions can bridge the gap. Only about 10 percent of the surveyed retirees used online calculation tools to determine their benefit amount. However, the number of people who are aware of these tools and actually use them is slowly increasing. Researchers also hope to increase awareness about financial advisers. They reported that less than 15 percent of retired respondents talked to an adviser before retiring.
Financial advice is a more promising topic for future retirees. According to the survey, more than 30 percent of future retirees had talked to a financial adviser. Only about 50 percent of those respondents reported getting advice specifically about Social Security from their advisers. When asked if they would switch to an adviser who could show them how to maximize their benefits, more than 75 percent of future retirees said that they would gladly make the switch.
If retirees work with an adviser, they are less likely to report health problems and costs preventing them from living their dream retirement. As the landscape continues changing for retirees, Social Security is becoming more important. Researchers said that about 40 percent of the survey’s respondents did not have a pension plan and lacked adequate savings to retire. If future retirees work with advisers, they can reduce their risks of outliving savings and maximize their financial portfolio to allow for unexpected life events and health issues. To learn more, discuss concerns with an agent.
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