Concerns Over Retirement Income Affect Social Security Decisions
A recent survey conducted by Schroders has unveiled significant anxieties among non-retired Americans regarding their financial future. The study, which was part of the 2025 US Retirement Survey, indicates that a staggering 87% of participants expressed at least some concern about their ability to generate sufficient income during retirement. Notably, over half of these individuals are either “concerned” or “very concerned” about the possibility of outliving their savings.
The survey reveals that many Americans are opting to claim their Social Security benefits earlier than the full retirement age of 67. Approximately 44% of those who are not yet retired plan to file for benefits before reaching this age, while only 10% intend to wait until they turn 70 to secure the maximum monthly payout. This trend reflects a broader sentiment among 70% of respondents, who acknowledge that delaying benefits could result in higher monthly payments. Despite this understanding, motivations for early claims are varied and include the need for immediate access to funds, worries about the program’s long-term viability, and the necessity of income for everyday expenses.
Understanding the Financial Landscape
According to Deb Boyden, Head of US Defined Contribution at Schroders, the income derived from Social Security is essential for many Americans aiming to sustain their lifestyle in retirement. Boyden noted that the ongoing discussions regarding the potential insolvency of Social Security are making workers anxious to access their benefits sooner rather than later. This urgency is compounded by the reality that many Americans face a significant gap in their retirement savings, which could have long-lasting implications on their financial health.
The average expectation among non-retired Americans is that they will need to generate approximately $5,032 in monthly income to retire comfortably. To meet this target, they anticipate relying on various sources, including cash savings (60%), workplace retirement plans like 401(k)s (45%), and investment income (34%). Alarmingly, the survey also found that 39% of participants in workplace retirement plans reported having access to a retirement income solution, while 27% stated their plans do not offer any such products.
Retirees Face Uncertainty in Financial Planning
Among those who have already retired, a significant portion, approximately 62%, admitted they are uncertain about how long their savings will last. Furthermore, 58% wish they had engaged in more thorough financial planning prior to retiring. The findings indicate that nearly three-quarters of retirees receive less than 75% of their final paycheck in monthly income, with 46% living on under half of their pre-retirement earnings.
For retirees who do have income strategies, the most common approaches include systematic withdrawals from retirement accounts (25%), investing in Certificates of Deposit (CDs) (21%), and utilizing dividend-producing stocks or mutual funds (21%). Boyden emphasized the need for improved management of retirement savings, suggesting that many individuals face challenging decisions when it comes to withdrawing assets to cover their living expenses.
The Schroders survey, which was conducted among 1,500 investors across the United States, highlights the pressing need for innovative solutions within the retirement planning industry. As concerns about financial security grow, the focus will likely shift toward developing products that alleviate the complexities associated with generating retirement income.
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