72% of Americans worry Social Security will run out in their lifetimes. Here’s what experts say

Workers who pay into Social Security while they’re working should expect benefits from the program when they retire. Yet 72% of adults worry Social Security will run out of funding in their lifetimes, a new survey from Nationwide Retirement Institute finds. Meanwhile, 23% do not expect to receive even a dime of the Social Security benefits they’ve earned. Millennials and Gen Xers are most concerned the program’s funding may run out, according to Nationwide’s online survey of more than 1,800 adults, ages 18 and up. The pessimism comes as the program’s future funding status is uncertain. The trust fund the program relies on to pay retirement benefits is due to run out in 2033. At that time, just 79% of benefits will be payable. Voters in the November presidential election are expected to place a high priority on where the candidates stand on fixing Social Security. However, fears that Social Security benefits may dry up completely are overblown, experts say. “The odds of it going away completely, I think, are really, really low,” David Blanchett, managing director and head of retirement research at PGIM DC Solutions, recently told CNBC.com. However, it is possible benefits could be rearranged to make it so high earners receive a reduced income replacement rate, he said. Nevertheless, Americans shouldn’t worry Social Security will disappear. “We’re always going to have a public pension system that almost all Americans will have access to,” Blanchett said. While it is possible future Social Security benefits will be reduced, it is unlikely they will be eliminated altogether, Joe Elsasser, a certified financial planner and president of Social Security claiming software company Covisum, recently told CNBC.com. “It’s totally reasonable to expect a benefit cut for younger people,” Elsasser said. “But to plan for it not to be there at all is a poor assumption.”

Most Americans don’t fully understand Social Security

While many Americans worry about Social Security’s future, they also don’t know fully understand how the program works, Nationwide’s survey found. “What is disappointing is to recognize that the gaps actually widened,” said Tina Ambrozy, senior vice president of strategic customer solutions at Nationwide, said of the results of the firm’s 11th annual survey. More than half of respondents — 51% — do not know how to maximize their Social Security benefits and 33% are uncertain when they may qualify for full retirement benefits. Likewise, recent research from the National Institute on Retirement Security found just 11% of Americans know exactly how much Social Security benefits they may receive. Social Security retirement benefits are calculated based on the top 35 years of wages that are averaged together to determine your benefit, Blanchett explained. If you start working and paying into the program through payroll taxes at age 20, and then retire age 65, you have a 45-year wage history. Social Security will use your highest 35 earning years to calculate your benefit. Importantly, beneficiaries are not limited to a fixed retirement benefit amount and can maximize their benefits. You can claim retirement benefits at the earliest at age 62 or wait until 70, the highest claiming age. At age 62, you will receive a permanently reduced benefit. If you wait instead until full retirement age — 66 to 67, depending on when you were born — you will receive 100% of the benefits you earned. But if you wait even longer, you may receive even more. Most experts recommend waiting until the highest age at which benefits can grow — 70 — to maximize Social Security benefit income. Many people are not familiar with the highest claiming age, NIRS recently found. “If you wait until age 70 you get the maximum possible benefit,” Blanchett said. “Every month or year you claim before that, the benefit is proportionally reduced.” To be sure, waiting may not be the optimal strategy for everyone. Nationwide and other firms recommend consulting a financial professional to help individuals assess their Social Security claiming options. Many Americans are heading into their retirement years with a shortfall in retirement savings, which has prompted debate as to whether the U.S. is on the brink of a retirement crisis. While many Americans may be forced to make significant changes to their lifestyles in their golden years, Social Security should help prevent worst case scenarios, according to Blanchett. “If we didn’t have Social Security benefits, we would have a crisis where we’d have people retire, they’d be destitute, they’d be in a lot of trouble,” Blanchett said.