I’ve written before that media coverage of retirement issues often, well, stinks. There’s too many click-seeking headlines and not enough deep dives into what’s really going on with retirement savings (which is surprisingly positive). Too many reporters run single-source articles rather than making a few phone calls to get some context. Today’s example – supposedly showing that near-retirees dramatically overestimate what they’re likely to receive in Social Security benefits – does nothing to assuage my fears.
A new survey from the Nationwide Retirement Institute asked near-retirees aged 50 and up to estimate what they’ll receive from Social Security when they retire. The average answer: $1,805 per month.
Here’s the problem, at least according to Nationwide and the numerous media outlets who reported on the survey: the average Social Security benefit paid to retirees today is only $1,408, a 28% difference from near-retirees’ expectations.
Now comes the hand-wringing: “Americans have ‘incredible’ misconceptions about Social Security,” says Fox Business. “Older Americans are relying too much on Social Security as a main source of income,” worries USA Today. “Older Workers Are Grossly Overestimating Their Social Security Benefits,” frets the financial website Motley Fool. Just more evidence of the retirement crisis breathing down our necks.
Except… The experts don’t know as much as they think. The average Social Security benefit of $1,408 is the benefit paid to all retirees of all ages, including the very old. The average benefit for new retirees in 2017 was $1,460 per month.
Moreover, the near-retirees surveyed by Nationwide have an average of about seven years additional work before they claim Social Security benefits. If we grow that average 2017 benefit of $1,460 until 2026 at the 2.4% annual rate that initial retirement benefits grew between 2008 and 2017, we get an expected benefit of $1,803, within $2 per month of what today’s supposedly-uninformed near-retirees guessed. Huh?
If you know the Social Security program the basic logic of this argument isn’t hard to follow, even if it takes a while to dig up the actual data.
America doesn’t need more coverage of retirement issues. It has plenty of that. It needs better-quality coverage.