Social Security: The last unexplored frontier?

“What we’ve got here is a failure to communicate.”

That line, from the 1967 film “Cool Hand Luke,” has been repeated frequently since The Captain explained “the situation” to Paul Newman (Luke) and his fellow inmates. And it certainly applies to the Social Security Administration and its intended audience.

That’s the primary takeaway from a recent survey mounted by Nationwide and executed by the Harris Group. What the insurer and the pollster found was an appalling lack of knowledge about Social Security by the very Americans who stand to benefit from it. But the survey suggests the fault lies not with the agency, but with the taxpayers themselves.

Harris surveyed nearly 2,000 U.S. adults to gauge their knowledge about Social Security benefits. Given that Social Security dollars will, in theory at least, be finding their way eventually to all those interviewed, the overall ignorance of the very basics of the system should be cause for the administration to overhaul its communications department.

For instance, “more than two-thirds of Americans (68%) don’t realize Social Security is protected against inflation.” This you would ostensibly know if you were receiving benefits, since the administration notifies recipients annually that their benefit has increased due to inflation.

Less than 10% were able to cite “all the listed factors that determine the maximum SS benefit someone can receive,” the pollsters report. Need further evidence of the general ignorance? Consider:

• Almost half (49%) of adults don’t know or aren’t sure what percent of their income is or will be replaced in retirement by Social Security.
• 44% of those not currently receiving Social Security aren’t sure how much their monthly Social Security payments will be.
• Only 13% of adults correctly guess their full retirement age based on their year of birth.
• 49% mistakenly believe if they file early their benefit will automatically go up once they reach their full retirement age.

What’s troubling about this is that everyone eligible to receive Social Security benefits could find the answers to these and more questions by logging in to their own SS account. Help numbers are prominently listed, and just about any city of any size has a local office you can call or visit.

Yet folks are making all sorts of decisions about their benefits without really understanding much about them. Among the survey’s other findings:

• 26% of boomers who are not currently receiving Social Security plan on filing for Social Security benefits early while continuing to work.
• 39% of boomers who are not currently receiving Social Security plan on drawing their benefits before their full retirement age.

There’s nothing wrong with doing either of those – as long as you understand what the implications are. Again, consulting a financial expert, or simply contacting SS, would give you the information you need to make an informed decision.

But then, the survey found, there’s lots of skepticism out there about the viability of the Social Security system. “Most consumers (70%) across generations worry that Social Security will run out of funding in their lifetime. One in 3 adults (33%) believe they won’t get a dime of what they’ve earned when they retire,” the researchers report.

The survey also queried people about the current state of the economy, which is more volatile than it has been in more than a decade.

“As a result of inflation, Americans across generations are making changes in their daily lifestyles and canceling or postponing life events in the past 12 months because of inflation,” the report says. Folks are dining out less frequently, cutting back on driving, postponing vacations and putting off vehicle purchases.

Related: Are early retirees overspending in retirement?

“Continued financial repercussions from the pandemic, new concerns over market volatility and high inflation are leading two-thirds of Americans (66%) to worry more now than they did before about their retirement income,” the survey says.

But people could assuage some of their concerns by learning more about Social Security, says Tina Ambrozy, senior vice president of Strategic Customer Solutions at Nationwide.

“It’s understandable that people are worried about retirement in the face of the current economic environment,” she says. “Individuals at all stages of their careers can benefit from educating themselves about the Social Security system and retirement planning and a trusted financial professional can help with that education.”

Or you could contact Social Security. Folks there cannot communicate if you don’t ask for help.