Studies abound on how dependent many U.S. workers will be on Social Security once they retire, since their other retirement savings don’t amount to much.

But a new Spectrem Group white paper says that even more affluent Americans rely on Social Security to make up a significant portion of their income — as much as 50 percent — in retirement.

The white paper, “Social Security: When and Why,” looks at the decisions made by affluent investors who have retired, as well as the plans affluent investors still currently working have for their own Social Security benefits distribution, and has found that a surprising number of more affluent retirees are receiving a substantial portion of their retirement income from Social Security.

Because there are so many different factors that determine when an individual will decide to start drawing Social Security benefits — a combination of age, health, dependents, employment and tax considerations — the paper said that people’s decisions about when to claim benefits and receive payments vary greatly.

Those decisions became more complicated with the legislation in 2015 that ended the “file and suspend” strategy, which allowed a spouse to receive half of the other spouse’s benefits even when that other spouse was not yet drawing benefits.

Despite the difficulties inherent in deciding the best time to claim benefits, only 25 percent of investors said they plan to discuss the matter with a financial advisor, and 43 percent said they don’t plan to discuss it at all. The wealthier the investor, however, the more likely they are to discuss Social Security with their advisor.

In examining the plans of the affluent, the paper found that among investors who are not yet at least 62 years of age or who have not yet begun receiving benefits, 18 percent plan to begin receiving payments at age 66.

The smaller an investor’s net worth, the study found, the later they plan to begin accepting benefits. More than half of investors with a net worth under $1 million plan to wait until they are at least 67 years old. In contrast, however, those with more than $5 million in net worth plan to wait until age 70 to begin receiving benefits.

Among those who have already retired, more than 60 percent of investors currently receiving Social Security benefits say that the payments represent between 10–50 percent of their current monthly retirement income. For 32 percent of those with a net worth between $100,000 and $1 million, it represents at least 50 percent.

And among those who have not yet retired, most expect their payments to represent at least 10 percent of their monthly retirement income. Even among investors with a net worth over $5 million, 30 percent believe it will represent 25 percent or more of their monthly retirement income.

Instant Insights /

Even more affluent retirees rely on Social Security income

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