Nationwide Retirement Institute Survey Highlights Critical Gaps in US Social Security Literacy

A 2025 survey conducted by the Nationwide Retirement Institute has exposed a significant deficit in financial literacy among US adults regarding Social Security. Drawing on responses from 1,812 individuals who currently receive or anticipate benefits, the data indicates that only 21% of respondents correctly identified their full retirement age. This lack of fundamental knowledge persists despite a widespread belief in personal competence, with 74% of participants expressing confidence in managing their benefits without professional assistance.

The discrepancy between self-perception and actual understanding is evident in the survey's testing results. When faced with a 15-question assessment covering claiming mechanics and tax rules, the average respondent answered just eight questions correctly. Specific areas of confusion were particularly damaging; only 26% of participants knew that a claiming decision could be undone within the first 12 months, and merely 27% understood that workers do not pay Social Security taxes on all of their income.

The financial vulnerability revealed by the study is severe, particularly for current beneficiaries. A majority of 61% stated they could not survive financially if they missed even half of a monthly payment. This lack of a financial buffer means that suboptimal claiming decisions or unexpected tax liabilities could have immediate and devastating consequences, as many households lack the liquidity to absorb such shocks.

Rising living costs are already forcing adjustments to the standard of living among recipients. The survey found that 52% of current beneficiaries have reduced discretionary spending, while 31% have cut back on essentials such as groceries and medications. These behavioural changes reflect a reality where fixed benefits are failing to keep pace with inflation, leaving many with only 59% of their retirement expenses covered by the program.

Taxation remains a primary source of anxiety for the population. Between 54% and 65% of respondents expressed concern over retirement taxes, with six in ten wishing they had better prepared for tax liabilities. This uncertainty extends to future retirees as well, with 65% of non-retirees worried about how tax rates will impact their income in later life. Consequently, more than half of all respondents indicated they would switch financial advisors to find someone better equipped to handle tax planning for retirement.

While interest in understanding how inflation affects benefits is high, the knowledge required to navigate the system remains elusive. More than two-thirds of respondents believe tariffs will drive inflation beyond the reach of Social Security cost-of-living adjustments, yet the mechanisms behind these adjustments remain poorly understood. The survey concludes that while the appetite for better outcomes is real, the gap between wanting a better result and knowing how to achieve it remains a critical barrier for millions of Americans.