“Great minds think alike.”
The recent annual meeting of the Association for Advanced Life Underwriting brought together a collection of great minds to discuss the current economic climate and upcoming political elections. A similar theme emerged in messages presented by Dr. Alan Greenspan, former chairman of the Board of Governors for the Federal Reserve; David Walker, United States Comptroller General; and George Will, the well-known political columnist.
Their common theme was simple but had larger financial implications for our industry and our senior clients: the U.S. Social Security program and an aging population are creating unprecedented economic challenges that our elected officials are not adequately addressing.
Social Security is our largest government program, with more than 44 million individuals collecting benefits. The program began during the administration of President Franklin D. Roosevelt about 70 years ago. When the program first began, individuals could qualify for Social Security benefits at age 65, the same age as the average life expectancy.
In 1940, approximately 222,000 citizens received Social Security benefits and the first recorded monthly retirement check totaled just $22.54. Of course, at that time the average annual salary was just under $2,000 and a gallon of gasoline cost around $0.18.
How times have changed! Today, gas prices and the overall cost of living continue to rise while the average life expectancy has increased dramatically. Increasing life spans are thanks in large part to pharmacology advancements, medical breakthroughs and lifestyle changes. Individuals now are living 20 or more years into their retirement, yet the retirement age has stayed the same. In fact, we have even shifted the opposite direction by offering the ability to receive early Social Security benefits at age 62.
The combination of rising costs and increasing life expectancy is a path our country will continue to follow, especially through the looming swell of retiring baby boomers. Millions of baby boomers are not adequately prepared for their retirement years, and many will rely on Social Security despite its shortcomings.
The resolution to our country’s economic problems lies in our ability to convince elected officials to make fundamental changes to improve the economy. An election year is the ideal time for change, and I encourage you as a financial professional to pay attention to the political process. I also encourage you to take action by educating your clients and guiding them as they save and plan for their retirement years. As trusted financial advisors, we have the ability to motivate our industry and motivate our clients to inspire change.