This summer we hired a market research firm to survey 532 married couples age 60-66 in an effort to gauge their knowledge of Social Security election strategies and their expectations when it comes to SS advice. Here are a few highlights:
- 77 percent of people would expect to receive claiming advice from a Social Security representative (which is interesting because they are precluded from providing advice, particularly when it comes to maximizing family benefits)
- 84 percent of people would expect claiming advice to be free and 92 percent would expect to pay less than $100
- 73 percent of people were unaware of creative claiming options such as the file and suspend and the restricted application
- 57 percent would expect their financial advisor to be able to analyze these options
- And, 57 percent would look to an outside advisor if their current one couldn’t perform a Social Security analysis.
We feel that the retirement market is ripe for advisors to begin offering Social Security planning as a core service. But first, a little background.
Why is Social Security So Important?
The Social Security election decision, especially for married couples, is one of the most important decisions your clients will make in retirement. The stakes are high, with the difference between the best and worst election decision usually falling the range of $20,000, $40,000 or even $100,000 (today’s dollars).
When you consider that Social Security makes up, on average, 64.8 percent of total income for recipient households with someone aged 65 or older, according to the Social Security Administration, it’s easy to see that this is a decision you want to make sure your clients get right.
Furthermore, Social Security is completely unique in that it is the only asset that insures against all three main retirement risks: inflation, market (sequence risk) and longevity. It’s adjusted annually for inflation, it’s tax-advantaged, it will pay as long as you live and it’s backed by a government promise. Further, According to Larry Kotlikoff of Boston University, it’s approximately 40 percent cheaper to “buy more” Social Security than to buy a commercial annuity. Simply put, Social Security is the best annuity money can buy. The fact of the matter is that for most people, even when maximized, Social Security is not enough. There is a need for additional guaranteed retirement income.
The Social Security Planning Opportunity