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Why Social Security Expertise Is Critical to Clients — and Advisors

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“I honestly give my clients the number to the local Social Security office if they have questions,” an advisor recently said. “It just gets too complicated and there are too many changing variables.”

It’s safe to say Bob Seawright does not agree with that advisor, although he’s not surprised by the attitude.

“I start with the general assumption that advisors too often ignore Social Security,” the chief investment and information officer for Madison Avenue Securities concedes. “There is not a lot of “there” there. They simply don’t make money at it.”

But with the increasing intensity of the fiduciary debate, it’s hard to see how such an attitude will last much longer.

“Studies confirm when retirement works, people are happy, strong, healthy and even more romantic,” Seawright notes. “When it doesn’t, those same studies find people go through hell.”

For this reason Social Security is “enormously popular and enormously important.”

He cites statistics from the Employee Benefits Research Institute that find it accounts for more than 36% of income for all retired people. But that number is skewed by the super wealthy; remove that outlier, Seawright says, and the percentage rises to almost 45%.

“As advisors, we have to therefore at least look at it. Only 2% of the population has saved more than $250,000. With inflation, that will soon get you a cup of coffee at Starbucks once a week. Yet a couple that is entitled to $2,000 a month in Social Security comes out to an asset worth about $850,000.”

The good news, he says, is that while Medicare is a “disaster,” Social Security isn’t in all that bad a shape, it needs “tweaking.”

The problem, Seawright adds, is that the public doesn’t want any changes that will negatively impact them.

“About the only tweaking everyone can agree on is some kind of means testing where rich people pay more. Of course, they define rich as anyone who makes more than them, regardless of where they might reside themselves on the income scale.”

One thing is for certain, he says; people are leaving enormous amounts of money on the table with their Social Security. According the Social Security Administration, 74% of recipients are receiving a reduced amount because they begin distributions at the most popular age in which to do so, which is 62. They therefore fall into what Seawright calls “that rat hole,” or the immediate three years before the official retirement age of 65. Because of a quirk in the system (or rather the math), they receive significantly reduced benefits.

“There is so much the public doesn’t know about Social Security; for instance, divorced or widowed spouses can get benefits after only 10 years of marriage.

“The biggest thing that people don’t realize is that for every year they delay taking Social Security, the get an extra 8% over and above inflation; and that is guaranteed,” he concludes. “Where else in today’s market will you get a guaranteed 8%? And none of it is dependent on a person’s portfolio performance.”

Robert Seawright will be a speaker at this year’s Think Retirement Income Conference in Boston on Oct. 10 and 11. For more information and a list of other speakers, please visit


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