It would seem to be a no-brainer that financial advisors should include Social Security in their clients’ financial plans, but according to a Nationwide Financial survey of U.S. adults age 50 and older, that’s often not the case.

The survey of future and current retirees found that only 52% of respondents who expect to retire within the next 10 years got advice from their advisor about Social Security, meaning half of those advisor clients didn’t.

That’s a major omission in financial plans and a big miss by advisors, says Dave Giertz, president of distribution and sales at Nationwide.

“To build a holistic financial plan, especially retirement income plan, you have to consider all the inputs for income and all the potential inputs for expenses,” he said. “Clearly Social Security and health care costs tie into that in a huge way.”

Of those Social Security discussions that did take place between advisors and their pre-retiree clients, just 45% were initiated by advisors; the majority were broached by clients (45%) or a family member (6%).

There are many reasons why financial advisors should include Social Security in clients’ financial plans, especially those nearing but not yet in retirement. Here are the primary reasons, according to the Nationwide survey:

Advisors risk losing clients if they don't

1. Advisors risk losing clients if they fail to include Social Security in their clients’ financial plans.

Seventy-six percent of pre-retirees working with an advisor — or planning to — were somewhat or extremely likely to switch to an advisor that would show them how to maximize Social Security benefits.

Even many retirees already collecting Social Security were likely to change advisors in order to collect the maximum Social Security payment. Fifty-four percent of survey respondents who were retired for 10 years or less – classified as “recent retirees” – and 35% of those retired for 10 years or more – felt that way.

Many clients are uninformed about Social Security

2. Many clients are uninformed about Social Security; they need professional advice.

Almost one-third of future retirees guess or don’t know how much their benefit will be, and many underestimate how much Social Security they will be able to collect. That can play havoc with their retirement plans and quality of life in retirement.

Almost one-quarter of recent retirees surveyed reported that they received less Social Security than they had expected. Among those retired for 10 years or more, the numbers were more dramatic: one-third received less payments than expected, and that represented a substantial increase from the previous year when only 22% felt that way.

Many clients take Social Security too early

3. Many clients take Social Security earlier than they should.

Most Americans begin to collect Social Security before their full retirement age, which is now 66 for those born between 1943 and 1954 and 67 for those born in 1960 and after. (An additional two months is added to age 66 for every year between 1955 and 1959).

The average retirement age is 64 for men and 62 for women, according to a report from the Center for Retirement Research at Boston College, based on 2013 data. A 2016 poll of Americans age 50 and older from The Associated Press and NORC Center for Public Affairs found that among pre-retirees, 64 was the average age most expect to collect Social Security.

Those who take Social Security early are “potentially leaving hundreds of thousands of dollars on the table.”

“That’s a huge issue when it comes to the opporutnity to help people maximize” retirement funds, said Giertz at Nationwide.

Retirees who collect benefits at age 62 — the first year they are eligible – receive 25% less than they would if they had waited until their full reitrement age. Those who collect benefits after their full retirement age but before age 70 collect 8% less for every year they didn’t wait until age 70.

Collecting Social Security earlier is a decision that about one-quarter of recent retirees in the Nationwide survey appear to regret. Twenty-three percent of them said they now they wished they had started drawing on Social Security at a later age.

(Related on ThinkAdvisor: 5 Shocking Facts About Retirement Health Care Costs)

That might be a wise decision given the experience of many of them. Twenty-eight percent of recent retirees — and 23% of those retirees ten years or longer — said health care expenses interfere with the retirement they had expected, according to the Nationwide survey.

Advisors can make a difference

4. Advisors Can Make a Difference 

“You can’t plan to keep healthy all the time but that could happen,” says Charley Gillespie, a spokesman for Nationwide. “But an advisor can help you draw down on an IRA instead of taking Social Security early.”  

That’s just one example of how a financial advisor can help clients navigate the complex rules of Social Security – “there are thousands of rules in Social Security Handbook,” says Giertz, noting that their complexity is why many advisors aren’t talking to clients about Social Security.

Nationwide has a Social Security 260 Analyzer and Health Care Cost Assessment to help advisors analyze the best strategy for collecting Social Security, taking into account potential health care costs, and other firms offer similar tools.

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