Navigating Social Security as part of a retirement strategy is complex. This is where advisors can deliver tremendous value to their clients, guiding them along the path of retirement planning. Here are five common misconceptions your clients might have related to Social Security and the insight needed to help close these knowledge gaps.
1. Big Changes in 2021
According to Jim Blankenship, a financial advisor and the author of A Social Security Owner’s Manual and Social Security for the Suddenly Single, “There is a misconception, brought about by some frothy advertisements, that there are big changes coming to Social Security in 2021.” In reality, the only change of any consequence for 2021 is slight (two months) in the age that people need to attain to reach their full retirement age (FRA) for benefits. This change has been in the rules for more than 40 years, the last time there was a major Social Security overhaul, says Blankenship.
2. Social Security Is an Entitlement
This is often heard in a political context. The reality is that Social Security benefits are based on work and earnings history. In order to qualify for benefits, your clients will generally need 40 quarters of work history. Benefits are based on indexed monthly earnings over the top 35 years of earnings history. All the while, clients will have paid into Social Security throughout their working career.
3. Working Longer Doesn’t Help