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Life Health > Annuities > Fixed Annuities

5 Ways to Calm Your Clients' Social Security Fears

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What You Need to Know

  • For some clients, fears about Social Security may interfere with any efforts to plan for retirement.
  • Educating clients early on the financial benefits of waiting to claim Social Security can be a key part of building dependable retirement security.
  • You could also talk about how use of private annuities can complement Social Security benefits.

Millions of Americans count on Social Security to help fund part of their retirement.

But today, many of those individuals worry about the long-term viability of the program.

How can we help curb those concerns and keep retirement savers not only on track but feeling confident about their futures?

Understanding how and why these concerns rattle retirement savers’ confidence can offer valuable insight for financial professionals.

How Your Clients Really Feel About Social Security

In a recent Principal survey, we took a closer look at individuals who reported being worried about the long-term availability of Social Security.

We found that 40% of those concerned are more likely to be uncomfortable with the retirement planning process.

Among that same group, an overwhelming 80% feel they aren’t saving enough (or simply don’t know how to save) for retirement.

Beyond savings habits, a lack of confidence in Social Security causes additional financial worries.

Long-term viability may be compounding concerns people already have, as evidenced by our recent survey: Three quarters (76.6%) of employees report experiencing stress with their day-to-day finances.

And 93.6% of employees say they’re stressed about longer-term financial security.

Knowing what contributes to overarching Social Security concerns can help you make stronger connections with your clients, provide unique context and information aligned with their individual finances, and better guide them through their Social Security and Medicare needs.

How to Make Social Security Work for Your Clients

Of course, this article is educational only; it does not provide legal, accounting, investment or tax advice.

If you yourself do not have the relevant professional expertise, you should consult with appropriate counsel, financial professionals, and other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

You should also urge clients to get the professional help needed to fill in any gaps in the scope of the advice you offer.

But clearly, clients should know that Social Security is one of the few things that are truly inflation-indexed.

While helping your clients plan for their retirement, be sure to discuss the following tips for maximizing their Social Security benefits.

1. Set up a Social Security account log-in.

Do your clients have Social Security accounts set up? If not, that’s the first place you should start.

Setting up a Social Security log-in now helps individuals gain access to their statements and see how much they may ultimately receive.

Another benefit: Checking their accounts often leading up to retirement also lowers the likelihood of identity fraud.

(Setting up an account early helps keep records confidential and protects your clients’ Social Security numbers.)

2. Resist the urge to withdraw benefits early.

Many people think of Social Security as a system they’ve paid into and can claim retirement funds from as soon as possible.

That thinking needs to evolve.

Those who claim Social Security early are losing the chance to grow their retirement income — missing out on a nearly 8% increase on their retirement income for every year they delay claiming — up to age 70.

Educating clients early on the financial benefits of waiting can be a key part of building dependable retirement security.

3. Consider a phased retirement.

Talk with clients about opportunities to make the shift to retirement a gradual one. Opportunities to work part-time, step into roles with less responsibilities or stress, consulting or mentorship jobs, and more may all be options that benefit both business owners and their workforces.

For clients who work for others, this opportunity offers a welcome transition into nonworking years — and a reason to not tap into their Social Security too early.

For employed clients who are ready to call it a day with their current employer, encourage them to explore other money-making options that align with their interests.

A contract or part-time job in a related field (or something completely new and different) can reduce idle time, build savings and restrict the impulse to spend too much money.

4. Recognize that family dynamics matter.

It may be beneficial to conduct a couple’s assessment with your married clients and those in domestic partnerships.

Partners need to carefully consider who should receive Social Security benefits and when to start.

Additionally, divorcees or widows will have additional considerations with Social Security, and how it may change family status (getting married again will impact Social Security benefits, too).

Single individuals who may be considering getting remarried will need to weigh how their benefits could change, as well.

Be sure to discuss housing and long-term goals. Does staying in their current home make sense, or would a less expensive home be a better fit for your clients’ retired lifestyle? No matter where they live, wiping away as much mortgage debt as possible now can be a big help later.

5. Hold off withdrawals with a bridge strategy.

Push withdrawals until age 70 whenever possible to maximize Social Security benefits. To do that, you may need to get a little creative.

Consider separating funding into three separate buckets: Social Security, employer-sponsored plans and personal savings.

Then ask your client to dip into one of the latter two buckets before relying on Social Security.

For individuals and couples who come up short after doing the math, you’ll need to talk through other retirement income options.

For instance, an annuity can help bridge the gap and add some balance to their overall retirement strategy.

This consistent and guaranteed income source might be just the thing to help clients get over the urge to take Social Security too soon.

A little education and reassurance go a long way.

Nearing retirement comes with a lot of worry about what life will look like and how to afford it.

Offering some reassurance and education around Social Security longevity will go a long way in helping your clients alleviate some of the stress they face today and build confidence in their financial future.


Sri Reddy. (Photo: Principal)Sri Reddy is senior vice president of Retirement & Income Solutions at Principal.

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