I read a lot about the retirement gap in America. There are some scary scenarios ahead for many people who have not committed to saving, investing or planning for income they can not outlive. But some of the scariest statistics that continue to bother me are those around Social Security.
No, it’s not the fact that 78 percent of people believe Social Security will run out of money in their lifetime.1 Instead, it’s the complete lack of education that the financial services industry is providing to clients. That’s something we can control and change.
Here are five stats you should pay attention to:
Ninety-one percent of Americans don’t know the factors that determine the maximum benefit Social Security can provide.1 If you don’t know what makes up the source of revenue, how can you feel comfortable about your retirement income? Let’s educate ourselves and our clients.
More than 50 percent of Americans continue to elect Social Security prior to their full retirement age, which results in lower income levels for the rest of their lives.2 We need to show clients how waiting to elect their benefits, even for a couple of years, can result in long-term improvements to their retirement plans.
People who elect Social Security income at age 62 will spend as much as 64 percent of their income on future health care expenses.1 Be sure your clients know how health care costs skyrocket in retirement. Not just long-term care, but general medical costs for prescriptions and doctor visits.
Only one-third of Americans work with a financial advisor – and only 20 percent have an advisor who provides advice on Social Security income planning.1 That’s painfully low. It’s largely because Social Security does not translate into an asset under management for fee income or a commissionable sale.
All of this results in the fact that 79 percent of people will likely seek out a financial professional who will help maximize Social Security benefits for them in the future.1 Will you be one of those advisors? Give your clients the education they want and need.
As advisors, we must learn the complexities of Social Security and convey that knowledge to our clients. The planners who do so put themselves in a much better position for long-term success. Their client retention will likely be higher due to the information they provide while preserving their assets under management.
Learn as much as you can about Social Security in the income planning process. Clients want advice on this complex benefit, and they clearly need to know more in order to make better decisions about their future income.
We're talking with Jim Blair on May 17 to tackle unique situations around Social Security your clients may be facing.
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