The Social Security Conversation

Only 11% of retiring and retired individuals surveyed have had a financial advisor talk to them about Social Security

It’s not the usual conversation many retirement advisors have with their clients – when and how to use their Social Security benefit, let alone how to build a retirement plan around the benefit.  And it’s a conversation many retirement plan participants are not getting: a study by Nationwide Retirement Institutes reveals that only 11% of retiring and retired individuals surveyed have had a financial advisor talk to them about Social Security. Of those, half of the retirees had to bring it up with their advisor.


While understanding the regulations surrounding Social security can be daunting, retirement advisors would do well to have even a cursory conversation with their participants around Social Security.


Here’s how to approach the conversation:

Hold regular reviews of Social Security benefits. Particularly if participants are relying on Social Security as a main source of income, advisors should be making the Social Security review part of the annual review of benefits.


Remind them of Medicare payments. Your participants may see that they’ll be receiving $50,000 annually in Social Security. However, are they deducting Medicare premiums from their anticipated retirement expenses? Help your participants estimate their Social Security benefit alongside their Medicare obligations. Also, help participants factor in any federal, state, or local taxes they may owe on Social Security benefits.


Examine whether they should eke it out until 70 ½. While it’s true that the payoffs are bigger the longer you wait, can your plan participant afford to wait? Depending on how much – or how little – participants have saved in their personal retirement accounts, the 25-30% reduction in Social Security benefits for withdrawing at age 62 may hurt them less than drawing down on a small savings pool. Can they afford to wait until the 65-67 year retirement age for that 100% benefit? Or is their savings such that they can wait for the delayed retirement benefit?


Consider having one spouse delay benefits. If one of your plan participant spouses delays collecting until age 70, the other spouse will see a significant increase in their benefit. Talk with your participants on how this may be a way to realize larger Social Security benefit.


Discuss alternative forms of retirement income. If your participants are financially unable to wait to collect their benefit, help them consider other options, such as post-retirement work. Educate them on what the current earnings limits are and how their Social Security benefits decrease if they go over that limit. Perhaps a part-time job could be the answer to remaining financially solvent during retirement.


Even a simple conversation and review of a participant’s Social Security benefit can help them build a plan that maximizes their retirement portfolio, and helps them their retirement savings.

Need more help getting into the conversation with your participants? Contact us

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