Ward off clients’ retirement crisis with Social Security talk
Collecting Social Security is a big worry for a lot of financial advisors’ clients -- could a conversation help?
Collecting Social Security is a big worry for a lot of financial advisors’ clients, and the key to easing that worry could be a conversation with clients about just that subject.
That’s according to a survey from the Nationwide Retirement Institute, which also finds that 90 percent of financial advisors strongly believe there is a retirement readiness crisis in America, and that they are essential to helping provide a solution.
While 54 percent of advisor respondents are confident about their clients’ plans to help them live comfortably in retirement, 62 percent say clients frequently tell them they’re concerned about when they should start to collect Social Security.
Yet only 13 percent of workers, according to another Nationwide Retirement Institute consumer survey, have actually talked with an advisor about it. And of those who have, 40 percent said they themselves, not their advisors, brought up the subject.
And while more than half of older adults (58 percent), according to the survey, don’t plan to claim Social Security benefits before they hit full retirement age, they don’t actually know when that is. Ten percent think FRA is later than it really is, while 57 percent think it’s earlier—and only 33 percent actually identified their correct FRA.
And it’s not as if advisors really believe that their clients understand the ramifications of Social Security choices. Just 25 percent of advisors believe a vast majority of their client base (more than 80 percent) understands the factors that can determine their Social Security income.
In addition, the consumer survey found that 88 percent of older adults don’t know what the factors are that would allow them to receive the maximum Social Security benefit, while 63 percent of future retirees own up to not being confident about what they think they know about Social Security.
And although 83 percent of advisors, according to the report, “believe their clients expect them to give advice on Social Security, and 42 percent even say their clients would likely find another advisor if they did not help with optimizing Social Security benefits,” if you ask clients it’s even more obvious that people want help. Says the report, “72 percent of future retirees currently working with a financial advisor say they would likely switch to work with an advisor that can help them maximize their Social Security benefits.”
Then there are the clients who are disappointed with the amount of their Social Security benefits. Among respondents 50 or older who are retired, or who expect to retire in the next 10 years, 27 percent say it’s a smaller check than they expected.
Yet 26 percent think they can get by comfortably just on Social Security benefits. But those who work with an advisor not only get more money—more than 20 percent more, in fact—they are also way more likely, at 83 percent compared with 55 percent, to say that they were able to do more things they wanted to do in retirement.
Advisors themselves aren’t all that confident about the issue, with just 37 percent saying they’re confident about their ability to maximize clients’ Social Security income in retirement.
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