Helping Clients Navigate Social Security's Continued Underfunding
Updated: Mar 2, 2022
The recently released trustees report from the Social Security Administration created headlines that raised more than a few eyebrows by indicating that full Social Security benefits could only be provided, given current funding levels, through 2034, or another 12 years. This is a full year earlier than was projected last year. Less publicized was that the program would then be able to continue supporting 78% of benefits, based on current funding levels and projections.
While some experts expect further pressure on program funding in the coming years, others expect that lawmaker intervention is likely at some point – especially as the date approaches.
Regardless of your level of optimism or pessimism, one message has been consistent and clear: advisors can play a key role in helping clients understand the cost of any temptation to file for benefits earlier than originally planned over concerns that aren’t expected to play out for at least another decade. In many cases, filing at the first age of eligibility (62) would also mean a reduction of monthly benefits by 25% or more.
Advisors with clients nearing retirement would be wise to raise the discussion proactively so a thoughtful, individualized strategy can be developed. The Social Security Administration offers further information and resources for advisors regarding the various Social Security programs and Medicare, to help clients plan thoughtfully for their unique situation, through this site.
Christy Charise, Founder & CEO of Strategic Advisor