Advisors who aren't talking about Social Security with their clients may be missing an opportunity to serve them well and retain their business.
The Nationwide Retirement Institute's fifth consumer survey about the program, conducted by The Harris Poll, illustrates many of the public's misconceptions about Social Security, which could addressed by advisors.
"There's a major disconnect between what consumers think their Social Security benefit will be — and cover — compared to reality," says Tina Ambrozy, president of sales and distribution at Nationwide.
A quarter of retirees surveyed said their Social Security payments were less than what they had expected, and 50% of future retirees thought they were eligible for benefits sooner they they actually were, according to the survey.
Many future retirees also don't expect to collect benefits until they reach 66, which is the full retirement age for anyone born between 1943 and 1954, but in reality more than 40% of men and women start collecting benefits at age 62. That's the earliest age to qualify for benefits, but the payments are about 25% less than at full retirement age.
Filing early is especially problematic for those who depend on Social Security for most of their retirement income, and many do. According to the Nationwide survey, about 42% of future retirees and 50% of current retirees view Social Security as their primary source of retirement income. Twenty-six percent of future retirees believe they can live comfortably in retirement on Social Security alone.
Most problematic in the survey for financial advisors is the low percentage of respondents who work with financial advisors and have received advice from them about Social Security — 13%. Among those who were counseled by their advisors on Social Security, 40% report that they had initiated the conversation.
