Millions of Americans count on Social Security to help fund part of their retirement.
But today, many of those individuals worry about the long-term viability of the program.
How can we help curb those concerns and keep retirement savers not only on track but feeling confident about their futures?
Understanding how and why these concerns rattle retirement savers' confidence can offer valuable insight for financial professionals.
How Your Clients Really Feel About Social Security
In a recent Principal survey, we took a closer look at individuals who reported being worried about the long-term availability of Social Security.
We found that 40% of those concerned are more likely to be uncomfortable with the retirement planning process.
Among that same group, an overwhelming 80% feel they aren't saving enough (or simply don't know how to save) for retirement.
Beyond savings habits, a lack of confidence in Social Security causes additional financial worries.
Long-term viability may be compounding concerns people already have, as evidenced by our recent survey: Three quarters (76.6%) of employees report experiencing stress with their day-to-day finances.
And 93.6% of employees say they're stressed about longer-term financial security.
Knowing what contributes to overarching Social Security concerns can help you make stronger connections with your clients, provide unique context and information aligned with their individual finances, and better guide them through their Social Security and Medicare needs.
How to Make Social Security Work for Your Clients
Of course, this article is educational only; it does not provide legal, accounting, investment or tax advice.
If you yourself do not have the relevant professional expertise, you should consult with appropriate counsel, financial professionals, and other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.
You should also urge clients to get the professional help needed to fill in any gaps in the scope of the advice you offer.
But clearly, clients should know that Social Security is one of the few things that are truly inflation-indexed.
While helping your clients plan for their retirement, be sure to discuss the following tips for maximizing their Social Security benefits.
1. Set up a Social Security account log-in.
Do your clients have Social Security accounts set up? If not, that's the first place you should start.
Setting up a Social Security log-in now helps individuals gain access to their statements and see how much they may ultimately receive.
Another benefit: Checking their accounts often leading up to retirement also lowers the likelihood of identity fraud.
(Setting up an account early helps keep records confidential and protects your clients' Social Security numbers.)
2. Resist the urge to withdraw benefits early.
Many people think of Social Security as a system they've paid into and can claim retirement funds from as soon as possible.
That thinking needs to evolve.
Those who claim Social Security early are losing the chance to grow their retirement income — missing out on a nearly 8% increase on their retirement income for every year they delay claiming — up to age 70.
Sri Reddy is senior vice president of Retirement & Income Solutions at Principal.
