How to Ease Clients' Post-Election Social Security Fears

But the interpretation that “my checks will stop” is not true.

Higher-income clients may be concerned that their benefits will be slashed to save Social Security. There’s been talk of means testing for years, but that doesn’t mean that payments will stop.

The accumulation of negative information coupled with a lack of knowledge about the law is leading some clients to make inefficient and non-ideal decisions.

Advisors Need to Steer This Ship Out of Rough Waters

Financial advisors will serve clients better by proactively discussing Social Security, pronto. Here are five practical strategies to help clients connect the dots about the viability of Social Security and the effects on their own financial security:

1. Rerun comprehensive retirement income plans. Update all 30-year cash flow plans that include Social Security. Then, rerun them without any Social Security. It is unlikely they will have enough money to last. By a lot. 
   
2. Send clients the latest unbiased updates and analyses of possible changes from the new administration’s proposals. These are the two best articles I’ve found:
   

• US Budget Watch 2024 from the Committee for a Responsible Federal Budget.
• Eliminating Social Security from taxation from the Tax Foundation.

And for clients who want a deep-dive into the law, use the Trustees Report.

3. Encourage clients to contact their representatives. In anxious times like these, remember that we have a representative democracy and a voice. So use it. Encourage clients to contact their senators and House members. Clients can also get involved with AARP’s advocacy efforts in their state.
   
4. Consider a fixed income annuity. For clients who are losing sleep over Social Security’s possible demise, consider the value that an income annuity provides. The guarantees are strong and can play a key role in providing an income floor. 
   
5. Discuss the value of staying on the job. The longer that clients can work, the less pressure on their Social Security benefits. If they retired early, suggest a back-to-work option. Clients can also suspend Social Security payments once they reach full retirement age, then restart with a higher monthly benefit at 70. 

Uncertain Times Call for More Proactive Outreach

While politics shouldn’t be part of a financial advisor’s job, it does affect clients’ decision-making and actions. In times of increased uncertainty, take more time to present information from unbiased sources:

• Discuss how Social Security is funded with payroll taxes from workers. This provides about 80% of payments.
  
• Explain that Congress has known since the 1980s that the trust fund, or savings account, would be depleted by the mid-2030s. They will eventually take action to shore up the program.
  
• Note that several Social Security experts expect that any changes to benefits are unlikely to affect those 60 and older.
  

Marcia Mantell is the founder and president of Mantell Retirement Consulting Inc., a retirement business and education company supporting the financial services industry, advisors and their clients.