Combating Social Security Insecurity

Sep 17, 2019 / Amanda Chase, Horsesmouth Assistant Editor

Not only is this article about discussing Social Security solvency with clients relevant, it also features quotes from Elaine Floyd, Peter Murphy (longtime Savvy SS member and Elaine’s co-presenter at workshops), and Nan Lesnick, another Savvy SS member! Enjoy the full article here.

I’ll bet more than one client has asked this question of you: “Will Social Security be there for me when I’m ready to retire?” Gallup reports that the financial health of the Social Security system is on the list of Americans’ top worries—67% of Americans said earlier this year they worry about Social Security either “a great deal” or a “fair amount.” And, just 45% of Americans told Gallup in 2015 that they believe that Social Security will be able to pay them a benefit when they retire.

Those numbers are stunning, considering that Social Security has never missed a benefit payment and had reserves of $2.9 trillion at the end of 2018. But the polling numbers reflect a steady drumbeat of negative headlines about Social Security finances, most of which are incorrect. Yes, Social Security faces a long-term financial shortfall. But the system is not “running out of money” or “going bankrupt” as so many of my fellow journalists dutifully report each year when the Social Security trustees issue their annual report. Another popular canard: Social Security drives the federal deficit. It does not.

“Most things you read in the news about Social Security are negative, despite the fact that the program is very solvent,” says Peter Murphy, a CFP in Santa Fe, N.M. “Whenever anything comes out in the news about Social Security, I get that question from clients—‘Can I count on it?’”

The biggest problem to avoid is letting worries about Social Security’s health drive a decision to file for benefits early, says Elaine Floyd, director of retirement and life planning for Horsesmouth, which trains advisors. “Many clients use the solvency issue as an excuse to claim early, which is what they want to do anyway—Social Security may not be around, so I better get it while I can. We like to show them all the numbers and then point out that if they claim early due to a worry that the system could go broke, you’re really taking the risk that it won’t—and you will end up with a permanently lower benefit.”

Nan Lesnick, a planner based in Monterey, Calif., says clients often express doubt about Social Security. “I simply tell clients there will need to be reform at some point,” she says, adding that she suspects whatever reforms are made will mainly affect today’s younger workers. “People who are close to retirement or in their mid-50s are not in danger.”


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