The Future of Social Security: What Advisors Need to Know

In this Horizons session, Finke convened Fichtner, Biggs, and Buckingham — two of whom are former deputy commissioners of the Social Security Administration (SSA) — to talk about the uncertain future of Social Security and how to approach the topic in planning conversations with clients. All participants recognized that Social Security has grown over the years from simply providing a supplemental benefit in retirement to being one of the main sources of retirement income most Americans depend on. 

The panel agreed that concerns from political and business leaders regarding Social Security fraud are often overblown, as the number of those abusing the system is likely vanishingly small. They also recognize that while the program needs reform, recent moves by the Trump administration to radically restructure and in some cases scale back support for Social Security may cause more problems than they solve — not interfering with those already collecting, but those who are approaching claiming age in the near future. 

Social Security: Perceptions vs. Reality 

The experts stressed that it’s important to make clients understand just how much money they could potentially lose if they claim Social Security too early. Fichtner noted that while many still view age 65 as the ideal claiming age, the truth is that age is now probably closer to 70. In addition, those who waited to claim Social Security until age 70 got 77% greater returns than those who claimed at the minimum age of 62. In addition, Finke pointed out that any retirement plan built to maximize Social Security should take into account clients’ lifestyle choices and actual projected lifespan. He reminded the audience that most people greatly underestimate how long they will live — according to research, a majority of Americans believe they won’t live until age 75, when the truth is they will probably live at least ten years longer than that. 

In the end, the experts concluded that clients may need to adjust their expectations of Social Security benefits in the future, and financial professionals need to prepare them with a retirement strategy that takes changes into account. Even though the government likely has until 2033 to address the solvency of Social Security, what that solution might look like is still unclear. However, the panel agreed it would be wise to begin to adjust clients’ expectations now, as the belief that they will get a benefit from Social Security bigger than what they paid into it in taxes is probably not true anymore. 

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