Many of those heading toward retirement will rely on Social Security benefits for income, but many may not understand the best ways to predict their Social Security earnings or make the best decisions about when to take their benefits. As a result, advisers ready to guide their clients through the system have an opportunity to add plenty of value — and perhaps even grow their businesses.
“A study by the Nationwide Retirement Institute has found that less than one-third of pre-retirees and retirees have hired a financial adviser,” according to Employee Benefit Adviser. “Moreover, 59 percent of those with an adviser say they received no guidance on Social Security benefits.”
Social Security is confusing, and often, people don’t understand it well enough to make the best decisions. “Social Security is an important piece of retirement planning, but it can be difficult to figure out what to expect the program to pay when the time comes,” according to the Motley Fool. Well-informed advisers can help clients make sense of things like their Social Security benefits statements. Statements can’t predict future earnings, and therefore make assumptions to make estimates.
“The statement sets out those assumptions, typically estimating future earnings as being consistent with whatever (someone) most earned in a recent year,” according to the Motley Fool. Advisers can help clients make sure the Social Security Administration has the correct tax and income information on file, in order to improve the statements’ accuracy.
Advisers can also help clients make smart decisions about when to take their benefits, writes Sarah O’Brien for CNBC. “For illustration purposes: Assume your full retirement age is 66, at which point you’re due a monthly benefit of $1,000,” O’Brien writes. “If you choose to get checks starting at age 62, your monthly payment will be reduced to $750, or a 25 percent reduction.” But if clients wait beyond full retirement age, benefits will grow by 8 percent of the full retirement amount each year, O’Brien writes.
Advisers who are ready to weigh in on these decisions can grow their businesses because the advice is so invaluable, writes Karen DeMasters writes for Financial Advisor. “Financial advisers who can help clients make one of the most important financial decisions of their lives — when and how to take Social Security — will cement relations with the client.”