AARP says 10,000 people in the U.S. turn 65 years old. Some estimates put that number north of 11,000, but the point is a lot of folks are reaching retirement age on a regular basis. So it’s not surprising that Social Security is top of mind for many clients.
Yes, benefits can be claimed at 62 years old, but 65 to 67 represents full retirement age, meaning folks that claim benefits in that age group get significantly more than the early takers. Wait a few more years to turn 70 and the recipient hauls in even more. All of that sounds fine, but clients are inundated with headlines regarding Social Security’s foundation.
A case can be made that Congress has been asleep at the wheel, kicking the can down the road to the inevitabilities of reduced benefits or higher taxes. It’s not on advisors to engage in political guessing games, but advisors are obligated to have ideas and strategies ready for Social Security-concerned clients. It’s not a one-size-fits-all approach, but there are some familiar assets that can ease the Social Security blues.
A Good Time to Talk Annuities
Driven in large part by demographic considerations, a point of emphasis in recent years in the wealth management community is the resurgence of annuities. Factor in the aforementioned fears about Social Security and it’s not surprising that more clients are, at a minimum, interested in annuities.
It makes sense because Social Security, though supplemental to other retirement plans, is supposed to be guaranteed lifetime income – the very objective annuities attempt to accomplish.
“One way to do that is by incorporating additional sources of guaranteed income. These solutions can help stabilize a retirement plan by providing predictable cash flow that isn’t tied to future policy decisions,” notes Nationwide. “In many cases, annuities can help provide that added layer of certainty. Because annuities offer contractually guaranteed income, they can serve as a reliable complement to Social Security benefits.”
Obviously, not annuities aren’t applicable to all clients and plenty aren’t interested, indicating advisors need to know their clients’ needs and personalities prior to bringing up this subject. On the other hand, data confirm the interest is there in broad fashion.
“Research suggests many consumers already view annuities this way. Seventy percent of Americans say they’re confident annuity payments will be made as promised, compared with just 61% who say they’re confident Social Security will pay full benefits,” adds Nationwide.
Annuities Can Ease Social Security Concerns
At a minimum, there are certainties. First, clients are worried about Social Security. Second, annuities, when deployed as part of a broader retirement plan, can potentially allay those concerns.
“When integrated thoughtfully into a broader retirement strategy, they can help address the confidence gap many Americans feel about their future income,” concludes Nationwide. “Ultimately, financial professionals play a key role in helping clients prepare for retirement with greater certainty. As questions about Social Security continue, building diversified and dependable income streams may be one of the most effective ways to help clients protect their retirement checks.”
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