The Perilous State of Social Security

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One of the chief obligations of financial advisors is to inform clients about the risks that threaten their retirement plans. In that regard, the chief risk for your clients who are in retirement or approaching that phase of life is the solvency of Social Security.

It is essential for the advisor to separate fact and fiction for the client.

Based on the latest forecast, people who are 79 are expected to outlive the system’s ability to pay scheduled benefits. While the exhaustion of the program’s trust funds is 10 years from now, the impact of the possibility of insolvency is already here. Recent retirement research suggests that 44% of those 62 to 65 are planning to take benefits early as a result of the fear of insolvency. This is a decision that may well haunt those people for decades.

Behind these facts, there are risks that advisors need to explain to clients about the program and its obligations to seniors.