Talking to Clients About Social Security

For the average earner, they can only expect to see a 40% salary replacement from Social Security. Will that be enough to cover your clients’ essentials?

No matter how far away retirement might be for your clients, it’s important for them to understand the role Social Security will play in their retirement planning.

Most people understand that Social Security will not replace their entire salary. But do they know how much to expect? Average earners will only see about a 40% salary replacement, while higher earners will have an even lower income replacement rate. Will 40% be enough to cover their essential living expenses? Probably not.

“Many retirees will need supplemental income in order to help replace their pre-retirement salaries.”

Retiring early?

If you have clients who might be thinking about early retirement or might need income before age 67 – tapping into Social Security will cost them 30% in permanently reduced benefits. For anyone born in 1960 or later, the Social Security Administration considers full retirement age to be 67, which means they won’t qualify for full Social Security benefits until that age.

Data from a recent study conducted by the National Bureau of Economic Research, also suggests that people who claim their Social Security benefits early stand a greater chance of living in poverty later in retirement.¹ Talking to clients earlier in their planning stage may help them determine how and when to claim their Social Security benefits.

The bottom line – many retirees will need supplemental income in order to help replace their pre-retirement salaries. They cannot rely on Social Security alone.

Bridging the Social Security Gap

A fixed index annuity may be a good strategy for clients looking to bridge the gap between their Social Security income and pre-retirement salaries. It may also help those looking for income while they wait for their full Social Security benefits to kick in at age 67.

A ForeIncome fixed index annuity offers a guaranteed lifetime income benefit. This benefit provides a predictable income stream for your clients and can help ensure that their essential expenses are covered no matter how long they live in retirement.

Consider showing your clients what lifetime income looks like with a ForeIncome fixed index annuity. Try this retirement income calculator to help illustrate for your clients the value of guaranteed lifetime income. Take a look.

For more information on Social Security benefits go to SSA.gov.