Thomas Drapala RSSA Staff
The start of Social Security can be traced back to the Great Depression of the 1930s and we can thank President Franklin D. Roosevelt for the idea. At the time, millions of Americans were struggling financially and could barely put food on the table for their families living in poverty. President Franklin D. Roosevelt signed the Social Security Act into law on August 14, 1935, hoping to help struggling elderly Americans stay out of poverty in retirement.
The Social Security Act established a national system of insurance for the elderly, disabled, and widows, paid for through payroll taxes of those who were currently in the workforce. The goal was to provide a “safety-net” for those who were unable to work and earn a living or at retirement age. The program was originally designed to help individuals avoid poverty in old age, but as it progressed it provided financial security to their families as well. In the event of disability or death, or even having dependents to take care of, Social Security was and will always be the “safety-net” Americans need.
Despite the challenges the program has had to overcome and will continue to face, the program remains one of the most important and effective forms of social insurance in the United States, helping to ensure a secure and stable future for generations of Americans that goes well beyond the baby-boomer generation. Today, Social Security is the cornerstone of retirement planning as it provides a guaranteed, progressive benefit that keeps up with the cost-of-living. Nearly all Americans will qualify for Social Security benefits, if not on their own work record, on the record of a family member such as a spouse or parent of a dependent. So, why is Social Security planning disregarded of its importance?
After speaking with many who work with a financial professional, there are usually two answers that are given to their clients on when to begin collecting their benefits. Age 62, the earliest to begin a retirement benefit, or Age 70, which for some can generate the highest monthly benefit. However, these answers without knowing more context or about a clients situation can cost clients hundreds of thousands of dollars in benefits. One client stated that their financial advisor said, “Social Security is not important and should not be considered in your retirement plan.” This is not uncommon and unfortunately for Mary, who we spoke with, lost out on $150,000 in lifetime benefits because she was given incorrect advice from her financial advisor.
The biggest problem clients have is that financial professionals put off the importance of Social Security benefits and they are unaware of Social Security rules that impact their client’s specific situation. Social Security calculators and software, although crucial to use, on their own, without an understanding of the complexities of the program can bring upon giving client’s wrong advice and for Mary a $150,000 in lost benefits for even the simplest of Social Security rules being misunderstood.
Many Social Security calculators on the market today ask for very general information and give a “potential” benefit, but after testing many myself, with the knowledge I have as a Registered Social Security Analyst, I see how these calculators mislead many people and the benefit estimates I received ended up being not just incorrect, but way off the actual benefit amount.
If you are a financial professional and want to learn more about the complexities of the Social Security program to help you build current client relationships, acquire new clients, and enhance your practice, the RSSA® designation is for you.
The National Association of Registered Social Security Analysts provides a turn-key Social Security solution to financial professionals to help their clients get every dollar they have earned and are entitled to. The RSSA® platform is comprised of education, software, back-office support, and marketing tools, all of which enables financial professionals to easily offer Social Security income planning services to their clients. The RSSA® designation is quickly becoming the gold standard in Social Security planning and education providing a 5-module eLearning course on Social Security basics, complexities, software training, and much more.
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