Fascinating – and depressing – research from the investment advisory group United Income shows 96 percent of Social Security recipients likely have tapped their benefits too soon. They’re missing out on $3.4 trillion in benefits – an average of $111,000 per household.
The research report notes that not everyone should wait till age 70 to start receiving benefits. But for those who can, Social Security will annually boost its payout by 8 percent.
Still, too many people are bypassing this option. And as suggested in a Bloomberg News story, “Americans Losing Trillions Claiming Social Security At the Wrong Time,” financial professionals acting as fiduciaries may have some explaining to do. Some apparently aren’t keen on recommending to clients that they delay Social Security benefits and rely instead on 401(k) and IRA money early in retirement.
Couple this report with the fact that a fiduciary’s recommendation to purchase an annuity, the only financial product that can help people save while guaranteeing lifetime income, can often reduce their assets under management and … surprise!!! … the inherent conflicts of interest faced by fiduciaries are fully revealed.
To be sure, fiduciaries are committed to providing independent advice solely in the interest of clients. But basic instincts and self-interest are stubborn things. They need to be acknowledged by the “fiduciary advice for all” proponents at the federal and state levels. Consumers want and need choices, such as the option to work through a financial professional compensated through commissions. Under the SEC’s Regulation Best Interest, financial professionals will be required to act in the best interest of consumers.
These financial professionals often have products not offered by all fiduciaries, such as annuities. And, they have the education and information that can help people make the right decisions about a wide range of financial and retirement security issues … including when to take Social Security!
Jack Dolan is Vice President, Public Affairs at the American Council of Life Insurers (ACLI). A former journalist and Capitol Hill aide, he joined ACLI in 1991. He has represented ACLI in print, broadcast and online news outlets on a wide range of financial and retirement security issues facing American families.
