The New Demographics

Guiding Social Security Conversations With Younger Clients

It’s not going away, so planning for options is always prudent

by Marcia Mantell, RMA®

Marcia Mantell is the founder and president of Mantell Retirement Consulting, Inc., a retirement business development, marketing & communications, and education company supporting the financial services industry, advisors, and their clients.  She’s the author of “What’s the Deal with Retirement Planning for Women,” “What’s the Deal with Social Security for Women,” “Cookin’ Up Your Retirement Plan,” and blogs at

The 2024 Social Security Trustee’s Report was released on May 6, 2024. But no fanfare, fireworks, or flamboyant headlines as in past years. Why so ho-hum? Because there was no new negative news to report. The Social Security trustees reported the OASI (Old-Age and Survivors Insurance) Trust fund is projected to last until 2033. Same as forecast last year. And the combined OASDI Trust Funds are projected to last until 2035—a year longer than estimated last year.

With all that relatively good news, why bother to cover it?

And so goes the Social Security yo-yo for another year, making every financial advisor cringe. With no Congressional solution in place again this year, how can financial professionals successfully guide their younger clients along the path to retirement?

The Boomers Will Be Fine…We Think

Younger clients can be defined as anyone who has earned their 40 credits but has not yet reached their Social Security Full Retirement Age (FRA). Practically speaking, we’re dealing with three generations of clients:

  • The youngest Baby Boomers (born 1960 – 1964),
  • GenXers (born 1965 – 1980), and
  • Millennials (born 1981 – 1996).

Your youngest Boomer clients’ Social Security estimates are as close as they get. They are reliable estimates to use in planning for retirement income. If there is a reduction of benefits in 2033, there is a strong argument to be made that the older beneficiaries should be spared the rod.

However, the law doesn’t work that way today. If the reserve account runs dry in 2033, all beneficiaries would see a reduction to their monthly benefits. Currently, the estimate is Social Security will be on track to pay 79% of obligations.

But another option might be a split-the-baby situation: borrow enough to keep the oldest beneficiaries’ checks whole but reduce payments to younger and future beneficiaries.

Use 1982 as the reference point when talking with your Boomer clients. This was the last time the reserve account ran dry. At that time Congress and the Regan Administration passed sweeping laws to shore up Social Security for the next 50 years. Funny, those 1983 Social Security Amendments will be 50 when the current reserve fund is depleted.

GenX Clients Are The Ones To Worry About

Clients between ages 44 and 59 are in a more precarious planning situation and should be split into two sub-groups: those under 44 and those 44 to 53 today. The older subgroup will be 62 to 68 in 2033, all eligible to claim at least early retirement benefits.

The question for planning is: should you assume the older group would be grandfathered in if that becomes an option? Or should you plan for the possibility of a Social Security cut?

While one can argue either way, the practical way of dealing with this group of clients is to run two scenarios.

  • What will Social Security benefits look like assuming Congress fixes this mess or grandfathers in all eligible-to-claim workers/retirees?
  • What would the impact on Social Security benefits be if there is an across-the-board 21% cut?

There is simply no way to know at this point what Congress will do. There is always some noise on Capitol Hill about shoring up Social Security, especially during an election year. Lots of talk, no action.

Illustrating The Problem

The best course of action is to prepare two complete retirement income plans based on 1) no cuts to benefits; and 2) about a 20% reduction in Social Security.

Any client who has not yet elected Social Security should consider the cash flow versus an “optimal” claiming strategy where the present value of the estimated benefits delivers the most income throughout retirement.

Running an example on (May 2024), these are the results for a single male (all numbers rounded) with and without a reduction:

  • born 4/15/1971; 53 today
  • FRA is April 2028 and 70 in 2033
  • Primary Insurance Amount (PIA) is $2,800

Taking a closer look at this simple example you can see:

  • His optimal date to file changes by four months, but PV drops dramatically.
  • There is only a 1 – 2% difference between claiming early and FRA, but cash flow increases significantly by waiting until FRA.
  • If he waits until 70 to claim in the 20% reduction scenario, he receives the same benefit amount as his PIA in the unreduced scenario.

Said another way, a 20% cut in Social Security effectively eliminates “bonus” delayed retirement credits even if he waits until 70 before claiming.

Millennials Have A Much Longer View…But May Be Disappointed

For clients who are 28 – 43 years old today, the prudent planning approach is to make adjustments to Social Security on two fronts:

1. Determining Future Income

Individual Social Security estimates may change dramatically over the next 20-30 years, depending on their salary and payroll taxes paid. You want to know if a client has the potential for a significantly higher or lower benefit than what is currently shown on his/her statement. For example:

  • Is this client on track to exceed the taxable wage base every year?
  • Is a client planning to stay home to care for children, reduce income for many years?
  • Is a client changing careers and taking a big step back before rebuilding?

2. Calculating Reduced Benefits

Use the client’s adjusted Social Security calculated benefits from the step above then plan for a reduced payment. Assume each client’s benefit will be 20% lower. This gives you a springboard for resetting savings requirements and helping clients make mindful spending decisions.

The good news for Millennial clients is they have many years ahead of them to adjust career options, spending habits, and importantly, savings strategies. Consider this a hedging strategy for the next 10 years, or until Congress makes decisions about how to shore up Social Security.

For millennials and Gen Z, more than any generation before them, the financial landscape has changed drastically, necessitating early and strategic financial planning...

Talking To Clients About Fixing Social Security

Many younger clients may hear Social Security’s retirement age will be extended. This is an easy idea to capture in headlines but is wildly impractical for American workers. We can look at three numbers to see why this isn’t a reasonable option:

  • 81% of all US workers work in non-management jobs. That means they spend much of their day on their feet or doing physical labor.
  • Civilian, non-agricultural, workers spend an average of 56% of their workdays on their feet.
  • Raising FRA from 67 to 68 only improves the gap in Social Security funding by an estimated 13%.

Unlike our cushy desk jobs, the vast majority of US workers have physical limitations to working longer. If Congress chooses older ages for retirement, it will penalize not only lower-income workers and the construction/infrastructure/service industries, but also doctors and nurses. Furthermore, it increase the potential for our oldest citizens to end up below the poverty line as they’ll lock in higher penalties when claiming early.

Other common ideas for fixing Social Security run the gamut:

  • Eliminate the taxable wage base. Sounds good to many. But remind clients the more wages paid in, the higher the benefits paid out.
  • Increase payroll/FICA taxes. Also not a bad idea unless you are a Millennial client. A small shift from say, 6.2% to 6.4% wouldn’t be noticed by many. But that ship has sailed. Prepare younger clients for higher payroll/FICA tax potential.
  • Reduce the PIA formula for high income retirees. This proposal reduces the third tier from 15% to 5%. Set expectations with clients that benefits formulas could change and reduce their benefit estimates.

There is no one magical way to fix Social Security. Talk to your younger clients about saving more now to hedge their bets. And plan to run multiple retirement income scenarios until the yo-yo stops.

One dynamic calculator to help you and your clients look at the options for shoring up the program is from the Committee for a Responsible Federal Budget. Their free interactive tool, The Reformer, is quite eye-opening. Try it and share it with clients.

Last But Not Least

Contact your Representatives in Congress. Encourage clients to do the same. And cast your vote for those supporting Social Security solvency.

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