When it comes to Social Security, age 67 is considered full retirement ageBut that wasn’t always the case. Originally, the Social Security Act of 1935 set the retirement age at 65. By the 1980s he was 67 years old. Today, a bipartisan group of politicians on Capital Hill raising the retirement age to 70 Meanwhile, Republican presidential candidate and former South Carolina governor Nikki Haley also supports raising the retirement age.
For advisors and clients, this creates challenges. If your client’s retirement age is uncertain, how do you plan for their retirement and perform financial projections?
Read on to understand how advisors run retirement simulations for their clients in an ever-changing retirement landscape.
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Consider retirement headwinds
Advisors often run simulations. client To better understand what retirement looks like given various economic and financial factors, including those that affect social security.
“When it comes to simulations, we test bad market conditions, longevity, caregiving events, persistently high inflation, rising taxes,” says Ryan Sala. certified financial planner (CFP) with Capital Financial Partners. “These simulations vary based on the client’s goals and objectives, but also with the client’s age.”
Some advisors are running forecasts without Social Security. “I like to run all my retirement projections without Social Security as the worst case scenario and plan accordingly. To explain, it has not been updated since its inception, said Dana Menard, Founder and Lead Financial Planner at Twin Cities Wealth Strategies.
Menard also uses current Social Security rules to calculate the numbers to ensure that best-case and worst-case scenarios are tallied. “So I run my[Social Security]projections as if I start at age 62 or wait until age 70 until I’m maxed out considering all the contingencies,” Menard says.
Adjustable savings strategies are key for younger customers
Finding the right retirement age has been a topic of discussion among Menard’s younger clients. social security It will be there by the time you retire in the next 20 to 30 years.
The Social Security Old Age and Survivor Insurance Trust Fund is currently on pace to run short of funds by 2033, a year earlier than previously projected. If the trust fund is depleted, social security benefits will be reduced by 20%.
“This has been a point of contention for most of my clients because they are Generation X and Generation Y business owners who still have 10+ years to consider retiring,” says Menard.
For clients just beginning their journey, Salah works to create savings strategy This is a different strategy than Salah uses with clients nearing retirement.
“For younger clients, the emphasis is on building a good foundation and establishing good saving (and) spending habits,” Salah says. and much more focused on risk management (although the emphasis is on long-term care for these older clients).”
Conclusion
Retirement ages are constantly changing and may continue to adjust in the years to come. As clients question the existence of Social Security in the coming decades, advisors must navigate calculations and simulations that predict what their lives will be like without Social Security.
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post How Advisors Cope with Ever-Changing Retirement Ages first appeared SmartAsset Blog.
