I’ve been blessed to be in the pension/investment industry for 40 years, and I truly believe that we possess tremendous responsibility to those that we serve – mainly the plan participant. But I’m often frustrated by the fact those that we have been asked to serve are not reaping the benefits that they were promised or deserve. I recently came across an article that touched upon Social Security. The gist of article pertained to a survey conducted by a major investment management organization whose primary focus was on when eligible recipients were likely to begin to claim the SS benefit (age 62-70). According to the survey, only 13% of those >60-years-old who haven’t begun collecting their benefit said that they would wait until age 70 to maximize their benefit. Of those currently receiving a SS check, only 5% had waited to age 70.

Here’s the issue: “Social security is the primary source of income for the majority of Americans we surveyed, which is why we were surprised to see so many deciding to take early SS payments at age 62, sacrificing their full benefits by tapping them early”. “It might come down to not being able to afford to wait”. Do you think? From the same survey: “for 52% of non-retired Americans and 58% of those retired, Social Security will be the primary source of income in retirement”. As a reminder, the average monthly SS benefit is only $1,543/month. By taking it early at age 62, the beneficiary is forfeiting 30% of their possible benefit had they waited to full retirement age. When asked, 64% of those not retired and 62% of those that have retired said that benefits wouldn’t be enough to live on.”

Is the fact that a majority of Americans will be forced to live primarily on SS benefits something for us as a retirement industry to be proud? The demise of defined benefit plans and the rise of defined contribution plans in their stead is not helping matters. This substitution is creating an untenable situation for many Americans that are now asked to fund, manage, and then disburse a benefit with little experience and knowledge to do so. Unfortunately, DC offerings are proving to be glorified savings accounts for many Americans. They are often used to bridge periods of unemployment until a new job is found or retirement is thrust upon them. The gap between employment and the ability to claim SS can be years. Assets that were supposed to be used for “retirement” are often exhausted during this process. Regrettably, most American workers haven’t come close to saving enough to weather such a storm let alone have a dignified retirement. The fact that this survey even mentioned that taking SS benefits prematurely might come down to affordability speaks to the dramatic lack of understanding as to what is truly occurring in our country.

Many people in our industry have done just fine from a financial perspective. Why is it that the people we are supposed to be serving haven’t? Why do we have a majority of Americans living on very meager SS benefits? I find this shameful!