PLANADVISER - March/April 2020 - 12

trends
Social Security Needs YOU
Advisers are asked to advocate for the program's reform
ACCORDING to the most recently released
financial status report from the Social
Security Board of Trustees, the combined
asset reserves of the Old-Age and Survivors
Insurance (OASI) and Disability
Insurance (DI) trust funds are projected to
run out by 2035.
Notably, that year does not represent the
time by which Social Security assets would
be wholly depleted. According to the Social
Security Board of Trustees, approximately
80% of benefits would still be payable at
that time. The board projects that the
total annual cost of the federal retirement
income program will exceed total annual
income in 2020-for the first time since
1982-and remain higher throughout the
entire 75-year projection period.
Given such figures, advisers should
strongly consider adding Social Security
advocacy to their political activities,
industry leaders suggest.
" The anticipated depletion of the
Social Security Trust Fund by 2035 begs
the question, how will Americans retire?
Comfortably and on our own terms? Or
without adequate savings, putting pressure
on families, the government and the
economy? " asks David Musto, president of
Ascensus. " That answer depends on decisions
that demand action today. Though
it lacks the emotional pull of a partisan
soundbite, retirement security is a topic
that both sides of the aisle agree needs
greater attention and innovation. "
According to Ric Edelman, chairman
and co-founder of Edelman Financial
Services, as well as a vocal Social Security
reform advocate, now is the time to
address the program's financial stability-
" before it is too late. " Waiting longer to act
will make any solution more challenging
to implement, he says.
He proposes that advocacy start by
simply addressing the misconceptions that
exist among voters and the public about
Social Security. For example, he points out
that the program was never " self-funding "
without the significant
Role of Race
Race has a very
strong role to play in
determining retirement
outcome. Whites have
consistently higher
retirement income than
do blacks or Hispanics.
Median Total Annual Retirement
Income, by Race
input of annual
federal tax dollars. Current workers and
employers pay substantial Social Security
taxes-more than 12% annually between
both groups-and their money is given to
current retirees. -John Manganaro
Poverty Status, by Retirement Income Source
Defined benefit (DB) pensions have a much greater poverty-reducing
effect than do defined contribution (DC) plans. This may be partly because
recipients of DC income tend to already have a much higher net worth than
do recipients of DB income.
Social Security Defined benefit Defined contribution
48%
not poor*
Social Security
only
73%
not poor
Social Security
and DB
78%
not poor
Social Security
and DC
92%
not poor
Social Security,
DB and DC
*Households with total income below the federal poverty level are classified as " poor. " Households with
total income exceeding 200% of the federal poverty level are classified as " not poor. "
Source: National Institute on Retirement Security
White
retiree
Black
retiree
Source: National Institute
on Retirement Security
Hispanic
retiree
White
retiree
Black
retiree
Hispanic
retiree
Those With Social
Security as Their Only
Retirement Income
39% 45% 46%
White
retiree
Black
retiree
Hispanic
retiree
Median Annual Retirement
Income for Those Receiving
Only Social Security
12 | planadviser.com March-April 2020
$13,320
$14,760
$23,292
$16,863
$12,720
$13,560

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PLANADVISER - March/April 2020

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