401(k) Specialist Issue 3 - 2018 - 14

F
Forget Chicken Little-like predictions of
Social Security's demise. It's a popular government
program (we have never written
that phrase before) and one of the few that
can claim the moniker. The hype and hyperbole
surrounding the Social Security Board
of Trustees' annual report fuels the perennial
prediction that political PAYGO looters
have all but exhausted the entitlement, or
soon will.
This year is no exception. Headline-grabbing
news noted that the total cost of the
program will likely exceed its income in
2018, causing it to dip into its reserves for
the first time since 1982 to account for the
shortfall.
Nevermind that it was fully expected,
with the Board adding, " The Trustees'
projected depletion date of the combined
Social Security Trust Funds has not changed,
and slightly more than three-fourths of benefits
would still be payable after depletion. "
Sensationalism sells, and it's wreaking
havoc not only on how and when American
workers collect Social Security benefits, but
also with their retirement planning allocation
and diversification decisions as a whole.
It's also driving Gail Buckner mad.
" It's a crying shame that Americans-by
a huge majority-have the impression
that Social Security is going broke, " says
Buckner, author, Fox Business Network
contributor and retirement planning expert
with Franklin Templeton Investments. " It
gets me really upset, because nothing could
be further from the truth. "
It's also the reason 401(k) advisors need
to step up to dispel solvency myths and assist
in influencing better planning behavior
on the part of participants that comes from
" knowing the money will be there. "
The most obvious and widely reported
result of the scare tactics is that recipients
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ISSUE 3 2018 | 401kSpecialist.com
think, " 'I better get it as quick as I can,' "
Buckner adds. " They therefore file early,
take a much smaller benefit than they could
otherwise get, and it's just too bad that
something that affects so many Americans is
still such a misunderstood mystery. "
Part of the solution is to steer the conversation-and
terminology-away from the
stereotype of the elderly widow dutifully
clipping coupons in order to supplement a
meager fixed income, to Social Security as a
lifetime annuity backed by the full faith and
credit of the United States government-
one that pays pretty darn well.
" Some people are nervous and defensive
in enrollment meetings because they don't
think they can afford to participate, " says
George Fraser, managing director and financial
consultant with Retirement Benefits
Group in Phoenix. " We therefore begin by
telling them what they have, which is an
average of $1,000 a month in Social Security
benefits. That's like having a quarter of a
million dollars in a retirement plan that pays
5 percent a year. "
It's a 'wow' factor that adds hope, because
most don't realize they have that kind of a
retirement resource.
It also serves as a natural segue to why it's
important to participate in the 401(k) plan
and, more specifically, why it's important to
include equity allocations in their investment
choice. Since Social Security guarantees
at least a portion of their retirement
income, it allows them to be more aggressive
in other areas.
It's just one example of the peace-ofmind
and resulting excitement that comes
from taking the time to engage individuals
in Social Security education, yet too many
advisors fail to do so, mainly because they
fall victim to the same misinformation as
their clients.
" People don't understand the trust fund, "
Buckner explains, when asked to provide
a list of the errors she routinely encounters.
" The trust funds do not lend money
to the Treasury Department. People think
Congress borrows from the trust fund. They
don't. They can't. They're not allowed. "
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401(k) Specialist Issue 3 - 2018

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