The Status of Social Security and Its Role in Retirement Planning: A Professional Advisor's Perspective

ABSTRACT Currently, one of the more salient retirement debates surrounds the future insolvency of the Social Security retirement system. In spite of the important role that financial planning professionals play in the retirement and private-savings decisions that individuals make, no research has focused on assessing the opinions of this group. This study uses a survey approach to assess the opinions of financial planning professionals regarding the problems faced by the Social Security retirement system, the solutions that have been proposed thus far, and the use of Social Security benefits in the financial planning process. INTRODUCTION On issues relating to Social Security, much of the focus in the literature has been on assessing the opinions of the public. The issue of the solvency of the Social Security retirement system is important not only because the program has succeeded in decreasing the poverty rate among the elderly, but also because it provides the financial foundation for individuals to retire before normal retirement age (Gebhardtsbauer, 2001). Given the complexity of financial and retirement planning, many members of the public rely on financial planning advice, at least to some extent, in forming opinions and reaching decisions regarding retirement planning. As the level of income and wealth increases, this type of advice is likely to be provided by financial planning professionals. As a result, the public's decisions and opinions are influenced by the knowledge and perspectives held by individuals such as financial planning professionals. However, in spite of the important role that financial planning professionals play in the retirement and private-savings decisions that individuals make, no research has focused on assessing the opinions and perspectives of these planners with respect to Social Security The focus of this research is to identify the views of professional financial planners on the role of Social Security in financial and retirement planning and the proposed solutions to the problems faced by Social Security. What exactly do financial planners think of the solvency of Social Security and how it affects their clients? At this point, the collective opinion of those within the community of professional financial planners has not been well documented. Although the value of financial planners' direct contribution to the public policy decision-making process can be debated, the perspectives of those who are in direct contact with and have the trust of many in the public are valuable for policymakers to understand. Policymakers typically are sensitive to the political viability of the positions they take on issues that are as highly charged as Social Security, and the community of financial planners can have an indirect impact on these positions with the influence they have on a politically influential segment of the population. For many financial planners who do not consider Social Security in the financial plans of their clients, the assumption is that the Social Security debate is not worthy of their participation. Others disagree. Carol Nowka of Nowka/Grimes Financial, Inc. states that she is "frustrated with [her] colleagues because they have not taken the time to understand how it [Social Security] affects our economy" (Most, 1999, p. 46).1 In the same article, Joan Gruber, Certified Financial Planner (CFP), sees the Social Security problem as potentially affecting everyone, especially the higher-income clients. She worries that the "higher-income clientele are going to foot the bill through higher taxes if the Social Security system isn't fixed" (Most, 1999, p. 46). In his article on Social Security and financial planning, Bruce Most (1999) states that "they [financial planners] and the profession [financial planning] have been largely silent on what pundits view as the most explosive financial issue [Social Security] in this country" (p. …