Recent research suggests that financial advisors’ advice on when to start claiming Social Security benefits may not always align with retirees’ best interests. Factors such as health, life expectancy, marital status, and financial needs impact the ideal timing for these claims.
While financial advisors traditionally advocate for delaying claims to increase potential monthly income, recent studies recommend that early claims could be more advantageous. The findings highlight the need for personalized financial planning guidance.
The study shows that some financial advisors may not consistently argue in favor of delayed claims. This inconsistency could be due to either a misunderstanding or a desire to boost their own financial gain.
Questioning Advice on Social Security Claims
Consequently, open communication between beneficiaries and advisors is paramount to ensure all options are explored.
A partnership study by David Blanchett of PGIM DC Solutions and Jason Fichtner of the Bipartisan Policy Center found that the type of financial advisor can directly impact the client’s decision-making process. The study emphasized the critical role that financial advisors play in guiding their clients’ financial decisions.
A striking finding of their research was that households guided by hourly paid professionals like accountants usually delay their claims by around two years compared to those advised by commission-based advisors. High-net-worth households advised by brokers tend to claim early, revealing a disparity in strategy between account-based advisors and commission-based brokers.
The researchers hypothesized that this early claiming could be a strategy used by financial advisors to simplify their job and to increase their compensation despite this not being in the best interest of the clients. They recommended better regulatory policies and transparency in the industry to prevent these potential conflicts of interest.
Following the release of these results, discussions are now taking place within the financial sector regarding the integrity and trustworthiness of its practices. The research encourages retirees to critically analyze the advice they receive and seek out alternative viewpoints when making significant decisions, such as claiming their Social Security benefits.
