Data & Research June 14, 2018

More Than Half of Advisers Say Clients Ask Them About Social Security

Yet, only 13% of workers have discussed Social Security with an adviser.

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Sixty-two percent of advisers say their clients frequently ask them about when to collect Social Security, the Nationwide Retirement Institute learned in a survey of advisers. Yet, in a separate consumer survey, Nationwide learned that only 13% of American workers have discussed Social Security with an adviser, and, among this group, 40% say they started the conversation.

This same survey found that 88% of older adults do not know how to maximize their Social Security payments, and 63% of pre-retirees are not confident in their knowledge of Social Security.

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The adviser survey found that only 25% think that 80% or more of their client base understand the factors that will impact their Social Security income.

The adviser survey also found that 90% think there is a retirement readiness crisis in America, and only 54% are confident in their clients’ plans to live comfortably in retirement.

Eighty-three percent of advisers think their clients expect them to give advice on Social Security, and 42% say their clients might move to another adviser if they don’t show them how to optimize their Social Security benefits. The consumer survey found that 72% of investors would actually switch advisers if this were not to happen.

Only 37% of advisers say they are confident in their ability to help their clients maximize Social Security.

A separate survey of adults ages 50 and older who are retired or plan to retire in the next 10 years found that 27% of the retirees say their Social Security payment is lower than they had expected. Twenty-six percent of future retirees think they can live comfortably on Social Security alone.

Retirees who worked with an adviser receive Social Security benefits that are more than 20% higher ($1,500 vs. $1,234). Additionally, 88% of the former group vs. 55% of the latter say they are able to do the things they want in retirement.

“Advisers can easily build trust and relationships by starting the Social Security conversation,” says Ron Ransom, senior vice president of integrated relationship strategies at Nationwide. “Social Security is a universal benefit and a primary source of retirement income for many. However, it’s often overlooked in the planning process.”

The Harris Poll conducted the online survey of 252 advisers for Nationwide last October.

Nationwide offers advisers a free Social Security 360 Analyzer tool so that they can help their clients maximize the benefit.

The Markets June 14, 2018

Fidelity’s HSA Assets Grow to $3 Billion

This is a 50% increase from 2017.

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Fidelity’s health savings account (HSA) business is seeing double-digit growth, with assets in these accounts now topping $3 billion—a 50% increase from 2017. Fidelity now serves 837,800 HSA account holders, and last year it added 117 new employers that provide HSAs to their employees.

Fidelity says that 25% of employees with access to an HSA are using one. When employers offer only an HSA-eligible health plan, 46% of workers add this savings benefit. However, Fidelity’s research also finds that, despite growth in HSA openings, many individuals are not making the most of the benefits these accounts can offer.

“With more than half of Americans naming rising health care costs as a top financial concern, this increased adoption of HSAs shows an encouraging trend that more people are making health care savings a priority,” says Eric Dowley, senior vice president, HSA product management, in the Fidelity Health Care Group. “But we still see a need for more education around how people estimate and plan for potential health care costs, both in the short and long term, and how an HSA can be a valuable tool in addressing these expenses.”

Fidelity notes that HSAs are available only to people in a high-deductible health plan (HDHP). The HSA balance can be carried over from year to year, and the account offers a triple tax advantage: contributions are tax free, balances can be invested and earnings grow tax free, and if the money is used for qualified medical costs, savings can be withdrawn tax free. However, at age 65, HSA account holders can use the money for things other than medical expenses, but they will be taxed on the withdrawals.

Fidelity notes that the contribution limits for 2018 are $3,450 for individuals, $6,900 for a family, and $1,000 in catch-up contributions for those over age 55. However, last year, individuals contributed an average of $1,800 and family account owners, $3,800.

Nearly 40% of people are unaware that the money in an HSA can carry forward. Instead, they think if they don’t use it, they will lose it at the end of the year. Additionally, 46% of HSA account holders are unaware they can invest their contribution, and a mere 7.7% actually do invest the money.

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Fidelity’s research has also found that people who save in both an HSA and a defined contribution (DC) plan save an average of 10.% of their paychecks, compared with a savings rate of 7.7% for those who save only in a DC plan. HSA savers also have an average of $119,000 more in retirement savings.

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