General education is helpful, but getting personal will help employees establish a plan for income in retirement.

According to the Social Security Administration’s website, Social Security will replace about 40% of an employee’s pre-retirement income after retirement.

It explains that this will be lower for people in the upper income brackets and higher for people with low incomes. “You’ll need to supplement your benefits with a pension, savings or investments,” the website says.

However, even the Social Security Administration notes that most financial advisers say a person will need about 70% of pre-retirement earnings to comfortably maintain his pre-retirement standard of living. So, 40% is more than half of what the average person will need.

“Social Security is the largest retirement income asset for 99% of Americans,” says William Meyer, founder and managing principal of Social Security Solutions, who is based in Kansas City, Kansas.

Pre-retirees, those within 10 years of retiring, expect they will receive $1,805 a month in Social Security benefits, but retirees actually collect an average of $1,408, a 28% difference, according to the sixth annual survey by the Nationwide Retirement Institute. Twenty-six percent believe they can live comfortably on Social Security alone, and 44% say that it will be their main source of retirement income.

Seventy percent think they are eligible for full benefits before they actually are. On average, they incorrectly think they will be eligible for full benefits at age 63, and 26% think that even if they claim early and receive lower benefits, these benefits will rise once they reach full retirement age.

Clearly, Americans need Social Security education.

Plan sponsors and providers have stepped up to provide education. Many offer education seminars and calculators, and some have even brought in representatives from the Social Security Administration to help educate employees.

“We know of a lot of HR professionals that have taken it upon themselves to learn about Social Security and teach employees about the basics. Or, during benefits fairs, they bring in a Social Security expert,” says Brogan O’Connor, senior financial planner, Sentinel Benefits & Financial Group in New York City. “Employers also guide employees to the correct resources.”

Meyer notes that the Social Security Administration has a mandate that its employees can’t give advice, so staff brought in by retirement plan sponsors and providers can only provide general education.

O’Connor says his firm offers Social Security education sources to retirement plan sponsors. “We have a library of presentations we can tailor to each audience and sophistication level, depending on the industry of the plan sponsor,” he says.

In a general setting, Sentinel provides Social Security basics, such as when employees can take their benefits, rules about spousal benefits and the benefits of delaying taking Social Security. But, O’Connor says its financial planners also do one-on-one consultations. “We can explain more what each person’s Social Security benefit is, how much income they want in retirement and how much Social Security factors into that,” he says.

Going beyond education to actual planning

According to Meyer, that kind of personalization is what is needed. “The classic wellness programs and education done by plan sponsors, recordkeepers and advisers are good and have made progress. But, from my point of view, they are missing the mark, missing personalization,” he says.

He notes that when a group of people attend Social Security education, many still come out of it saying, “What does this mean for me?” Participants need to be given next steps, Meyer says.

“Much education focuses on how to maximize Social Security benefits, but employees need to know how to coordinate this with other savings,” Meyer adds. “People can claim Social Security as early as 62. If they decide to wait until at least age 70 to maximize their benefits, they will need other savings to do that.”

He notes that his firm found in a study that if an employee draws from his defined contribution (DC) plan savings in order to wait and maximize his Social Security benefit, he can make his income last two years longer in retirement, as well as reduce taxes and required minimum distributions (RMDs).

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