In a rare display of unanimity, members of the Financial Planning Association indicated by an overwhelming margin that Social Security reform is needed now to stave off insolvency in the Federal retirement benefits program.
   During a two-week period in May 2,697 individual FPA members, or nearly 10% of total membership, responded to the survey during a two week period in late May. A huge majority of members, 92.6%, agreed that something must be done now to "fix" Social Security to prevent insolvency. Of the 92.6%, 60.7% "strongly agreed" with the statement while 31.9% "agreed." Only 1.9% of members "strongly disagreed."
   "Financial planners are on the front lines every day with their clients in attempting to decipher how future Social Security benefits will affect their retirement income," said James A. Barnash, CFP, FPA president. "While the financial planning process involves preparing for unanticipated financial risks, decisive action by Congress this year or next would go a long way in addressing the concerns of anyone planning for the future."
   While there was solid agreement among members that Social Security needs fixing, there was less agreement among members about how to fix it. In one question, respondents were asked to "spend" 20 points on various solutions to the problem. The single most popular option, at 21%, or 11,261 of 52,811 points "spent" by respondents, was eliminating the current $90,000 cap on payroll taxes paid into the Social Security trust fund, currently set at $90,000. The second most popular option, at 18% and 9,433 points, was increasing the retirement age two or more years beyond the current age of 67. The third most popular choice, at 5,080 points, or 10%, was the so called Pozen Plan (progressive indexing for payroll taxes and benefits). Of the other options offered, none garnered even a 10% approval rating; the "do nothing "option accounted for 448 points, or less than 1% of the total.
   There was no clear consensus with regard to the creation of private investment accounts. In one instance, respondents allocated 15,612 points among their individual "spending" points to various private account options, collectively ranking number one among all options at 29%. When asked separately whether planners believed Social Security should become a defined contribution plan, or along the same lines as private accounts, however, 56.2% said no, with 31.4% favoring them.
   Clearly, advisors fret that should private accounts become a reality, the general public is ill prepared to make their own investment decisions. Fully, 48.6% favored directing investments to lifestyle or target accounts, while only 20.7% thought individuals should have full investment discretion. As for account administration, advisors favored a Federal Plan (something similar to the Federal Thrift Savings Plan) over employer/private administration (something similar to qualified plans) by a margin of almost 2 to 1 (39.4% vs. 20.7%).
   The survey indicates that the clients or advisors are likely to be less dependent on the Social Security system that the population as a whole. When asked to approximate what portion of their clients' total retirement income Social Security benefits will represent, the results were as follows:
   0-25%      53.6%
   26-50%    41.7%
   51-75%    4.5%
   76-100%   0.2%
   While Social Security clearly is on the minds of advisors, FPA leadership acknowledges that Medicare, which the survey did not address, will present additional challenges:.
   "We need to keep this entire issue in perspective," says Barnash. "The problems with Social Security pale in comparison with the fiscal problems facing Medicare."

-Joel Bruckenstein