Editorial

Advisers need to boost knowledge of Social Security

Dec 15, 2013 @ 12:01 am

+ Zoom
(Roger Schillerstrom)

How much do you know about Social Security? Not just the basics, but how much do you really know? Enough to sit down with each of your clients right now and confidently outline all of their claiming options, including a recommended course of action that will help them reach their retirement goals?

If you are honest and acknowledge that you don't know as much as you think, you are probably not alone. Many advisers underestimate the importance of having deep knowledge of this important cornerstone of retirement income.

And yet there are many reasons why financial advisers should be nothing less than Social Security experts.

PENSIONS DISAPPEARING

First, as private pensions disappear and interest rates remain depressed, retirees are increasingly dependent on Social Security to fulfill a greater part of their income needs. That means it will be more important than ever that clients maximize their benefits.

Second, there is a lot at stake. The difference between claiming benefits at the right time or the wrong time could mean thousands of extra dollars a year and tens of thousands of dollars over a lifetime. A mistake could be disastrous for some retirees.

Third, consumers expect their advisers to be experts in Social Security and help them make the important decisions about when and how to claim benefits. In a recent online survey of 500 married couples by Social Security Timing, a software company, 46% said they would want their adviser to calculate their Social Security-timing options, up from 40% two years earlier. Even more important, 54% said they would look for another planner if their adviser could not — or would not — analyze their best claiming option, up from 44% in 2011.

Advisers who are reasonably well-versed in Social Security recognize that each retiree and each couple they counsel has a different set of circumstances that will affect when they should start collecting benefits. While the rule of thumb seems to be to put off collecting until at least 66 — and possibly until 70 to maximize benefits, as long as you don't need the income — there are other factors to consider. Good advice for someone in reasonable health and a history of longevity in their family may not work for someone in ill health whose parents both died young.

Advisers looking to learn more about Social Security can turn to organizations such as The American College of Financial Services and the Retirement Income Industry Association for help. Both have courses that apply to credentials in retirement planning that cover Social Security-claiming strategies.

Learning more about Social Security will add more value to an adviser's skill set, helping existing clients and bringing in new ones.

0
Comments

What do you think?

View comments

Recommended for you

Latest news & opinion

DOL fiduciary rule opponents want to push implementation back until 2019

ICI, Chamber of Commerce among groups asking for delay, while Democratic lawmakers call on DOL to keep to its earlier planned schedule of Jan. 1, 2018.

Take 5: Vanguard's new CIO Greg Davis talks bonds, stocks and costs

Having just stepped into the role, this veteran of the firm now oversees $3.8 trillion in assets in more than 300 mutual funds and exchange-traded funds.

Tech companies deploy behavioral finance tools for advisers

They seek to turn knowing more about clients into growing more revenue.

Retirement planning for women

Longer lifespans and lower savings require creative income strategies.

Sean Spicer resigns as press secretary after Anthony Scaramucci is appointed communications director

Scaramucci is known as an ardent foe of the DOL fiduciary rule, having said during the campaign that Trump would repeal it .

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print