InvestmentNews Editorials

Clients still need Social Security advice

File and suspend's elimination doesn't mean advisers should put Social Security planning on the shelf

Apr 24, 2016 @ 12:01 am

The Bipartisan Budget Act of 2015 took the wind out of the sails of many advisers who had been looking forward to using a Social Security claiming strategy known as file and suspend on behalf of their baby boomer clients.

The option, which was eliminated in the budget deal, allowed those 66 or older to file for Social Security and activate benefits for a spouse or minor child while suspending them for themselves while they built up extra benefits they could claim down the road.

The option sunsets on Friday.


But this doesn't mean advisers should put Social Security planning on the shelf. If nothing else, the file-and-suspend strategy alerted a lot of advisers to the importance of these benefits and the need to maximize them for their clients. After all, Social Security will constitute a key portion of retirement income for many of their clients, and the budget act didn't wipe out all of the options that could help them — at least not yet.

For example, the phase-out period for another strategy known as a restricted application for spousal benefits will continue, in some cases, for another eight years. This option allows those 66 or older to claim one-half of their spouse's, or ex-spouse's, full retirement age benefit for up to four years while their own benefits continue to grow by 8% a year up to age 70. To take advantage of this option, a client must have been at least 62 by the end of 2015.

Beyond these creative strategies, clients need help with other questions concerning both Social Security and Medicare as they get close to retirement. Among the biggest issues is figuring out the optimum age to claim Social Security benefits. That will generally depend on many factors, including work options, health, income needs and retirement goals. Some clients may want to claim benefits as early as 62, but an adviser may conclude it is not in their best interests in the long run.


Like many of life's important decisions, those surrounding Social Security and Medicare can enhance — or sometimes impair — the quality of a client's life. They should not be taken lightly by either clients or advisers.


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