Financial advisors need to know when their clients will die. Is that difficult, or probably impossible, to do? Of course, but two experts on Social Security claiming strategies say it is even more important now since the Social Security Administration changed two rules affecting when a person can begin taking benefits.

Some advisors anticipated the rule change would make Social Security simpler, but the opposite is true, according to William Meyer, founder and managing principal of Social Security Solutions, and Dr. William Reichenstein, principal and researcher for Social Security Solutions, a Social Security resource tool for advisors and consumers.

Social Security changed as part of the Balanced Budget Act of 2015. With those changes, the technique commonly known as file and suspend was eliminated as of April 30 and the option to file a restricted application is being phased out over the next eight years. Both strategies allowed couples to coordinate with each other when they would take benefits in order to obtain a maximum payout.

Even with the elimination of these two strategies, there are still at least 10,000 different filing strategies that can be used by couples and individuals, says Reichenstein.

“The complexity of Social Security claiming hasn’t lessoned at all. In fact, for at least the coming years, it will be even more complicated for financial advisors to recommend an optimal strategy to clients,” he says.

The two researchers use an imaginary couple to illustrate just one of the many very real situations an advisor may have to consider.

Ben and Kathy are thinking of retiring. Ben, the higher earner, was going to file for his benefits but then suspend them. That would enable Kathy to file for spousal benefits on Ben’s earnings record, while Ben’s benefits continued to grow until he reaches age 70. Social Security benefits grow by about 8 percent a year until the person reaches age 70.

The premise behind waiting to collect benefits is that if the person lives long enough, he or she will eventually receive more money than if he or she had started receiving smaller benefits early. The point in time where the person receives more money by waiting is called the break-even point.

Using the file and suspend strategy, Ben and Kathy would break even at about age 81. However, since that option is no longer available, Kathy cannot receive the spousal benefits and that pushes their break-even point back to approximately age 89. It therefore becomes questionable whether it is worth waiting because they do not know how long they will live.

On the other hand, if Ben waits until he is age 70 to collect his benefits, they will have grown by 8 percent a year to their maximum amount. If he dies before Kathy, she will receive more in survivors’ benefits for the rest of her life than she would have if he started receiving benefits at age 66.

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