Investors have been flocking to advisors for the past 18 months for help with their sudden and unexpected retirements. They need assurances—in black and white and dollar signs—that their savings, investments and Social Security will supply the income they will need for the rest of their lives. They also need to make decisions—now.
For most, making smart choices about Social Security filing will make a difference in their financial outlooks and peace of mind. My colleagues Jeff Quigley and Alyson Dorosky help advisors understand how to help clients maximize Social Security benefits and retirement income. Let me share a recent conversation with them about how advisors are meeting clients' most urgent retirement income needs.
Jack Sharry: Alyson, what would you say is the big "a-ha" moment for advisors and clients when they look at Social Security filing strategies as part of a coordinated approach to maximizing retirement income?
Alyson Dorosky: Advisors often think every client's case is the same. Most know the client gets more money the longer they wait to file for benefits, capping at age 70. It sounds straightforward, but that's not really the case, especially for couples.
Partners have different birth dates, of course. They have different amounts of Social Security to draw from and different full retirement ages. And the interplay between Social Security and survivor benefits makes it even more complicated.
Sharry: The rules change for people who are divorced or widowed, too. There isn't a lot of practical education about how someone's life circumstances affect Social Security benefit filing plans. That's not a knock on anyone. There are 2,700+ rules for claiming Social Security benefits.
Dorosky: Right. The Social Security Administration (SSA) can't provide its opinion or suggest strategies. And SSA representatives are not well versed in the tips, tricks and edge cases that can create additional wealth over a retiree's lifetime.
Jeff Quigley: We find advisors must go to bat for their clients. That starts with printouts that explain what the client should do when they begin the filing process.
Sharry: We consistently hear from advisors that the first thing clients and prospects want to know as they consider retirement is what to do with Social Security. The discussion is so important because Social Security makes up about 60% of their retirement income for most people.
Quigley: It's one of the reasons we devote so much time to training advisors. It isn't enough to say, "Here is the software. Here is the fact sheet. Go get 'em." Our job is to help the advisor and client be confident in using the tools.