Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Retirement Planning > Social Security

Talking Social Security With Boomers

Your article was successfully shared with the contacts you provided.

Agents and advisors are constantly asked: Should I take Social Security at age 62 or later? Should I build my retirement funding around it? How much will I get? What happens to it if I remarry? Could my new wife share in my benefits?

What is the advisor to do–give Social Security advice, refer to a SS expert, or what? NU went to some experts for answers.

“I walk people through the Social Security basics,” says Bill Losey, president and owner of Bill Losey Retirement Solutions LLC, a fee-based planning and registered investment advisory firm in Wilton, N.Y. His firm typically counsels couples age 50+ with $1 million to $2 million in net worth.

These boomers do ask about Social Security, he says, noting the question of when to start taking SS–at age 62 or later–is among the Top 10 questions he gets. It was also among the Top 10 questions that surfaced from a survey his firm did of 5,000+ boomers nationwide with up to $1 million in net worth from January 2006 to June 2007.

So persistent is this question that Losey calls it “the Social Security dilemma.”

He says he is comfortable discussing the basics of SS with boomers–how it works, where to get help, the pros and cons of taking benefits early, etc.

In general, he says, “if money is tight or the boomer is not working and not in good health, the person should consider taking benefits early. But if the boomer is in good health and doesn’t need the money, consider taking benefits at the full retirement age or even later.”

But some questions are more detailed or involve complexities such as the impact of divorce or remarriage on disability on SS benefits, he continues. In those instances, Losey suggests the boomer visit the local SS office, call the national 800 phone number for SS (1-800-772-1213), or visit the SS website ( which has “calculators and reams of information.”

Sometimes, he and the client phone SS while together, so they can get answers to the more difficult questions at the same time. In other cases, he might speak with the client’s certified public accountant or tax accountant to get more information about the client’s situation.

If questions involve Social Security Disability Income, though, he directs the client to the person’s attorney.

Responding to boomer inquiries about SS is important for advisors to do, contends Garth Bernard, president and chief executive officer of the Sharper Financial Group, LLC, a Boston startup focused on retirement products, advisor education and programs.

In the current environment, SS income is a significant part of the foundation of a good retirement income plan, he explains.

Boomers need to know not only when to start benefits but also the consequences of waiting until age 65 or later, Bernard says. “They want to know if they should work longer, live on other assets until starting benefits and how their choices will impact retirement success.”

If the advisor is not prepared to deal with this, he continues, the advisor will not be meeting the needs of the client, who may go to someone else for help.

To get prepared, advisors should acquire a basic SS education, Bernard says. Sources of this education can be retirement income product providers, professional associations and education firms, and the Social Security Administration itself, he says.

Advisors also need computer tools, he says. “These should enable the advisor to incorporate Social Security benefits (and other income sources) into the boomer’s income plan and to do ‘what if’ scenarios.”

Advisors need to be able to structure the income plan so the boomer won’t be overtaxed or not lose benefits, adds Jim Johnson, vice president-advanced sales development for Allianz Life, Minneapolis. “If they don’t do this, they are not doing their job.”

The advisor should also be sure that the income products sold are suitable in the situation, he says.

This entails factoring in not only SS but also other sources of income–401(k), defined benefit pension, deferred compensation, cash balance plan, IRA, even income from working during retirement.

To help the process along, Johnson says his company has put together a booklet for advisors, providing guidance on the decisions people must make.

Retirement is one of the most stressful times in life, he observes.

When the boomer is in the accumulation phase of life, he explains, the focus is on having enough to live on, asset allocation, and a known time horizon. But the brain “switches at age 60 to 65, from ‘rah rah’ to ‘holy cow.’” he says. “Suddenly, the boomer can’t figure it out. Now the concerns are: outliving money, withdrawal allocations and an unknown time horizon.”

The advisor should be supportive and not scare people, he says. Also, know what SS offers, he says. And ask 2 key questions: 1) do you want to retire at 62? Then SS benefits will be reduced. 2) Can you do phased retirement or work part-time? Know there are rules on how much money you can make before losing SS benefits.

Lowell Aronoff, chief executive officer of CANNEX, a Toronto annuity data service for the United States and Canada, suggests that advisors start the income planning without factoring in SS. “Then add it in later on, if and when the plan comes up short.”

Such an approach is okay to use with younger boomers, he says, explaining that its conservative nature will be important if SS benefits are trimmed in the future. Many younger boomers are already saving as much as they can, he adds.

But boomers who are near or in retirement will need help with optimizing what they have, including SS, Aronoff adds.

In many cases, SS will be the basis of the income plan–the part used to cover essential expenses, he continues. The advisor can then use an income annuity to cover the basics SS doesn’t cover.

“Be sure the essential expenses are covered for the rest of the boomer’s life,” he suggests, “so there is no risk of financial ruin. Boomers need to know this part of their plan is locked in.

“Beyond that, allow for flexibility,” he says. “Tailor the plan to allow for an expensive vacation, for instance. But protect the boomer’s dignity for all of their life.”

Dealing with all these issues is a lot to do, and it sounds complex, concedes Johnson. But companies that are in the market can help, by providing some backup to the advisors.

What about advisor liability in this? “The advisor is as liable for giving advice on Social Security as for any advice the advisor gives,” says Bernard, who has worked in financial services for 25 years.

“And if the advisor is functioning in a fiduciary capacity, the advisor would be legally liable for not acting in the client’s best interests,” he adds.

The way Losey sees it, “from a compliance and legal standpoint, it is okay to talk with the client about the basic questions. But when the questions become more complex, he prefers to bring in, or refer to, relevant experts

Advisors don’t receive compensation for providing basic Social Security information, the experts agree.

“But if the advisor just says, ‘here’s what you should buy’ without understanding what the client has (in SS, 401(k), etc.), there could be suitability problems,” warns Johnson. His recommendation: “Be prepared to discuss all the issues. The four words the advisor never wants to hear: ‘you never told me.’”

Besides, without a full review, chances are it won’t be a comprehensive retirement plan that meets client needs, says Aronoff.

Losey has another concern: About 80% of those reaching age 62 automatically think this is the time to take retirement, he says.

Some may need the money for expenses or to help bridge into a new line of work, he allows. “But others want to take benefits early because they think this will grandfather them into the system.”

His response? He tells clients that “the decision about when to take Social Security benefits and when to retire are separate decisions, and they don’t have to be made at the same time.” That and the ensuing discussion often changes behavior, he says, noting that “about 50% of my clients will make a different decision than intended, based on our conversion.”


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.