Talking Social Security With Boomers

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 (www.ssa.gov) 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.