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Build practice with female clients, Social Security planning

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Social Security planning is an important part of planning for female clients and can attract them to advisors’ practices, according to a webinar held on Wednesday.

Moderator Marie Swift of Impact Communications introduced Martha Sheddon of ClientFirst Financial, who said that for pre-retirees, “the hunt for income is on.” Social Security planning is “not an up-front money maker,” she acknowledged, “but it’s a source of goodwill and segues into other opportunities.”

Clients can’t ask questions they don’t know they need to ask, so advisors need to “create demand for education,” Sheddon said.

Female clients in particular are in need of more help. “More women should be receiving more financial advice,” she said pointing to changing demographics in the work force. Half of managers are women, she said, and of the 15 job categories expecting growth, all but two are dominated by women.

When and how to begin claiming Social Security benefits are important decisions for anyone, Sheddon noted, but women’s longer life expectancy, less time in the work force, lower lifetime earnings overall and tendency to marry older men means they are likely to outlive their partners and have lower benefits.

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“It’s important for couples to plan for survivor income to be largest for the widow,” Sheddon said. One of the difficulties in planning, though, is that it requires highly personal conversations right away, for example, when estimating life expectancy.

Frank Horath, another speaker on the webinar and author of “How to Grow Your Financial Practice with Social Security Income Planning,” suggested “female clients embrace this topic.” He outlined a case study wherein a 62-year-old man files for benefits, then suspends them to provide spousal survivor income for his wife after his death. If the husband files at age 62, his wife can collect $1,725 per month, with $331,200 when her husband dies. If he waits until age 70 to file for benefits, her monthly income from Social Security increases to over $3,000, with a survivor benefit of $582,912.

Sheddon presented a second case study wherein a divorced woman claims “ex-spousal” benefits at age 66, then begins taking benefits based on her own earnings at age 77. Divorced clients can claim benefits on their ex-spouse’s earnings under certain conditions, according to the Social Security Administration: the marriage must have lasted at least 10 years, they couple must have been divorced for at least two years, the client claiming the benefit should be at least 62 and hasn’t remarried, and their own benefit would be lower than the one they could claim on their own record.

In the second case study, a woman has a benefit of $1,800 while her ex-husband has a benefit of $2,200. By claiming the ex-spousal benefit at 66 and switching at 70, she can capture an additional $80,000.