How do you develop a tax-efficient withdrawal strategy for clients without including the single largest source of retirement income for most Americans?
If you answered, “you don’t,” pat yourself on the back; all others should abandon the advisor business—immediately.
It’s a depressing fact that too many advisors (and their clients) view Social Security as this “other” source of retirement income, one separate and distinct from the rest of the portfolio. Leaving aside for a moment the obvious mistake of not including a major asset in the overall plan, imagine the size of the compliance issues and legal exposure that arise as a result.
Especially for those advisors who consider themselves a fiduciary, the term is meaningless without a thorough review of how best to “coordinate” Social Security into the retirement income plan.
Remember that term; you’ll be hearing much more of it in the near future.
After all, demand is driven by demographics; more baby boomers are looking for the maximum amount of retirement income, and therefore Social Security. Advisors could get away with ignoring it until now, but no longer. Not only will boomers expect the amount they receive in benefits to be maximized, they’ll also increasingly expect (demand) it be coordinated with the rest of their portfolio. Here’s why it’s so important:.