What You Need to Know
- The redesigned statement shows the effects of starting benefits each year between age 62 and 70.
- Advisors should also discuss whether the payments clients will receive each month in retirement will be enough for them to live on.
- Clients may be surprised to learn that Medicare premiums are paid out of their Social Security benefits.
Social Security statements already served as handy tools. But the changes that the Social Security Administration is rolling out will help advisors and clients even more.
Advisors who have never used their clients’ Social Security statements to provide a clearer picture of how much they will get when they retire have been missing an opportunity, according to advisors and financial planners interviewed by ThinkAdvisor.
That opportunity has grown even larger with the enhanced statement, which shows the effects of starting benefits each year between age 62 and 70. The SSA recently rolled out the new, shorter statements to a limited number of Americans.
Research has shown that people who see their statements tend to make better retirement choices, according to Jeffrey Levine, chief planning officer at Buckingham Wealth Partners.
He and the others we interviewed pointed to five key things advisors can do now with Social Security statements to help clients.
1. Take advantage of the enhanced statement’s standout feature.
The new version of the statement provides a “really easy graphical way of showing people, right on that first page, what their benefit will be by delaying” their retirement,” said Levine.
After all, rather than just ages 62, 67 and 70, the redesigned statement shows what the estimated monthly benefits would be for each of nine years if you start receiving benefits from ages 62-70 — in a personalized graphic with a series of horizontal bars.
At 62, it is tempting to say “70 is so far away,” he said. But when you’re talking about 63, the client might say, “63’s not so bad and look, next year I get more if I wait,” he noted.
“That is the biggest change on the form and that’s what probably” will drive the most advisor conversations with clients once the enhanced version is made available to more Americans, he added.
Advisors can already illustrate this through software. But the new statement offers a “very quick and dirty way of going about this,” Levine told ThinkAdvisor.
Jody King, vice president and director of wealth planning at private wealth management firm Fiduciary Trust in Boston, said she had yet to see an enhanced statement. But, based on what she saw and heard about the redesigned statement, she too gave a thumbs-up to the expanded number of retirement ages included in it.