Page 14 - Investment Advisor October 2022

RETIREMENT PLANNING

By Marcia Mantell

Should This Client Claim Social Security

Before 70?

Some advisors do the math and say it’s better to wait. But there’s more

to consider than math.

n advisor asked about claim-
ing strategies for a couple. The
A higher earner wants to claim
now. But the advisor heard that no one
should claim before 70 — unless they are
the lower-earning spouse.
There are two distinct camps among
advisors. One group staunchly believes
the higher earner should always wait
until 70 before claiming.
The other camp is more measured.
While they, too, can do the math and
see that getting 8% per year in delayed
retirement credits yields a higher
monthly payment, they also consider
the facts and circumstances that sur-
round each client — and how their goals
change over time.

THE CLIENT COUPLE when she reaches her own FRA of 66 were favorable, allowing the couple to
In this case, the client couple (we’ll call and 6 months, about $1,500 per month. live comfortably off their investments.
Juan Carlos and Tessa) wanted advice But until Juan Carlos claims his own With the help of their advisor, their port-
about timing their Social Security claim. benefit, Tessa sits on the sidelines. She folio had grown nicely, even with annual
Juan Carlos reached his full retirement cannot claim her spousal benefit until he draws to support their lifestyle.
age (FRA) of 66 and 4 months. Tessa had claims his worker benefit. That means However, this last year with the mar-
just turned 65. if he waits until 70, she must wait until ket downturn, along with rising infla-
He retired 12 years ago, and they then as well. She’ll be 68 and a half. tion, has put pressure on their portfolio.
have been living off their investments While his benefit will increase at 8% per Furthermore, much has changed in
since 2010. year, hers maxes out at her FRA — two the last 12 years. Most notably, they now
Should they claim now at FRA or con- and a half years earlier. Spousal benefits have grandchildren and their top goal
tinue to wait until Juan Carlos turns 70? do not get delayed retirement credits. has changed significantly. They want to
secure a larger inheritance than origi-
IS THE ANSWER ‘WAIT ‘TIL 70?’ TAKE A STEP BACK nally planned.
“Yes!” some advisors would say. Instead When considering this question with
of receiving a primary insurance amount your own clients, take a step back. WEIGHING THE OPTIONS
(PIA) of $3,000 a month, he would get a Review the client’s current personal sit- If the clients wait to claim for four
boost to at least $3,880. uation and their goals. The real answer more years, they will continue to chew
However, Tessa is a dependent wife. is more nuanced than simply looking at through their portfolio. Even if there is
She did not earn enough credits to have the math. a sustained market rally, the new goals
her own Social Security benefit. She will For Juan Carlos and Tessa, in the must be factored in. Adobe Stock
be eligible for half of Juan Carlos’ PIA first 10 years of retirement, the markets The question, therefore, becomes,

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