Sarenski started with the bad news during his presentation before CPA-planners at the Advanced Personal Financial Planning Conference sponsored by the
Trouble looms even sooner for the Social Security Disabilty reserves, which will be depleted by 2016, according to Sarenski. And, once depleted, anticipated income would cover just 80% of scheduled benefits, he adds.
For these reasons, Sarenski says, he urges caution.
“We need to be conservative, I think, in our planning,” he says. For people who are age 50 or younger, he is currently projecting they will receive 75% of their benefits.
While he holds out hope that government intervention – possibly in the form of tax increases – can provide a solution, planners still can help their clients get solid benefits from
This is especially important because baby boomers, now entering their retirement years, have not been good savers, he says.
Across the U.S. workforce today, 51% of people have no private pension coverage and 34% has no retirement savings, he adds.
“So, now that we are all depressed,” he says, “what are the things that we can do for our clients?”
His advice includes the following:
Although there are exceptions, planners should urge most clients to wait to take their
“You cannot buy an annuity that has an inflation rider so it’s worth waiting” for the higher number, he said.
2. FILE AND SUSPEND
In some cases, it can make sense to start benefits at age 62 and then immediately suspend them – a strategy many clients are not aware of. For example, a spouse may want to start his benefits and immediately suspend in order to triggers spousal benefits for a wife who is 62 or older. He can then suspend his benefits in order to receive a higher benefit when he resumes them later. Some people take this route to reduce required minimum distributions from retirement savings.
“The closer [married couples] are in age, the better this works out,” he cautions.
3. MEDICARE B PREMIUM
However, if you do file and suspend, make sure to pay your Medicare Part B premium yourself. If you don’t,
Remember that spouses need to be married for a full year to collect benefit from a spouse’s work record.
5. SPOUSAL BENEFITS
Both spouses in a couple cannot file and suspend in order to trigger benefits on each other. On the other hand, if they decided to get divorced, they could.
Planners “probably won’t get a lot of clients to do this,” Sarenski jokes.
Those already divorced must have been divorced for two years before they can collect a spousal benefit on their divorced spouse. The same goes for their exes if they want to collect on them. Benefits collected by ex-spouses do not impact the benefits due to a client’s family.
7. REPRESENTATIVE PAYEES
When working with clients who are much older and could lose the ability to care for themselves, those clients should appoint “representative payees” to receive funds on their behalf from the administration. That’s because
Once, Sasenski says, one of his clients had to close out a banking account that took direct deposits of
8. IN-PERSON ENROLLMENT
Remember that, although the
“Someone told me here at the conference that one of their clients couldn’t apply online. Why? Because they were born on Feb. 29,” Sarenski says, and the system couldn’t recognize that
9. ANNUAL STATEMENTS
Planners should urge all their clients to enroll online right now to receive annual
10. NO BENEFITS IN JAIL
For anyone wondering, Sarenski says, husbands or wives who kill their spouses can’t collect benefits on them. Neither can children who kill their parents. If someone goes to jail, any benefits that would have come due during that jail time are lost.
“But your spouse and children, as long as they are not in there with you, they can continue getting benefits,” he said.
11. COMPASSIONATE ALLOWANCES
In some situations, clients can start receiving benefits very rapidly. “There are 200 compassionate allowances,” he said. “You will get
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