Many advisors would agree that helping clients optimize their
Actions to rein in entitlement programs by the
"If you select the wrong
Indeed, failing to recommend the right strategy for a client could leave a gaping hole in retirement benefits over a client's lifetime. "The average advisor's client is getting
Fine, but Do I Have a Legal Obligation?
While a good number of advisors are taking (or teaching)
For "a lot of people, one of their primary benefits to live on in retirement isn't the assets that they've saved; rather it's the Cyuber DB plan' that the government has created–and to which [clients] have contributed their whole lives–known as
However, for "financial planners (many of whom are RIAs), there might be an implication that if the agreement didn't exclude
Meyer argued that his firm has already heard from consumers who are exploring litigation based on "bad"
"If an advisor has a contract with a plan sponsor or participant that says the professional advice they give is fiduciary in nature and it includes looking at sources of income, including
Determining the Best Strategy
So how are advisors helping clients decide which claiming strategy best meets their needs?
As Meyer explained, picking the optimal
Different claiming strategies are based on household type–single, married or widowed. Also, "if one person has already started taking benefits, what should the other person do?" Meyer said that "happens a lot with married couples." Different rules also exist for those who've worked in the government or have been a teacher, called the non-covered pension, he said.
Meyer said that while advisors know
Most retirees–anywhere from 70% to 80%–claim benefits early, at age 62, which most advisors say should be avoided. When taking benefits before your full retirement age of either 66 or 67, depending on when you were born, your benefit is reduced by 25%, said Scottino. If you delay your benefits and take them after 66, she explained, the benefit grows inflation-adjusted about 8% per year between ages 66 and 70.
According to the
For those who start receiving a spouse's benefits at age 62, their monthly benefit amount is reduced to about 32.5% of the amount their spouse would receive if his or her benefits started at full retirement age.
"There is still the mentality that you should claim at 62 because
Regardless of the situation, for married or divorced couples, and widows or widowers, "the value comes from waiting longer," agreed David Mendels, director of planning at Creative Financial Concepts in
Couples have "many more options" than single people, said Victoria Fillet, principal at Blueprint Financial Planning in
If something changes, Fillet said you can go back six months after you suspend.
Say you're single and decide to wait until 70 to collect benefits, but six months later you're diagnosed with terminal cancer and you need to collect benefits due to your illness, Fillet explained. If you had done a file-and-suspend, the
A file-and-suspend strategy also "opens up the benefit for people who are already on your record. Sometimes that's your spouse, other dependents or children," planner Scottino said.
She recalled a claiming strategy in which she "dug deeper" to help a widower. In this instance, the husband claimed under the spousal benefit and started receiving his deceased wife's
Addressing the Issue in Time
Like other advisors, Lee said Spectrum uses a software program to help demonstrate the various claiming options.
Baker said that people as young as 56 are asking his firm, which teaches a course about
For couples that he works with, Baker said his goal "is to have the highest
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