Is anyone in our group a Social Security expert, or taken any courses?

[schirallicpa]

Unfortunately, I seem to have gotten older as have my clients.  So - more and more I am getting questions about SS and SS planning.  I was looking online to find what info I could this morning for a client, and came across some courses.  So wondered if anyone else had taken courses or has a go-to resource.  

I ordered a book from the social security association in the spring but I haven't received it yet....imagine that.

[Lee B]

Be careful, there is a lot of misinformation out there.

Most clients have preconceived notions which aren't always accurate.

Also, certain situations can be significantly more complicated than you might expect.

Because of these minefields I don't give specific advice, I speak about issues to be considered.

Clients wanting specific advice probably should be referred to Certified Financial Planners.

[kathyc2]

I think the SSA.gov has a lot of good information if you know what you're looking for.  The Tax Book has a SS/Medicare book, or it's included in their Tax Library.  I know I've done webinars in the past, likely either Surgent or Checkpoint. 

In a nutshell, benefits are based on highest 35 inflation adjusted earning years. There is software that you can buy to calculate this, or if you are an Excel person, you can calculate it yourself.

One word of caution.  When you get the statement from projected benefits from SSA, they assume you are working at the same level as past year until you collect benefits.  This can be misleading for people especially for people who want to retire now but want to wait to take benefits until later. 

 

[Lion EA]

Ash Ahluwalia

https://www.oneteamfinancial.com/

 

[Sara EA]

I consider SS out of my bailiwick.  Sure, I'll advise clients on how benefits will affect their tax situation, but that's where I draw the line.  When to collect, on whose record, etc. are complex and I don't want to be responsible for giving advice that may end up not being in the client's best interest.  Same goes when clients ask us legal or investment questions.  Go ask an expert in those fields.  Of course they ask us because they don't think they'll have to pay us extra.  We had a client who called with a legal predicament and when we recommended he go to his lawyer, he admitted that the lawyer charges too much.  Stay in your lane.

[kathyc2]

11 hours ago, Sara EA said:

Stay in your lane.

Wow!  Nothing wrong with us increasing knowledge on issues such as how SS works. Many times I've been able to inform clients on items they aren't aware of.  Of course I always say "this is my understanding" and encourage them to contact SS for verification. 

If preparers don't want to get involved in such issues as SS, that's fine.  On the flip, if preparers want to educate themselves and share the knowledge with clients, that is also fine.  To each their own.

My "lane" is trying to help clients that aren't well versed on various financial matter to the best of my ability. 

[JohnH]

I always deferred most SocSec questions by recommending that the client go straight to SSA for answers. 
 

After I began drawing SocSec 7 years ago and navigated my own situation, I changed my policy. I now defer ALL SocSec questions by recommending that the client  go straight to SSA.  

[Medlin Software, Dennis]

There is not always a good answer.  Situations may be different.  For example, someday, our daughter will need to transition from SSI to SSDI, based on my earnings.  This change is not always automatic, and must be initiated.  If one does understand this can be done, and why, one may make less than optimal decisions before then, such as claiming before FRA.

[Lion EA]

Send your clients to an SS benefits expert. Here's just 1 of Ash's slides from his presentation to the NY/CT-ATP June 2018:

[kathyc2]

The goal should not be maximizing SS benefits, but rather maximizing wealth. 

Simple scenario:

Benefits at age 67 are 25K.  I'm assuming a 2.5% annual COLA.  Waiting until age 70 and the combo of 8% a year bump and COLA and first year benefits are 33,914.

If the person lives past age 80, they will receive more in benefits by not claiming until 70.  If they die before 80 they will have received less benefits. 

By age 90, the projected benefit total is 809K for starting at 67 and 922K by starting at age 70.  Looking only at the benefits, it looks like it's better to delay, correct?

Instead, how about starting at 67 and investing the benefits for the first 3 years?  I used 80% of benefits at account for any tax on amount to invest and used an annual return rate of 7%.  Compounding the returns and the amount in this account is 272K at age 90.  The non invested SS benefit amount is 732K, for a total of 1,004K.  In this case, you end up with 82K more, plus the 272K can be passed on to heirs.  Now, which one sound better?

[Lion EA]

Ash took us through examples of maximizing benefits vs optimizing benefits. So many differences in a person's or couple's needs. Perhaps health/non-working requires more benefits sooner. Or health/ancestry + minor children suggest starting benefits sooner to preserve them for children/spouse. Or market rates are predicted to out perform the 8% from waiting. Or...

If you know when each spouse will die, the calculations get much easier!!

The SSA even offers a couple of Do-Over options. But, limited.

There are courses available that cover a multitude of scenarios. Or, a calculator/spreadsheet can help you sort out possibilities for a specific client situation. I send my clients to Ash Ahluwalia. Some clients already work with their financial advisor, so we work together to make sure the tax implications are taken into account before, not after, making financial decisions

[kathyc2]

53 minutes ago, Lion EA said:

I send my clients to Ash Ahluwalia

He may be great, but I personally don't put much stock in people using scare tactics to drum up business. "Over 90% of recipients get less money than they are entitled to."  LOL!  Took me less than a minute to google that 10% wait until age 70.  Are 90% of people wrong by starting benefits before 70?  Nope. Like I said, it's about maximizing wealth, not SS benefits.  Do I think the gov't can handle my money better than me?  Again, nope. 

None of us knows when we will die nor do we know what Congress will do when the Trust Fund is depleted.  It's estimated that around 70% of benefits could be paid by current tax inflows.  I wouldn't be all that surprised if high income/high retirement account people have their benefits reduced in the future. 

Just like defer, defer, defer mantra for retirement accounts isn't always the correct answer, neither is deferring SS as long as possible the correct answer for a lot of people. 

I am curious about a couple of things.  Does he have a list of the 567 filing options? And how much does he charge to advise on SS benefits?

[Sara EA]

Kathy, of course there's nothing wrong with educating yourself, but I draw the line at sharing my certainly incomplete knowledge with someone who will use it for a life-changing decision.  People should get solid advice from SSA (the folks there are really good in my experience) or work with a financial advisor--NOT their tax preparer.  Over my career I have had several people question me about the tax implications of getting married.  Really?  I would think that people decide to marry because of love, commitment, to make a relationship permanent.  Money might enter into a decision to do a prenup, but to get married?  Talk to a marriage counselor, not your tax preparer.

[Lion EA]

Back in 2018, he charged those of us at his class and our clients $750. I think that may've been half price. At that time, he was one of a very, very few speakers on SS; and our NYCTATP group had looked hard for a couple years before finding a speaker. I would think more have joined that niche as we baby boomers have aged.

He spoke to us for only 2 hours, so we didn't cover more than 67 filing options! To keep working in his niche, he must have documented the options. He took us through many to show us how optimizing over a lifetime, taking into account more than just SS, was better than just looking at how much SS benefits could be received. Single? Divorced? Married? What if the older was ready to retire first? Younger? What if there were minor children? Are their living expenses already covered, so they can take advantage of investment opportunities? Do they need money sooner for other reasons, such as healthcare? Those types of questions to adjust each scenario beyond just ages: 62, FRA, 70, and everything in between. Way more than I have time to generate from scratch when it's not my core expertise.

After taking us through one set similar to the above, here are his summary slides: (can't figure out how I copied a slide above; I'll try on a new post below)

 

[Lion EA]

Until I can figure out how I copied a slide...

Waiting until 70 is only one way to increase SS benefits, but won't be successful unless you live to about 90, so NO, failing to wait was NOT how people left money on the table. Not working out what their goals are for retirement and being honest about their situations (health, for instance) and looking after their own finances via private investing &/or working and NOT relying on our inefficient government were topics he discussed.

[BrewOne]

Folks who aren't well-positioned for retirement don't tend to listen to advice...they've already made up their mind to sign up ASAP.

[schirallicpa]

19 hours ago, Lion EA said:

If you know when each spouse will die, the calculations get much easier!!

Exactly....

This is where I always get hung up.

[kathyc2]

12 hours ago, Sara EA said:

Kathy, of course there's nothing wrong with educating yourself, but I draw the line at sharing my certainly incomplete knowledge with someone who will use it for a life-changing decision.

Like I said, if you choose to not talk about SS with clients, that's fine.  However, telling someone that chooses differently to "stay in your lane" is quite rude in my opinion. 

[Lee B]

Lion and kathyc2

It's kinda ironic since you both imply that anyone who disagrees with you is an idiot.

[Medlin Software, Dennis]

SS planning should be done starting from an early age. Meaning, get in 10 quarters. Check for accurate reporting. If an s corp, for example, maximize SS wages instead of playing RC games. JMO though. My opponent noon is based not on maximizing for own self, but to setup for the unexpected. Surviving spouse, surviving kids. Disabled self, spouse, kids. Etc. 

Comes from my grandmother collecting for over 50 years. Me being a surviving child. Daughter likely collecting 40+ years of ssdi based on my wages. Also still personally having one zero year dragging my calculations down due to a poor choice in my youth.

i don’t see it as a need to beat private investment game, but a way to care for those we are responsible for. The average person is not going to beat SS if something unexpected happens. I don’t else a scenario where SS is left fallow. 

I know not all agree, and I know many who wish they had!

[Lion EA]

I don't think anyone else is an idiot.

I do feel that I'm an idiot for not being thoroughly educated in tax-adjacent topics, such as SS, Medicare, retirement saving, investing, crypto, planning for like-kind exchanges, STR, vacation rentals, anything I haven't had to study in the past, etc.

I know I don't have the knowledge or the time to give my clients the consultation they need -- but that there are people who can.

I do talk a LOT about SS to my clients, but remind them I don't know any more than I'm telling them, that I gained my little bit of information by taking courses from experts in those fields, and suggest they consult experts in each field, that we can all work together to help them plan.

I thought I was agreeing with kathyc2 that we need to help our clients plan (in my case, with my limited knowledge, help by recommending consultants that I've learned from) for retirement -- using SS as just one of their resources.

Who do you all recommend that I take classes from to up my SS game? Any courses you recommend scheduled for November-December 2023?

[Medlin Software, Dennis]

For me, studying my own situation has led me down many paths which might help others.  Answering your own issues is a great first step, which will give you a place to start making notes to look at other paths.  As above, my first advice is always to study death or disability tomorrow, and the results of prior planning or lack of will be a shock.  That shock is great inspiration.  I then looked at my death being at age 100, which is the actual average for my family.  I slightly considered death at an age where waiting until max SS is gained, but for me, I discounted it as it only affected ME, not those I will leave behind (which is my personal priority).

[kathyc2]

41 minutes ago, Lion EA said:

I don't think anyone else is an idiot.

Neither do I.  I got a good chuckle from that comment. 

 

41 minutes ago, Lion EA said:

Who do you all recommend that I take classes from to up my SS game? Any courses you recommend scheduled for November-December 2023?

Surgent has several.  I think webinars led by Bob Lickwar are quite good.  You can buy an unlimited package that is good for 12 months for $560.

[kathyc2]

1 hour ago, Medlin Software, Dennis said:

Check for accurate reporting.

Definitely.  Mine was wrong for 1986.  Since I have all my tax returns, sent them a copy of W2 and it was quickly corrected.

1 hour ago, Medlin Software, Dennis said:

If an s corp, for example, maximize SS wages instead of playing RC games.

Have you gotten into the indexing factors and bend points?  If so, you can easily create a spreadsheet to come up with a close estimate of what changes higher earnings will make.  

[Lion EA]

I've had classes from Bob Lickwar on other topics and like him. And, have heard good things about Surgent; but their constant emails have been about courses I don't need (specialized trusts, for instance) or CPE only and not CE, so I haven't stopped to check out their schedule. I should do so. NY/CT-ATP has a rental real estate track planned for October with Kathy Morgan that I'm signed up for (6 CEs + 2 CEs ethics).