Updated Thursday, August 27, 2015 as of 8:20 PM ET

11 Tips to Help Clients With Social Security Benefits

The Social Security system may be in serious trouble but, right now, it’s still a critical source of support for clients, according to Theodore Sarenski, president of Blue Ocean Strategies Capital in Syracuse.

Sarenski started with the bad news during his presentation before CPA-planners at the Advanced Personal Financial Planning Conference sponsored by the American Institute of CPAs in Las Vegas.

Reserves for Social Security will be depleted by 2033 and, once they’re gone, incoming receipts will cover just 77% of scheduled benefits, Sarenski says. “It sounds like it’s a long time away, but it’s only 19 years.”

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 Social Security right now.

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 Social Security benefits. If they take them as soon as they can at age 62 rather than waiting until age 66, or even 70, they will receive lower monthly benefits. Planners should remind clients that Social Security is the only benefit with a built-in inflation adjustment.

“You cannot buy an annuity that has an inflation rider so it’s worth waiting” for the higher number, he says.


In some cases, it can make sense to start benefits at age 66 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 trigger 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 up to age 70, allowing the benefits to grow by 8% a year. 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.


However, if you do file and suspend, make sure to pay your Medicare Part B premium yourself. If you don’t, Social Security will pay that premium for you, which will reduce future benefits which would otherwise by 8% a year. “Be careful of that,” he says.


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Comments (4)
Excellent article.Great information even for my life agents.
Posted by Gregg P | Friday, January 24 2014 at 9:13AM ET
You have to be at normal retirement age to file and suspend, not age 62.
Posted by alfred l | Friday, January 24 2014 at 10:10AM ET
Alfred makes an important point that you must be at least "Full Retirement Age" (FRA) to file and suspend. Also, your spouse must also be at least FRA to file a restricted application limited to spousal benefits only. If the spouse files prior to FRA, the claim will be based on his/her own record and will not be limited to spousal benefits only. That locks him/her into the lower benefit level at early retirement age. Since the article recommends waiting in order to accumulate delayed retirement credits, it's important to understand that the file and suspend/restricted application strategy should NOT be attempted prior to Full Retirement Age (66 for those born 1943-54)).
Posted by PEGGY S | Friday, January 24 2014 at 12:34PM ET
As financial advisors, can we ask somebody to remain invested if you know there is a risk that the moneys available may be sufficient to pay only 75% or less of the benefits, unless there is some form of intervention. If only, there were alternative forms of benefits with the same returns, clients could park their moneys elsewhere.
Posted by KIMMY B | Wednesday, January 29 2014 at 12:49PM ET
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