Social Security Planning Advisors

Darcy Bergen

January 10, 2023


A growing number of people are using social security planning advisors to help them navigate the complex landscape of their retirement benefits. By coordinating their retirement income with other sources such as pensions, personal assets, cash flow, and earned income, they can draw on these sources in the most tax-efficient way.

Delaying benefits 

Delaying benefits can give you a higher monthly Social Security payment for the rest of your life. The amount you get depends on your financial situation and the age you claim. But when you delay, you will not only receive a larger monthly payment, but you will also earn delayed retirement credits that will increase your benefit amount by 8% yearly.

The Social Security calculator is an excellent way to calculate how much you will be entitled to. It allows you to select the years you were born and estimates how much you will be able to collect at various ages. Alternatively, you can use the Online Calculator for more accurate calculations.

If you have a better financial situation, you can earn a delayed benefit of up to 8%. In addition, you can suspend your Social Security benefits when you reach the FRA.

You should consider delaying your benefits if you have a spousal benefit or are expected to live a long life. Delaying is also the right choice if you need a large amount of cash.

Coordinating benefits 

Suppose you are a financial advisor looking to provide clients with a social security planning strategy. In that case, you should know that many different types of designs are available. Each process will be tailored to the specific needs of a client. However, several common elements will be present throughout the plan.

The Employee Retirement Income Security Act of 1974, also known as ERISA, is a federal law that oversees private-sector pensions. Since its inception, the legislation has changed to adapt to evolving retirement plans offered by private employers.

While ERISA was amended to respond to the growth of private employer pensions, it is not the only law that affects retirement. Throughout the years, societal trends and economic changes have impacted individuals’ ability to save for retirement.

Among clients’ most common concerns are the stock market, inflation, and health care costs. Moreover, clients often need more information to make sound financial decisions.

Draw on retirement assets 

With the help of tax professionals, you can decide the best strategy for drawing money out of your retirement accounts. The proper techniques can increase after-tax income and secure your retirement. Using the wrong method can mean losing money and putting your portfolio at risk.

There are three tax treatment types for retirement savings: tax-deferred, taxable, and Roth accounts. Each class offers a certain amount of tax efficiency. Choosing the right strategy depends on age, risk tolerance, and immediate income needs.

Tax professionals generally advise you to withdraw from taxable accounts first. This strategy will allow you to minimize taxes on Social Security benefits, Medicare premiums, and IRA taxes. However, a prominent IRA combined with high RMDs can result in a heavy tax bill. The tax bill can grow even more in the later years.

On the other hand, using a proportional withdrawal strategy will help you pay fewer taxes in the early years and spread the tax burden more evenly over your lifetime. Proportional withdrawals are especially useful if you have multiple retirement accounts.

Reducing economic disparities 

If you’ve been following the news in recent months, you may be aware of the continuing racial gaps in financial well-being among older adults in the United States. These disparities are shaped by life course experiences, risk and coping behaviors, and the social contexts of aging. In addition to presenting a challenge to improving aging outcomes, they contribute to persistent racial inequality in the United States.

Older Black and Hispanic adults are more likely to live in economically disadvantaged neighborhoods than their white counterparts. This results from a lack of trustworthiness and feelings of not belonging. The study also shows that older Black and Hispanic adults are less confident about their ability to make their next mortgage payment.

People who struggle financially may avoid necessary medical care or go without nutritious food. These factors can contribute to a variety of adverse health consequences. A decline in physical activity can also contribute to disabling conditions.