Social Security holds a unique place in the sensitivities of most Americans and it is a topic that most people would never consider discussing it with a financial advisor.
Being able to maximize your benefits is potentially more complicated than you might think. Recent research completed by Spectrem Group highlights the unique place that Social Security holds emotionally for investors, regardless of their level of wealth.
First, in countless focus groups and individual interviews with investors of various levels of wealth, it is clear that Social Security is an expectation. "I paid into it, so I should get it back" is the clear belief of almost everyone interviewed. Two thirds of the individuals interviewed in the quantitative research felt that there should be no cut-off for Social Security regardless of an individual's level of wealth. Of the 34 percent that supported a cut-off based upon income in retirement, 44 percent felt it should be $100,000 or more.
In the research, more than a third of investors said they planned on taking their Social Security benefits not at retirement age, but later, so they could maximize their benefits. But, for most, they had not discussed the issue with a financial advisor of any type.
I had the benefit of sitting through a presentation by a CFP in recent weeks who highlighted the many issues individuals should consider when contemplating when to begin taking their social security benefits. Who knew there were so many issues to think about? Most individuals merely go onto the Social Security website (52 percent) to determine how and when to make their decision. Of the individuals surveyed that were already on Social Security, 97 percent felt they were well informed although only a handful talked to a professional.
After seeing this presentation, I felt guilty about how I had assisted my parents when they began taking social security. I helped them fill out the paperwork, however, now that I realize they could have benefitted more by taking benefits differently, I wish I had been more adequately informed.
Twenty percent of investors do wish their financial advisors had discussed Social Security with them. The same is true of Medicare. For many, these issues are just as important as estate planning and an investment plan. Spectrem's research shows that as investors become wealthier, they are even more likely to want to discuss these issues with their advisor.
I encourage you to bring these issues up with your financial advisor. As part of your holistic retirement planning you need to make sure you understand how to benefit from both Social Security and Medicare. You need to understand tax implications and other issues regarding how it fits into your overall financial picture. Do you need supplemental insurance? And how does Obamacare change all of this?
Despite the relative ease of application, how Social Security does or will fit into your financial picture is slightly more complicated than you may think. Additionally, changes in health care laws and Medicare may also have an impact. Have a financial advisor or professional discuss these issues with you to ensure the best outcome.
Catherine S. McBreen is President of Millionaire Corner. McBreen plans and develops content for Millionaire Corner. Catherine balances editorial content to meet the informational needs of both new and seasoned investors. She designs special monthly surveys on topical issues affecting the economic environment.
McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law. She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.
Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences. She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth. Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.
McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)
Catherine is the mother of four and is involved in many school and community events.