Social Security is a “honey hole” for financial planners. Knowing the claiming rules can be a wonderful way to provide tangible value over and above portfolio management. As part of my information gathering duties, I usually ask clients to provide copies of their social security earnings histories.
A 66 year-old client recently provided me with a copy of her social security statement. It showed that she should expect to receive a paltry $263 per month when she filed to claim retirement benefits later in the year. The low dollar figure was attributed to her limited work history. However, as part of the information gathering process, I learned that she had been married and divorced many years ago and that the marriage had lasted more than 10 years. I also learned that her ex-husband had died several years earlier. She had no idea that she is entitled to receive 100% of his benefits, which are more than $30,000 per year!
A different client shared that he had gone through an acrimonious divorce and that his ex-wife had recently passed away at age 66. The client, who is 67 had not yet claimed social security benefits because he still runs his landscaping business and did not wish to claim while his income was still high. He was completely unaware that, because he was born before 1954, he was eligible to file a restricted application to claim her benefits while deferring his own benefits to age 70 to earn delayed retirement credits. The additional $17,000 he will receive from his ex-wife’s social security was an unexpected windfall and helped to assuage some of the hard feelings he had over the divorce.
Now wouldn’t you like to hire me to find some honey for you to give to your clients too?
Contact Info: Laurey@fphawaii.com
The information contained herein is general in nature and should not be construed as providing specific tax or legal advice. All readers should consult with their tax and/or legal advisors for such guidance in advance of making investment or financial planning decisions with tax or legal implications.