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Bipartisan Budget Act of 2015 - How does this effect your clients preparing to draw Social Security?
What are the changes?
The biggest changes were the elimination of the ‘File and Suspend’ and ‘File and Restrict’ strategies. These changes will go into effect May 1, 2016. However, if your clients are at full retirement age under the current law, they can still file and suspend their Social Security benefits.
‘File and Suspend’
This allows a lower-earning spouse to receive a higher benefit based on their spouse’s work history. If your client chooses to suspend their benefits (which increase 8%/year until age 70), they will still be able to take advantage of delayed retirement credits, because they are not yet receiving their Social Security benefits.
‘File and Restrict’
This strategy allows clients at the full retirement age (normally age 66) to restrict their application to spousal benefits. Typically one worker claims benefits, and the spouse only claims spousal benefits to increase their total payment from Social Security. The spouse can then claim their own higher benefit at a later date, age 70 for maximum benefits . By doing this, they are not receiving their own benefits, allowing them to continue to grow.
Other Important Factors
If your clients are 66, or turning age 66 before May 1, 2016, they will still be able to file and suspend. Alternatively, if your clients already have one of these strategies in place, they will not be impacted by this new law. Your clients who are age 62 or older by December 21st, 2015 will only be able to claim spousal benefits when they turn age 66, and then switch to their own benefits at age 70. This provides greater benefits than each claiming benefits only from their own account.
By Carolyn Portanova
When it comes to financial planning, we all could use a little help. The importance of saving (not only for a rainy day) but for higher education costs, retirement and even possible illness and long-term care are crucial.
Not all of us are star pupils when it comes to the financially fit class, but with the right tools and some planning, you can assist your clients, and help them save for the future.
If your clients are asking you about long-term care, disability insurance and life insurance, you can be the one to assist them if you’re already writing Medicare Supplement policies for them. If you’ve already established a rapport and a good relationship with your clients, it’s only logical to offer to help them with other needs they may have.
If your clients are saddled with credit card debt, this convenient tool will help them figure out how long it will take to pay off that balance, and find financial peace. The stress of revolving debt is something no one wants, and this tool will put them on the right track to eliminating that debt.
If your clients are still in the workforce and have yet to retire, this calculator asks for some basic math and will give them a plan in the making to realize their retirement dreams. There are even tools to help them figure out how long their money will last once they’re no longer working. This one allows you to enter the proposed withdrawal amounts and will calculate how long your client has before their money runs out.
Investing in life insurance is not just smart, it can be very cost effective. Clients with young children and without the resources to provide for their children, should something happen, are best-served by investing in life insurance. Clients often ask “How do I know if I have enough life insurance?” This tool will calculate your client’s needs and his/her spouse’s needs as well.
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“Money is what makes the world go ‘round”, as they say. And it’d be fantastic if we didn’t have to have it, use it, or worry about it. As daunting as it may seem to try and create a fiscal plan that fits your clients’ needs, it is indeed do-able. And with the right tools, you can make it happen for them.
Help your clients get fiscally fit, and help them prepare for their retirement and long-term needs.
By Carolyn Portanova
1480 Chapel Ridge Road
Apex, NC 27502