Savvy advisor John Hollosy shared some valuable links with me that he received from a course he attended. I'd like to pass them on to you:

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1 Page 1 of 6 21 West 38th St. - 14th Floor, New York, NY phone: (888) ext.1 Thursday, February 2, IN THIS ISSUE Useful Links for Educating Clients Annual statement update Client seminar typos fixed Kudos of the week Data Solvency provisions Article in Journal of Financial Planning Articles on retirement planning In the news CRR Paper Opinion Useful Links for Educating Clients Dear Savvy Social Security Advisor, If you're not careful, you could spend all your time answering questions about Social Security. Once clients approach Social Security age and start learning about the program, they come up with all kinds of personal questions about how the rules apply to them. (See the Q&A section at for examples from our advisors nearly 600 of them!) Some client education is essential, of course. In fact, that's what the Savvy Social Security Planning for Boomers program is based on. But it's important to distinguish between Social Security planning as it fits into a client's overall retirement plan and Social Security rules as they pertain to eligibility, applications, documentation, and so on. As much as we lament the misinformation that is sometimes given out by SSA representatives, very often the best answer to certain questions can be obtained by calling or visiting Your job is to help clients understand their claiming options, especially as they relate to pensions, investments, and other sources of income to help them set goals and manage their overall financial affairs. SSA's job is to answer specific questions about who's entitled to what and how to implement the strategy you have laid out for them. Savvy advisor John Hollosy shared some valuable links with me that he received from a course he attended. I'd like to pass them on to you: Retirement webinar. ( This hour-long webinar recorded in 2010 by the SSA Boston region's communications director is a good overview of Social Security basics. I recommend that you share it with people after they have attended your Savvy Social Security presentation. The reason is that you want to reinforce your dominant position as the person who can help them integrate Social Security into their overall financial affairs before they get bogged down in the nitty-gritty rules. They can watch this webinar at home, at their convenience, and supplement the knowledge you gave them at your seminar. Benefit Eligibility Screening Tool. ( This site asks some basic personal questions and then tells you which benefits you may be entitled to. For example, it asks about prior marriages and whether the marriage ended by death or divorce. If divorce, it asks for the dates of the marriage and the divorce to ascertain whether or not the marriage lasted 10 years. If you wanted to make sure you didn't overlook something important, you could go through this tool with your client (rather than sending them off to complete it themselves; it will help you to have this information about your client and to know which benefits SSA recommends). One caveat: when I filled it out for myself it said I was entitled to a divorced-spouse benefit as long as I was not receiving a higher retirement benefit based on my own record. Technically this is true, but it implies

2 Page 2 of 6 that if my own benefit is higher I have to take it. It did not say that I could restrict my application to my divorced spouse benefit and let my own benefit earn delayed credits. This is why you will want to oversee the use of this tool and educate clients on the nuances that SSA does not provide. Retirement Estimator. ( You are probably already aware of this tool, especially now that annual statements have been suspended (see below for an update on that). For this tool, you can send clients off to their own computers in order not to have to agree to the statement, "I am the individual whose personal information I am requesting." That's OK. Just ask them to run it on themselves and either bring you a printout or provide you with the numbers. The FRA benefit amount (PIA) is what you need to run the Savvy Social Security calculators. Benefits Planner. ( This page contains lots of links to other useful pages. There is also a demo of an online retirement planning CD, which walks the user through the website and points out certain important pages. One caveat is that the first screen talks about how useful and important the annual statement is in planning your retirement. You can't help but wonder, if it's that important, why SSA discontinued them. Oh well. Otherwise the video will answer a lot of your clients' basic questions. Publications ( Some of SSA's publications are more thorough than the web pages discussing the same topic. On this page you will see a list of all of SSA's publications, which you can narrow down by topic. You can click on the various sections to read the information online, or click on the printable PDF to see it all at once. There's an MP3 audio version of many of the publications. Or you can order a Braille version or audio CD by mail. Benefit Application. ( When the time comes for clients to apply for benefits, send them here. SSA encourages people to apply online, and you should too, as it involves less waiting time and is just more efficient. Certain things cannot be done online, such as file-and-suspend and application for survivor benefits, but many things can, such as filing a restricted application for spousal benefits. In any case, this page will answer clients' questions about how to apply. Local Office Locator. ( For clients who need to visit a local office, this tool will locate one by zip code and includes hours and a map. POMS. ( As a last resort you can send clients to the Program Operations Manual System, which is the reference SSA workers use when serving clients. It's not the easiest thing to get through, but unfortunately there have been times when clients have had to go back to their local offices with POMS citations in hand after being told they couldn't do something. The latest was Savvy advisor Doug V., whose 68-year-old client was told she couldn't suspend her benefit and earn DRCs. We found RS ( which states very clearly that DRCs may be earned if the worker voluntarily elects to have benefits suspended. We would presume that all the SSA links mentioned here are for educating clients, not SSA workers, but you never know what challenges clients will face when going up against new, untrained workers. Annual statement update COMING SOON: Social Security Client Reprints -When to Apply for Social Security Benefits -Creative Social Security Claiming Strategies: Understanding the Nuances -Social Security as Longevity Insurance -Life Expectancy and Social Security -Will Working Longer Help-or Hinder-Your Social Security Benefit? -How Cost-of-Living Adjustments Affect Social Security Benefits The Client Seminar & Marketing area of the Savvy Social Security site will soon have information on how to download free client reprints. In February of this year (as in, this month), SSA will resume mailing statements to people over 60. Sometime after that it will introduce an online statement service allowing everyone to access their annual Social Security statement online. And by the end of the year it will do a one-time mailing to 25-year-old workers introducing them to Social Security. Apparently it took a rather terse and pointed letter

3 Page 3 of 6 ( from the U.S. Senate Special Committee on Aging to SSA Commissioner Michael Astrue to get some action. Astrue responded ( to the letter by stating the agency's intentions with regard to the statements and other budget cuts. Client seminar typos fixed One sharp-eyed advisor noticed that Mike's age-70 benefit should be $2,640, not $3,293. Another noticed that on slides 27 and 28 the line at the bottom should read "Assumes PIA at 66 = $2,466" (not 62). The complete Powerpoint file, named "Savvy Social Security Client Presentation_0212," with the corrected slides, has been posted at on the Client Seminar page. My deep apologies for any inconvenience this may have caused. Thanks to those who wrote in. Kudos of the week Elaine, recently you confirmed information that I had given to a client regarding "file and suspend, and spousal benefits". The client visited the local Social Security office for the second time, today, and got everything done correctly. It took them 2 hours three weeks ago and 1½ hours today to get things completed. The local office said this strategy is totally new for them and it will take some time for them to understand it. A supervisor was called in to help the client. This relatively new client is now on board and will be doing retirement planning with me. Thank you for your prompt assistance and for the great job your group has done with the Savvy Social Security program. Howard L. Thank you, Howard, for writing. We love feedback, even if it's to tell us about typos. But we really love hearing how Savvy Social Security Planning has helped your business. Data Social Security Annual Statistical Supplement, 2011 ( The annual statistical supplement provides a good overview of the Social Security program and includes preliminary numbers: How many people are receiving Social Security, history of the trust funds, etc. (Social Security Administration) Solvency provisions SSA actuaries have been busy crunching numbers, estimating the effect upon the system of various reform proposals, updated for the 2011 Trustees report. See the categories under Individual Changes Modifying Social Security ( to understand how the various reform proposals will affect trust fund solvency. Article in Journal of Financial Planning "When to Start Collecting Social Security Benefits: A Break-Even Analysis" ( by a former deputy assistant regional commissioner with the Social Security Administration gives a slightly different take on the breakeven analysis. The article is worth reading. Here is the executive summary: Many factors affect the decision of when to file for Social Security benefits, including health, personal financial considerations, and employment status. If clients can be flexible in their decision,

4 Page 4 of 6 planners should help them assess the financial advantage of the options available. One method of assessing the financial advantage is to calculate the break-even age. Break-even is the age when total Social Security income from two retirement options is the same. Using break-even calculations, we compare three basic options for when to start collecting Social Security benefits: (1) age 62, (2) full retirement age, which in our examples is assumed to be age 66, and (3) age 70. The calculations are highly dependent upon the numeric value of the variables used in the computations. These variables include the assumed rate of inflation, the return on investment, and marginal tax rates. Based on statistical averages, if the worker is the only person entitled on the account and the earnings test is not involved, the rate of return must generally exceed the rate of inflation by 5 percent or more to justify taking benefits at age 62 rather than at full retirement age. At higher inflation rates and/or higher marginal tax rates, the rate of return may need to be even higher, perhaps in excess of 7 percent or 8 percent above inflation to justify taking benefits at age 62. The rate of return needs to exceed the rate of inflation by a lesser amount to justify taking benefits at full retirement age rather than waiting until age 70. It may make sense for a man to start collecting benefits at full retirement age rather than waiting until age 70 if the rate of return exceeds the inflation rate by as little as 3 percent. For a woman whose life expectancy is longer, the rate of return would need to exceed inflation by 5 percent or 6 percent. At higher inflation rates and/or higher marginal tax rates, the rate of return may need to be higher. The break-even calculation is also affected by the number of other beneficiaries entitled on the worker's record and/or whether the worker is entitled on multiple records. Every client's situation is unique. The planner may use the information in this paper to assist clients in conducting break-even calculations tailored to individual circumstances. Articles on retirement planning "Six Ways to Maximize Retirement 'Sweet Spot' Years" ( Excerpt: During your working years, it is usual to focus more on gaining an immediate deduction for retirement account contributions than on how future withdrawals will be taxed. Financial advisers say that as a result, affluent people often retire with a portfolio of huge taxdeferred IRAs and 401(k) accounts and belatedly realize they must tap the accounts for substantially more than living expenses to cover annual taxes on their withdrawals. But there is a "sweet spot" between the ages of 59½ and 70½ when withdrawals from tax-deferred accounts are penalty-free, but not yet required. Advisers say those 11 years are the ideal time to protect yourself by moving some money into taxable and tax-free accounts instead of continuing to plow it into tax-deferred accounts. (Reuters) "Retirement in America is 'Endangered'" ( Excerpt: "I think the state of retirement in America is endangered as the 'Great Recession' has taken a toll on the financial status of many and as retirement savings were not adequate for many prior to the 'Great Recession,'" said Matthew Greenwald, the president of Matthew Greenwald & Associates, a leading retirement research firm. "There are several things that need to be fixed, including addressing Social Security and helping people feel confident in the viability of the system, more effective defined-contribution plans that do a better job of encouraging participants to defer more of their income and more effective advice to retirees that helps them use their financial assets most effectively when they retire." (MarketWatch) "Designing a Monthly Paycheck for Retirement" ( Excerpt: "Where's my paycheck?" That is a common question for new retirees and near-retirees

5 Page 5 of 6 when they start mapping out the retirement journey ahead. In their working days, many had regular paychecks coming in to cover ongoing expenses. But what will take its place in retirement? This Decision Brief points out the factors to consider. (Society of Actuaries) In the news "When a Divorce Pays Off" ("When a Divorce Pays Off") "These days, couples getting divorced likely will hear about the ins and outs of how their Social Security will be affected, often from an attorney or accountant. But people who divorced years or even decades ago usually have no clue." (WSJ online) "Seniors Decide Retirement Doesn't Suit Them, Keep Working" ( "People are being given rotten advice to slow down, take it easy, stop worrying and retire," Friedman says. "The Longevity Project discovered that those who worked the hardest lived the longest the responsible and successful achievers thrived in every way, especially if they were dedicated to things and people beyond themselves." (USA Today) "Look at Jobs Before Leaping on Older Retirement" ( 18/look-at-jobs-before-leap-on-older-retirement-commentary-by-peter-orszag.html) "Has the ailing economy forced older workers to delay their retirement? The conventional wisdom certainly suggests so. A recent front-page story in the Washington Post was headlined: "Ranks of older workers swelling: Data show employment surged among those 55 and over since recession." The reality, though, is more complicated. The financial crisis caused more workers to want to delay retirement, but the labor market limited their ability to do it. The net effect of these opposing supply and demand forces has, if anything, been to reduce the employment rate among older workers." (Bloomberg) CRR Paper "Do Income Taxes Affect the Progressivity of Social Security?" ("Do Income Taxes Affect the Progressivity of Social Security?" Conclusion: This brief found that, despite the tendency of higher earners to live longer and work fewer years, the OASI component of the Social Security program is clearly progressive. Households in the lowest earnings decile relative to the average household in the cohort receive nearly 80 percent more in benefits than they pay in taxes while earners in the highest decile receive less than they pay in. Adding the influence of income taxes has only a small net impact on the program's progressivity, as the large effects of specific tax provisions mainly offset one another. Net tax effects do, however, appear to add to progressivity over time due to the increasing percentage of households subject to income taxes on their Social Security benefits. With no changes in tax laws, this trend toward greater proggressivity is likely to continue. Opinion "Reshaping Social Security and our society: Payroll tax holiday could transform the program into welfare" ( "It is way too early to tell the ultimate endgame. But President Franklin D. Roosevelt's comment in 1941 was prescient. 'We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my Social Security program.' Without them, maybe they can." (Washington Times)

6 Page 6 of 6 As always, post your questions to or write to me at socialsecurity@horsesmouth.com. Elaine Floyd, CFP Director, Retirement and Life Planning Horsesmouth, LLC 2012 Horsesmouth, LLC. All rights reserved.