If you knew that meeting with a financial planner regularly might help you find opportunities and avoid costly mistakes, would you do it? While that might sound like another financial planner’s pitch to get you in for your annual meeting, it’s not. And I have the story to prove it.
Uncovering additional income
I recently sat down with a same sex couple for a routine financial Annual Review. The federal government has found same sex marriage to be legal for filing a joint tax return and for drawing Social Security marriage benefits. These clients are in their late 50s and are both retired. One was a high-income earner throughout her career. The other fell 10 quarters short of the 40 quarters you are required to pay into FICA taxes in order to receive Social Security benefits.
Going back to work for 10 more quarters just didn’t seem worth it to my client since it only meant $2,000-$3,000 a year in benefits. But what she wasn’t thinking about was that, if she did work 10 more quarters, she would be legally entitled to spousal benefits. Her partner had maxed out the Social Security benefit after paying into the system for many decades. We did some quick math:
So, does working for 10 more quarters to become eligible for half of your spouse’s Social Security amount seem worth it? The answer was easy for them. And they realized, without sitting down for an Annual Review, they could have missed the boat entirely.
Your Own Annual Review
This is a very unique circumstance and your situation may not be similar. But there is no denying that Social Security is complex and it makes sense to pay attention to the rules for qualification and how the strategies apply in different circumstances. Could you do it alone? Think of it like going to the dentist. You might not know you have a cavity … that could turn into an abscess that threatens your life … unless you get a regular cleaning. So stay on top of your financial health, just like you do your dental health. Visit your financial planner regularly, discuss issues, and communicate. You might just uncover unforeseen benefits and it will hopefully be less painful than a trip to the dentist!
Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc. Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions. In 2012 and 2013, Matt was named to the Five Star Wealth Managers list in Detroit Hour magazine.
Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.
The material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. The example provided is hypothetical in nature and is to be used for illustrative purposes only. C14-038027