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If you have heard us speak in the last couple of years, you know the big statistic with which we began any Social Security discussion: “10,000 people are turning age 65, every day, for the next 13 years.”. That is not our number, it is from Pew Research, a national statistical company. Do you know what is really scary about that statistic? None of these folks know where to go for clear, unbiased advice. So where do they go? They go to their plumber, their electrician, their friends, and to folks selling them annuities; all people without the knowledge to provide the needed advice to make sound decisions on the second biggest financial decision of their lifetime.
By default, these folks should be calling the one professional that is unbiased, knowledgeable, knows their financial situation, and has the basic knowledge of Social Security to provide some guidance. You would think that person would be their tax professional, but sadly our experience is that few tax professionals have the knowledge of Social Security necessary to provide even rudimentary answers. Here are 5 common client questions, with short answers, for those questions. All of this information is from our Social Security Course. The 8-hour class has been called “the single most personally useful class I have ever taken” and has received the highest evaluations of any class we have ever presented. We find that clients are demanding the information and that tax professionals of all ages need the answers. Our favorite attendee quote: “My boss made me come (I’m 26 years old), but the class was fantastic and personally beneficial, thank you”.
In-depth discussion and analysis of these and hundreds of other Social Security and Medicare questions are provided in this class.
Client Question 1
How many years of my life is my benefit based upon?
Bob asked this question in recent years throughout the country at 1040 seminars. The answer? We had about 20% of an average room get it correct. No, it is not 7, 10, 20 or 30. The answer is that your personal social security benefit is based upon your highest 35 years of earned income. So, for people playing the S corporation low wage game, or wiping out income every year with bonus depreciation, or whatever, they will see a tremendously reduced monthly check at retirement and they are looking for someone to blame. We hope you are using our engagement letter to protect yourself from these future lawsuits!
Client Question 2
What is the average benefit I can expect?
Social Security tells us the average benefit in America in 2022 for a single person is about $1,675 monthly. Do you know what it took to get this benefit? Thirty-five years of an average annual inflation-adjusted income of $28,000. In the classes we show you how to plan appropriately to obtain more.
Client Question 3
What is the earliest age I can draw my benefit?
Nearly everyone knows the generic answer to this, which is age 62. Do you know the very common situation when you can draw at age 60? Or how about the age 50 drawing rule? What about a divorced spouse? What about a married spouse with no personal work history? There are dozens of answers to this question-see the class for more details on workers, spouses, widows, ex-spouses and more.
Client Question 4
Shouldn’t I draw at age 62 and invest my money like my financial advisor suggests?
Let’s see, the Social Security benefit increases by 8% every year you wait to draw after full retirement age. That increase is tax-free and that increase is risk-free. In your 60’s you cannot afford to take any risk, and an investment advisor suggesting this approach will need to earn 12% just to offset the tax difference, plus another 3-4% to offset the additional risk, meaning the investment advisor needs to earn 15% annually just to match the Social Security risk-free, tax-free increase. Since 1871 the S&P 500 has earned a little less than 6% annually. In my mind, taking the chance of obtaining a 15% return for a high-risk investment at retirement age is one of the single worst financial decisions that can ever be made. If the investment advisor says something like “Well, you know Social Security is going bankrupt” or something like that, it is proof of incompetence-read the Social Security Trustee’s annual report like we have. The only thing we sell in the Social Security seminar is knowledge, so you can impart this wisdom to your clients.
Client Question 5
The biggest question of all is “When should I draw my own benefit?”
That’s actually simple Madam client-just tell me what day you will die! This sarcastic answer is an answer to illustrate that there is no “one answer fits everyone”. There are three factors involved in the decision: first, what kind of average life expectancy do we have in America and in your ancestry?; second, what kind of personal health issues do you have that will affect your life expectancy?; and third, what kind of financial situation are you in and who will be drawing on this account besides you?
What’s New on the “Elections, Checklists & Letters” USB Drive this year?
- 1040, 1099, 1120, 1120S and 1065 engagement letters for 2022
- Entirely new Excel section of working forms for:
- 2022 Interview Form
- 2022 1040 Final Review Worksheet
- Loan amortization payment and monthly amortization calculator
- Break even point calculator
- Personal budget calculator
- Ratio calculator
- RMD Calculator
- 3rd Party computer services agreement
- 2022 Fee Schedule
- Business plan preparation checklist
- Dozens of practice management checklists and letters
- 300+ additional letters, tax elections, IRS Forms, checklists and reference guides
- Complete video recording of the 2022 1040 In Depth course (No CPE)
- The USB is $129 online, but if bought at an “in-person” seminar it is only $99. (Plus tax)
Odds & Ends
- 2023 Classes: If a new tax bill is passed we will have a class (classes?) available on that, whether it is 2, 4, or 8 hours.
Bob Jennings
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