Advisors of high-net-worth clients shouldn’t discount Social Security as a planning tool, even if those clients’ other assets are far greater than the benefits they expect to receive from the government.
So says Ash Ahluwalia, president of National Social Security Partners LLC, in a column in The Wall Street Journal.
“For wealthy couples, Social Security is still a guaranteed income stream that could pay out more than $1 million over their lifetimes, making it an integral retirement-income and estate-planning tool,” Ahluwalia says. “Even if a client won’t depend on that income stream to fund his or her retirement, the role of an advisor should be to find ways to leverage that money to achieve other financial goals strategically.”
One example is encouraging wealthy clients to claim Social Security as early as age 66. Sure, that contradicts conventional wisdom for more traditional investors and will shrink the size of the benefit compared with waiting until age 70. But by starting Social Security payments earlier, the wealthy can put them to work in an irrevocable life-insurance trust that can be used for estate taxes or charitable gifts, the advisor says.
It can also be wise to use Social Security benefits to pay for long-term care insurance, Ahluwalia says, noting that medical care for a chronic or debilitating illness can have a steep price tag – even for the wealthy – and isn’t covered by traditional insurance.
If you’d like to find out if long-term care insurance is right for you and your family, contact our experienced long-term care insurance agent Raymond Lavine today at (253) 275-6091.