Advisors guide clients on Social Security, Medicare costs

Financial advisors are increasingly advising clients on Social Security claiming strategies and Medicare cost planning after trustees projected the Social Security retirement trust fund would deplete in 2032 and the Medicare Part A trust fund in 2033. After depletion, both programs would continue to pay most benefits at reduced levels unless Congress acts.

At a June 11 session at the American Institute of CPAs conference, speakers urged advisors to include Social Security and Medicare decisions in broader retirement plans. The 2024 trustees reports prompted detailed discussion of claiming timing, spousal and survivor benefits, and ways to manage future health-care costs.

Matthew Allen, co-founder and CEO of Social Security Advisors, told attendees that Social Security was designed as a safety net rather than a primary source of retirement income and warned against relying on it alone. He noted he sees higher political pressure on the program than at most points since 1935 but added that historically Congress has acted before reserves were exhausted, as in 1983.

Advisors were advised not to give one-size-fits-all guidance on when to claim benefits. Allen noted the optimal choice depends on household structure, including spousal, survivor and divorce benefits. He described optional moves that can create flexibility: people who reach full retirement age can file retroactively for up to six months to receive a lump-sum payment, and in some cases they can suspend benefits again.

Speakers recommended careful recordkeeping when dealing with the Social Security Administration, urging clients to keep written confirmations or recordings of conversations to support appeals when incorrect guidance or errors occur.

On Medicare, presenters described ways advisors can help clients lower costs. The income-related monthly adjustment amount, or IRMAA, increases Part B and Part D premiums for higher-income enrollees based on tax returns from two years earlier. Advisors were instructed to look for clients who have had large income drops or qualifying life events, which can provide grounds to appeal and remove or reduce IRMAA surcharges.

Allen encouraged advisors to compare clients’ current income to the figures used to set premiums and to check for job loss, retirement or other events that change reported income.

Kerri Buckley, owner and senior agent at The Buckley Insurance Group, told the session that Medicare coverage choices must match an individual’s health needs and finances. “Medicare is not one size fits all,” Buckley noted.

Speakers observed that trustees’ depletion projections establish timelines but the timing and form of any legislative response remain uncertain. They advised advisors to model multiple benefit and cost scenarios, document decisions and maintain flexibility in retirement income plans.