July 22, 2018
Every week, Simply Money’s Nathan Bachrach, Ed Finke and Amy Wagner are answering your financial questions in The Cincinnati Enquirer. If you, a friend, or someone in your family has a money issue or problem, please feel free to send those questions to firstname.lastname@example.org
Terry in Harrison: I’m 63 and started claiming Social Security last year. But I think that might have been a mistake to start claiming so early. Is there any way I can get a “re-do?” Please help!
Answer: Sixty-four percent of women and 56 percent of men claim their Social Security benefits before their Full Retirement Age (FRA), according to the Center for Retirement Research at Boston College. This means that the majority of retirees are receiving monthly Social Security checks that are less than 100 percent of their full benefit. Moreover, a study from Nationwide Retirement Institute finds that nearly one in four retirees regret the age at which they started claiming Social Security. It sounds like you’re in the same boat.
First, the good news: yes, if you start claiming your Social Security benefit but then change your mind, the Social Security Administration does allow you one opportunity to withdraw your claim then re-apply at a later date. Now, the bad news: there isn’t an ‘indefinite’ deadline on the ability to make this move – you can only withdraw your application for benefits within 12 months of your initial claim. So, in your case, whether or not you get this do-over depends on when you started claiming last year.
If you’re eligible to withdraw your claim and decide you want to follow through, you must fill out Social Security Form SSA-521 and state your reason for wanting to do so.
Additionally, you need to realize that asking for this do-over means you must repay all the Social Security benefits you have already received (this includes any benefit a spouse or child might have also received based on your application). Once the Social Security Administration receives your form SSA-521, it will notify you of the amount you owe.
Here’s The Simply Money Point: If you claim your Social Security benefit but then realize you should have waited longer, you do have a window of time to reverse your decision. However, ideally, anyone getting close to retirement can avoid this type of mistake by working with a trusted financial planner. He or she can run different scenarios within your financial plan to figure out the best claiming strategy for your situation.
Joyce and James in Alexandria: What’s the best way to vet a financial advisor?
Answer: This is a really important question to ask, especially since pretty much anyone can call themselves a “financial planner” or “financial advisor.” Plus, a U.S. court just struck down the Labor Department’s “fiduciary rule” (a rule that would have required all financial advisors to put your best interests above their own when dealing with your retirement money), so it’s more imperative than ever for you to take it upon yourself to research any potential advisor with whom you’re thinking about entrusting your life savings.
The easiest place to start is BrokerCheck.org. FINRA, the Financial Industry Regulatory Authority, runs this free website, allowing you to look up an individual advisor or an entire firm. You’ll be able to see whether or not that person or firm is registered to sell securities (things like stocks, bonds, and mutual funds) and/or offer investment advice. You’ll also have access to an individual’s employment history, licenses, regulatory actions against the individual or firm, as well as arbitrations and complaints.
Also ask for the advisor’s or firm’s “Form ADV” (or you can search online at AdviserInfo.sec.gov). This is a document that an advisor must use to register with the Securities and Exchange Commission (SEC). There are two parts: Part 1 is a fill-in-the-blank format that reveals basic information about the advisor’s business, including employees, affiliations and disciplinary events. Part 2 gives more detailed information, including the types of advisory services offered, fees, and conflicts of interest.
We also recommend that you look for someone who is CERTIFIED FINANCIAL PLANNER™ or Chartered Financial Consultant®. Both of these designations require extensive coursework and continuing education, as well as adherence to a strict ethics code.
The Simply Money Point is that finding a financial advisor can take some time and effort on your part. But in the end, all the legwork should hopefully lead you to a person (or firm) who is worthy of your trust.
Responses are for informational purposes only and individuals should consider whether any general recommendation in these responses are suitable for their particular circumstances based on investment objectives, financial situation and needs. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing, including a tax advisor and/or attorney. Nathan Bachrach and Ed Finke and their team offer financial planning services through Simply Money Advisors, a SEC Registered Investment Advisor. Call (513) 469-7500 or email email@example.com.