“Many high-net-worth investors ignore one of the most powerful financial-planning tools available to them: Social Security,” writes Ash Ashluwalia in this past Monday’s Wall Street Journal.
He caught my attention. I’ve been assuming the system’s demise–and seeking to make alternative plans–since the mid-1980s, when I first learned from Dr. Gary North about how the program is really a Ponzi scheme and is going to fail, one way or another.
Dr. North pointed to comments by then-Sen. William Proxmire during a 1976 hearing. I have bolded the most relevant part:
In my state, I figure there are 600,000 voters that receive Social Security. Can you imagine a senator or congressman under those circumstances saying, ‘We are going to repudiate that high a proportion of the electorate?’ No.
Furthermore, we have the capacity under the Constitution, the Congress does, to coin money, as well as to regulate the value thereof. And therefore we have the power to provide that money. And we are going to do it. It may not be worth anything when the recipient gets it, but he is going to get his benefits paid.
So I have always assumed I would not receive Social Security benefits even though I might. If I got them, then it would be mere icing on the cake rather than my meat-and-potatoes, bread and butter.
So now comes Mr. Ashluwalia, president of National Social Security Partners, LLC in New Brunswick, NJ.
What can wealthy people do to maximize the value of Social Security?
I was shocked at what Ashluwalia said:
While [people who prepare to survive without Social Security] probably are right that their other assets will dwarf what they receive from Social Security, . . . Social Security is still a guaranteed income stream that could pay out in excess of $1 million over their lifetimes, making it an integral retirement-income and estate-planning tool.
Okay. Yes! He got my attention.
So what are some strategies to follow?
- “Individuals who don’t have to depend on Social Security payments to fund their retirements can leverage that income stream to achieve other financial goals. For example, instead of deferring the benefit, high-net-worth investors could claim Social Security as soon as age 66. . . . By starting the Social Security income stream earlier, the high-net-worth investor can begin putting those payments to work—directing the money into an irrevocable life-insurance trust to fund life insurance that can be used to help cover estate taxes, making charitable gifts or leaving a legacy for heirs.”
- “Another smart use of Social Security benefits is as protection against the potential cost of long-term care.” Ashluwalia noted that “It isn’t unusual for someone with a chronic or debilitating illness to pay upward of $10,000 a month for medical care—a significant expense regardless of net worth. And because those services aren’t covered by traditional insurance policies, using at least some of a Social Security benefit to fund long-term-care insurance can be a wise decision.”
Haven’t yet contacted Ahluwalia’s firm, but their sales pitch certainly intrigues me:
- There are over 2,700 rules governing social security and 500 possible elections
- The Social Security Administration office is prohibited from providing strategy and planning advice
- CPAs and Lawyers do not focus in this area
And? Therefore? NSSP Social Security Professionals propose to . . .
- Meet with you to understand your unique situation
- Generate a comprehensive, customized Social Security Plan with alternative options
- Tell you when and how to claim benefits
- Show you how to make best decisions
- Factor in tax and retirement consequences
- Coordinate with your CPA and/or attorney
. . . all at no cost to you.
“Contact Us Today for a Free Consultation!” they conclude.
I plan to do that.
And I’ll tell you the results.