Plus, a debate you may have missed on Harold Evensky's FINRA comments

July 20, 2010 — 3:43 AM UTC by Elizabeth MacBride


Elizabeth’s note: Brooke and I have both been on vacation during the past few weeks. I was traveling in the Pacific Northwest with my family. We visited Portland and Missoula, including the fascinating Montana ghost town of Garnet, which lived and died by the price of gold. Brooke’s now in South Freeport, visiting his family. In the meantime, RIABiz has been humming along, with a couple of interesting conversations developing in quiet corners of the site.

The safest annuity ever — and the returns aren’t bad

A couple of weeks ago, picked up a column by Gene Steuerle, a former deputy Treasury secretary who is now a fellow and the Richard B. Fisher Chair at the nonpartisan Urban Institute.

Steuerle is a numbers guy that I’ve heard speak at conferences on health care reform and the budget — I like his way of looking at political and regulatory issues through a lens made of dollars.

He brought that lens to bear on the question of Social Security in An annuity even an RIA could love: no commissions, no fees, solid returns and the highest investment security on the planet, pointing out that the option to delay Social Security gives retirees (and their advisors) a powerful retirement planning tool – an annuity, in fact, though people don’t usually think of it that way.

He pointed out that Social Security’s regulations enable people to put off collecting their Social Security payments in order to receive larger yearly benefits in ensuing years (in some cases, in which retirees are still working and earning, Social Security forces them to make that choice). He also pointed out a little-known loophole in the law: if you return Social Security benefits that you’ve already received, Social Security gives you credit (the higher future payouts) as if you had never taken them in the first place.

Steuerle advocates making these regulations easier to understand and promoting them as real retirement-planning tools.

A handful of advisors commented that they’d like to know more about this option. So I called Gene from my Missoula office to ask him for a few more details.

He summed it up for me this way:

For every year that you delay getting your Social Security payments between the ages of 62 and 70, you increase the value of your annual benefit between 6 2/3% and 13% a year.

Steuerle suggests that more retirees should make the choice to live off their 401(k)s for a year or two, delaying their Social Security benefits. He suggests advisors consult Social Security’s Annual Statistical Supplement for the exact amounts and client ages in question. It gets complicated, as you might expect from the federal government. Here’s the link: “”:

He also suggested that an advisor could work with a company’s retirement plan to offer employees formal advice on the delaying tactic.


Last week, we ran two different viewpoints about FINRA, one from Ron Rhoades, our One-Man Think Tank columnist, arguing that the self-regulatory organization should be dismantled, and one from Harold Evensky, an elder statesman of the RIA business, who advocates for a middle-of-the-road approach to the possibility of being regulated by FINRA.

What you may have missed were a couple of thoughtful comments that pushed the debate forward another notch, including one from Ron. See Why Harold Evensky believes that a FINRA-as-devil attitude is counterproductive.

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