Andy Landis, owner, Thinking Retirement

Andy Landis, owner of the Seattle-based consultancy practice Thinking Retirement and author of "Social Security: The Inside Story," says many insurance professionals and financial planners have a "gap in their knowledge and are not well-trained regarding Social Security."

Landis added that consultants should educate themselves and their clients about the advantages and disadvantages of Social Security.

"Clients come to professionals with questions and professionals often don't know where to get the answer," Landis explained. "Consultants need to know what kind of life insurance or disability a client needs in addition to Social Security."

Landis will present Social Security's "Top 10 Client Mysteries" Monday, Jan. 8, 2001 at the American Institute of CPAs Personal Financial Planning Technical Conference in San Diego. The presentation's purpose, said Landis, is to demystify the Social Security program.

"Social Security, as an investment, is not a good deal," Landis said, addressing one of the most common questions asked by clients. "But as a form of insurance, it is a good deal. Twenty to 30 percent of us will be disabled or deceased before we would have been able to collect our Social Security checks." Consultants need to be prepared to assist their clients in protecting his or her family in case of such an event, he noted.

For instance, "working with the client each year, (a consultant) can figure out how much Social Security would pay" in the event of death. Then the client and consultant can figure out what extra coverage to purchase, such as life insurance.

Another mystery of Social Security is how the monthly payments are computed; Eligibility, lifetime average earning, and age of Social Security activation are all considered in the computation.

To be eligible, the client must have "at least a 10 year part-time work history," explained Landis. Rather than just taking into account the last 10 years of salary compensation, "Social Security averages the entire work history of the recipient, a fact of which many clients -- and even consultants -- are not aware," he noted.

"Accountants work with people who on the average have decent salaries, are in the higher salary scale, and who often want to retire early. This will not affect them negatively if they have high salaries," he added.

As early as four years ago, the Social Security Administration began to distribute Social Security statements to beneficiaries three months prior to their birthdate. Landis advises consultants to use this opportunity to connect with clients. "Send a postcard to your client four months prior to their birthdate letting them know you'd like to discuss their options with them," he said.

According to Landis, facilitating dialogue with a client is as easy as "playing with the (Social Security) estimate program," what Landis labels "what ifs." Give the client a handful of Social Security estimates to fill out, requesting information on what the client will receive, for example, if they retire early at age 55 rather than 65. "As a financial planner, this is an excellent opportunity to stay in touch with your clients," he said.

-- By Niquette M. Kelcher

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