How advisors can add value as Social Security, Medicare uncertainty grows

At a time when questions are mounting about the long-term financing of federal retirement and health benefit programs, financial advisors are increasingly being drawn into conversations about Social Security claiming strategies and Medicare cost planning.

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The Social Security retirement trust fund is projected to deplete its reserves in 2032, while the Medicare Part A trust fund is projected to follow in 2033, according to the most recent trustees report. After those points, the programs would still pay the majority of benefits, but at reduced levels. 

Speakers at the recent American Institute of CPAs (AICPA) conference emphasized the importance of integrating Social Security and Medicare planning into broader retirement advice as clients weigh decisions amid concerns about those programs’ long-term solvency.

“Way too many people are relying way too much on Social Security benefits,” Matthew Allen, co-founder and CEO of Social Security Advisors, said during a June 11 conference session. “It was never built to be a retirement program. It was built to be a safety net.”

While the projected depletion of the Social Security fund would not eliminate benefits entirely, Allen said he considered the prospect of broad, across-the-board cuts politically unlikely.

“I do think Social Security is at the highest political risk it’s been at since it was established in 1935,” he said. Still, he doubted huge cuts would occur.

“Politicians like their jobs too much” to cut retirees’ benefits, he said. Historically, Congress has acted to modify Social Security when faced with financial (and political) pressure, most notably in 1983, when lawmakers enacted changes shortly before the fund faced depletion. Yet future solutions remain uncertain, leaving retirees and advisors to make decisions without clear timelines.

During the session’s Q&A portion, Allen was asked whether a 61-year-old concerned about potential benefit reductions should delay claiming benefits until age 70. He cautioned against one-size-fits-all guidance, noting that claiming strategies depend heavily on household structure, including spousal, survivor and divorce benefits.

READ MORE: Social Security trust fund projected to run short in late 2032, trustees say

Allen also pointed to optional strategies that can create flexibility in retirement planning. In certain cases, those who have reached full retirement age have the option to file for benefits retroactively for up to six months, potentially creating a lump-sum payment.

“Interestingly, they could put the benefits back on hold if they wanted to,” he said.

Another area advisors need to be attentive to is documentation when working with the Social Security Administration, he said, recommending that clients keep written records of all communications or confirmations of guidance received.

“We have seen way too many situations where Social Security gives out misinformation, and then they come back and say, ‘Well, you know, that’s too bad,'” Allen said. “If the person only had a recording or had it in writing, we’d be able to do an appeal.”

READ MORE: Medicare premiums erode Social Security COLA in 2026

Medicare planning and IRMAA appeals

Beyond Social Security, speakers highlighted opportunities for financial advisors to help clients reduce health care expenses through Medicare planning.

Clients who have had decreases in their income may be able to appeal Medicare premium surcharges. The income-related monthly adjustment amount (IRMAA) is added to Medicare Part B and Part D premiums for people with higher income levels, based on tax data from two years prior. If a client has a qualifying life-changing event or significant reduction in income, it is possible to appeal for IRMAA to be removed or reduced, Allen said.

“A lot of people just go on paying these higher premiums, and in actuality, they can appeal in many cases,” he said. “They want to be looking for: Have they had a drop in their income versus two years ago, generally? And then number two, have they had what’s called a life-changing event?”

READ MORE: The financial advisor’s guide to Medicare

Medicare planning represents an area where advisors can add value, especially when clients are unaware of various appeal options.

Speaking during the same session, Kerri Buckley, owner and senior agent at The Buckley Insurance Group, outlined how Medicare coverage decisions vary by individual circumstance.

“Medicare is not one size fits all,” she said. “What was good for your mom, or what’s good for your friend or your brother, is not necessarily going to be what’s good for you, coverage wise. It’s really an individual decision based on your health [and] your finances.”