Medicare and Social Security Guides Updated by Manning & Napier

Manning & Napier created a set of reference guides to break down exactly what individuals need to know about the new tax law, Social Security, Medicare, and long-term care going into 2018.

Every New Year brings changes to tax laws, Social Security benefits, healthcare requirements, and more—and in many cases, this information can be difficult for individuals to locate or understand.

With this in mind, Manning & Napier created a set of reference guides to break down exactly what individuals need to know about the new tax law, Social Security, Medicare, and long-term care going into 2018.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

One important point shared in the Social Security Guide reminds readers that, while the more recent Tax Cuts and Jobs Act of 2017 did not have a direct impact on the Social Security system, the Bipartisan Budget Act of 2015 put an end to “File and Suspend” and “Deemed Filing” strategies. The closure of the “Deemed Filing” loophole only affects individuals who reached age 62 after December 31, 2015.

“Therefore, a limited portion of the population can currently take advantage of the deemed filing loophole—filing for and receiving spousal benefits while allowing benefits on your own work record continue to grow,” experts explain.

Manning & Napier experts further point out, according to the Congressional Budget Office, Social Security outlays have exceeded revenues each year beginning in 2010. Based on the current trajectory, the balance of the retirement portion of the Social Security trust fund is projected to be exhausted in 2031.

“Change is inevitable to ensure the continuation of Social Security benefits,” they warn. “Given the passing of the recent Tax Cuts and Jobs Act, many speculate that reforms for Social Security and other social programs may be next on the docket. Future changes to Social Security could include pushing back the retirement age, reducing benefits/benefit caps, raising taxes, increasing eligibility requirements, means testing, and others.”

All four updated guides from Manning & Napier are available for download here.

Participant Trust in Providers Could Be Much Improved

Compared with those who seek out traditional advisers, “online enthusiasts” are marginally more skeptical of believing that financial services firms are working in their best interests, according to Cerulli research.

Cerulli Associates’ latest reporting offers a deep dive into the differences in investor preferences measured across those who seek out and prefer traditional, in-person advisory relationships, compared with those who prefer Web-based advisory programs.

According to Cerulli, in most cases, those who identify as online enthusiasts opt to take control away from financial advisers because they believe financial firms are not looking out for them. To combat this belief, providers are working to be “more transparent with fees and offer products and services that are a fair trade-off for the client’s and the firm’s interests.”

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

Cerulli finds investors who identify as “traditionalists” are marginally more trusting that financial services firms look out for their best interests, at 55%, as of 3Q 2017. While the average outlook on trusting financial services is improving over time, Cerulli warns that a lack of trust remains a lingering and potentially debilitating issue for close to half of traditionalist investors.

Interesting to note, while they are less trusting of their advisers and providers, online enthusiasts over time have increased the amount of market risk they are taking, as 7% overall described their investment strategy as “aggressive” in 2015 compared with 12% in 2017. As Cerulli sees it, allowing technology to manage or aid in managing investments as a byproduct may desensitize investors from taking either inappropriate high or low risk.

“A move toward greater acceptance of portfolio risk is an overall positive, especially among younger investors, but providers must ensure that clients understand the implications of these decisions when facing what could be peak equity markets,” Cerulli warns.

Cerulli data shows traditionalist investors’ self-reported risk tolerance has remained “remarkably consistent” during the past two years. These investors generally prefer to outsource portfolio management to their advisers rather than keeping abreast of market developments. As such, they are less likely to have dynamic risk tolerances in the short term.

“Providers should use the opportunity presented by current equity market highs to revisit portfolio allocations with these investor households to make sure that they remain properly allocated with respect to the investor’s goals,” Cerulli suggests. “If certain goals have already been achieved, the situation may warrant a reduction in portfolio risk.”

More information about obtaining this research and other Cerulli data is available here.

«