The difference between a good Social Security claiming strategyand an optimal one can make a huge difference in a retired couple’s income and quality of life. But it can be challenging for financial advisers to help clients visualize how those decisions can improve the long-term success of their retirement income plan.
LifeYield announced enhancements to its Social Security Advantage service this week that provide advisers with easy-to-understand presentations of client retirement needs and the projected outcomes based on their decisions. A scaled-down version of the Social Security Optimizer is available to consumers through Quicken.
“It’s become evident that the most important question for most clients is, ‘When should I take Social Security and how should I file?’” said Jack Sharry, chief marketing officer at LifeYield.
“It’s the first step in a larger conversation about retirement income wants and needs and how to coordinate all the financial bits and pieces that include Social Security, assets and maybe a pension,” Sharry said. “It illustrates the major value of doing planning.”
More than 80,000 advisers at wirehouses, insurance companies and asset management firms already use LifeYield’s Advantage Suite of software products, which includes Portfolio Advantage, which identifies the tax-optimal location for every asset, and Income Advantage, which calculates the most tax-efficient ways to take income from investments. LifeYield’s Social Security Advantage tool helps clients decide when to retire and the best time to claim benefits based on likely life expectancy, survivor benefits and other aspects of their financial lives.
For example, one case study shows how a married couple with a five-year age gap could increase their annual Social Security benefits by more than $469,000 over their joint lifetimes with an optimum claiming strategy. The tool focuses on maximizing the primary breadwinner’s benefit and ultimately the survivor benefit for his spouse. The case study illustrates the value of having one spouse claim only spousal benefits initially and switch to their own maximum retirement benefits later — a strategy that is still available to people who were born before Jan. 2, 1954.
The Social Security Advantage tool includes reports that arm clients with detailed instructions on how and when to for benefits, complete with suggested language to overcome any bureaucratic obstacles or possible arguments from Social Security claims representatives.
The new Income Layers feature of the tool unveiled this week lets advisers take client conversations a step further with visual projections of a client’s expected retirement income needs that show how Social Security benefits will meet those needs in tandem with other income sources.
Advisers can customize a client’s projected income needs and various income sources to account for inflation, interest rates, insurance policies, additional expenses and other factors. They can manipulate the graphs on the fly to show clients how various investment vehicles, insurance products or other strategies can help them cover projected shortfalls or maximize their retirement income.
“The pandemic has introduced a new level of uncertainty, particularly for clients who are close to retirement,” said Steve Zuschin, vice president of LifeYield’s Advisor Success channel, which works with RIAs and independent advisers. “These additions to the LifeYield platform will help our adviser partners rise to the extraordinary demands of the moment.”
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