Two of the top Social Security and retirement experts in the country say advisors need to rethink the way they plan for their clients' retirements.

The duo said that calculating retirement plans based on a client’s marginal tax rates can gain substantially more income for clients than the traditional practice of using tax brackets, which many financial advisors rely on to craft retirement plans for their clients.

Advisors can use sophisticated withdrawal strategies to add value for their clients and to grow their businesses, according to William Reichenstein and William Meyer. The two were keynote speakers at the recent Inside Retirement conference sponsored by Financial Advisor and the Money Show.

Paying close attention to the marginal tax rates, which is the amount paid in each additional dollar of income, can increase retirees’ lifetime assets and add enormously to the value of the advisor’s counsel, the two said.

Reichenstein and Meyer are co-authors of the book “Social Security Strategies: How to Optimize Retirement Benefits.” Meyer is CEO of Social Security Solutions and managing principal of Retiree Inc., which developed Reichenstein is head of research for Social Security Solutions and Retiree Inc. and is professor emeritus at Baylor University. Both are frequent contributors to Financial Advisor and other national financial publications and developers of guidance for advisors doing retirement planning. Retiree Inc. was recently acquired by T. Rowe Price.

Advisors need to do more than tell clients when to withdraw first from tax deferred retirement accounts and then from taxable accounts during retirement, which is how many advisors frame their retirement strategies. “A robot can do that,” Meyer said during the presentation. Instead, advisors need to base their retirement strategies on a planned withdrawal strategy that takes from both types of accounts at the same time depending on the client’s marginal tax rates, which can yield more income.

Meyer also cautioned advisors to take into account the client’s personal biases. In some cases, the math can look good, but if the advisor is ignoring the behavior of the client, he or she is missing a large part of the picture, Meyer said.

For the math part of the equation, planning should include withdrawals from multiple accounts so that adjustments can be made in income levels based on the marginal tax rates, both experts said. For instance, if each dollar of income is not considered, the marginal tax rate for Social Security benefits can be pushed to 150% or 185%, costing the client needlessly.

Mayer and Reichenstein explained the difference the marginal tax rate strategy can make to clients in case studies detailed in two articles written for Financial Advisor Magazine, which can be found here and here.

The bottom line is that using conventional planning based on tax brackets will lose income for clients, Meyer said. Instead, paying attention to marginal tax rates to determine withdrawal strategies will significantly impact whether funds should be withdrawn from taxable or nontaxable accounts, he said.

The strategies apply to all clients. “We’re not just talking about people with huge incomes; these strategies are also important matters for middle income clients,” Reichenstein said.

And it can significantly impact the advisor’s practice.

There are a lot of moving parts to using an integrated strategy of withdrawing from both taxable and nontaxable accounts at the same time, Meyer said, but there is software developed by he and Reichenstein that makes it easier for the advisor to make the optimum selections.

“If you enable your clients to keep more of their own money and if you show them” how it benefits them, “you will grow your business and add value to your clients,” Meyer said.