If Social Security is not fully leveraged, it may not do as much for your clients as either of you might hope.
Of course, some tactics like waiting to file are not a possibility for every client, but failing to take advantage of this option could be concerning as it may indicate a lack of understanding about the advantages that come with delayed filing – namely, increases in monthly benefits that could be as high as 32%**. For some clients, accessing increased benefits in the future may mean they’ll need to draw income from other accounts such as an annuity in the short term, but this strategy can be worth it if it can produce the desired results. That’s why getting the full benefit from Social Security is so important and deserves a thorough analysis to determine steps that can help to increase benefits.
Benefits Of New Technology For Optimization
The good news is, new technology platforms are making the process of enhancing Social Security strategy much easier for financial professionals to accomplish and in turn communicate potential benefits to their clients. The software has the ability to analyze all of the relevant client information – including things like desired retirement age, full retirement age, work credits, delayed retirement credits, spousal and survivor benefits – and run through different scenarios to determine the best possible options.
Financial professionals who utilize new technology options to assist with Social Security are routinely discovering how a significant amount of lifetime benefits could be missed by employing a basic filing strategy. In fact, one firm did an analysis of more than 30,000 client reports in 2020, and found an average of $131,351 difference in potential benefit between an enhanced strategy and one that is more basic in nature***. This sum may be eye-opening to both standard and high net worth clients, as it can translate to things like better cash flow, better homes for retirees, better long-term care, and potentially a stronger legacy for their children. (A client’s individual results will vary and that clients should contact their local Social Security Administration office for information regarding their specific situation.)
If you’re considering how you can add more value for your clients, a great place to start is by exploring options with Social Security. Although there is a lot of nuance to filing strategies, making informed decisions early on can make a substantial difference for the overall health of your client’s portfolio down the road. Although it can sometime be hard for financial professionals to articulate a dollars-and-cents benefit of enhanced filing strategies, new technology is helping to make that process much easier to accomplish and straightforward to communicate.
*Allianz conducted an online survey, the 2020 Retirement Risk Readiness Study, in January 2020 with a nationally representative sample of 1,000. individuals age 25+ in the contiguous USA with an annual household income of $50k+ (single) / $75k+ (married/partnered) OR investable assets of $150k.
**Motley Fool - What Are Delayed Retirement Credits? - Aug 17, 2019.
***LifeYield - LifeYield Unlocks $5.3B of Potential Lifetime Social Security Benefits in First Half of 2020 Social Security Advantage tech adds average of $150K of possible retirement money per client - August 19, 2020.
Corey Walther is president of Allianz Life Financial Services.
Jack Sharry is executive vice president and chief marketing officer at LifeYield.