An advisor recently reached out to talk about timing Social Security benefits. He thought my colleagues Paul Samuelson and Alyson Dorosky, writing in this publication, were too emphatic in advocating the benefits of delayed retirement credits and filing for Social Security at age 70.
This advisor specializes in retirement planning with a national independent financial services firm. In his estimation, most people should file for Social Security as soon as they are eligible and no longer working.
His reasons include:
• Death will deprive some people of ever getting benefits if they delay filing until 70.
• People can enjoy their benefits more while they’re active and healthy.
• Many people genuinely need benefits to pay their bills.
• A financially savvy individual may get a better return by investing Social Security benefits.
Ultimately, he said, it comes down to the “utility of the money” and how a client would use or spend Social Security benefits. Planning drives the discussion, he said, and decisions fall from a thorough review of income sources, family budgets, and projections.
As I see it, we agree: Social Security filing choices are highly personal and depend on the context of an individual’s life, health, dreams and goals. In my experience, however, there’s no conversation starter as potent in inspiring clients to engage in retirement planning than, “When do you think you’ll file for Social Security?”
Think Of The Places Your Conversations Can Go
Years of paying taxes to support the Social Security trust fund mean there is universal awareness of the government’s promise to support older Americans. Everyone wonders what they’ll get from Social Security, no matter their income or how much they’ve got in their IRAs and 401(k)s.
Financial advisors: Take advantage of that curiosity.
Prospecting is part of your business. And as technology and innovations like model portfolios mean less day-to-day investment management, your success depends increasingly on the service you provide clients and your ability to win new ones.
I’ve seen advisors generate attention through cold calling and seminars by offering a complimentary Social Security income analysis. The target market is people in their 50s: Retirement isn’t clearly in focus, but they know it’s coming.
Offering clients and prospects a complimentary Social Security analysis using your firm’s software is not invasive or intrusive. It means asking clients only a few questions to deliver their Social Security benefit projections at different ages.
It also allows you to model scenarios such as the early death of one spouse or, conversely, of lifetime benefits should one or both enjoy longevity.
When people see what their Social Security benefits might be, their next question is often, “What do I do now?” I’ve seen these conversations lead to sales of annuities, investment products and accounts, and life insurance.
They also allow you to demonstrate savvy with retirement planning, which an AARP study last year found that 87% of Americans believe is important. It’s not unusual for an individual for whom you’ve run a Social Security analysis to think, “This person helped me with Social Security. Maybe they can help me with my” … rollover, 401(k), individual retirement account (IRA), life insurance, brokerage account, etc.?
People Want Help With Retirement Income
I’ve worked with annuity and life insurance wholesalers and independent and wirehouse advisors. They all recognize the unique place Social Security has in the hearts and minds of Americans, even as there are doubts about its future solvency.
Even without future changes, Social Security will replace an average of 30% of pre-retirement income. That’s why suggesting ways to maximize Social Security benefits (yes, through delayed retirement credits) and optimize investments to supply retirement income will appeal to clients and prospects.
Three out of 4 people surveyed by Nationwide this year said they were interested in optimizing other income streams to delay Social Security. And 4 in 5 said they would switch financial advisors to find one who would help them optimize Social Security.
Don’t worry if clients or prospects initially decline your offer of a Social Security analysis or ghost you afterward. The outreach has stirred them to think about retirement income. Let time do its work.
Stay in touch by adding them to your firm’s marketing communication — emails, newsletter, seminar invitations, new hires or services — so they know whom to call when they are ready for your help and advice.
Jeff Quigley is senior vice president for enterprise sales and relationships at LifeYield.