Social Security Timing: The New Frontier of Financial Planning

As baby boomers progress through their 60s, they’re confronted with numerous financial challenges. Making Medicare choices. Evaluating long-term care insurance options. Estimating annual withdrawals from IRAs and 401(k) plans. The complexity of these issues is beyond the capability of many people to figure out on their own, which is why they often turn to financial advisors for guidance.

Most advisors use financial planning software to help their clients figure out their projected expenses and sources of income during their retirement years. But one area where most of these programs fall short is their ability to help pre-retirees make one of their most important decisions, like when and how to claim their Social Security benefits.  

Most Social Security benefits calculators−even those provided for free by the Social Security Administration−only provide monthly benefit estimates based on the individual’s earnings history and filing age. But few are able to project the combined lifetime value of the various benefits available to people in different situations and even fewer are able to accurately model the many complexities of the system. 

When couples are thinking about the timing of filing for Social Security, they often wrestle with questions such as:

  • How could filing at different ages affect the lifetime combined value of Social Security benefits?

  • If one spouse wishes to file for benefits at age 62, what can the other spouse do to potentially maximize their combined lifetime Social Security income?

  • If one spouse wishes to file before their full retirement age and continues to work, how could this additional income potentially reduce their monthly benefits, and can the difference be made up over time?

  • Under which conditions does it make sense for a spouse to restrict an application to only spousal benefits? (only available to those born before January 2,1954)?

  • Under which conditions does it make sense to suspend a benefit after the changes made by the Bipartisan Budget Act of 2015. 

  • How can the timing of their filing decisions affect future survivor benefits?

When presented with such questions, most advisors recommend that their clients and prospects consult with an accountant or tax attorney. But advisors who can offer guidance on these complicated Social Security scenarios will develop a reputation as retirement planning experts. This may lead to a higher volume of prospects and more quality referrals from existing clients.  

One tool advisors can use to address these situations is Social Security Timing®, part of Covisum’s suite of web-based financial planning applications, that also includes Tax Clarity®, SmartRisk™ and Income InSight®.

Much more than a benefits calculator

While Social Security Timing can calculate a monthly Social Security benefit, the software’s real value lies in its ability to estimate lifetime benefits for couples under different filing scenarios and compare it to the couple’s projected monthly income needs−and show where potential shortfalls could occur. 

Using its intuitive interface, an advisor can enter ages, life expectancies, estimated monthly retirement expenses and Social Security earnings information for each spouse. Future yearly income  can also be entered, as well as non-covered income from state and federal government pension plans.

From this analysis, the application generates two Social Security filing strategies:

  • A suggested strategy with recommended filing ages for each spouse that could generate the largest lifetime Social Security benefit. 

  • An earliest-possible strategy, which shows the lifetime benefits if both spouses retire at age 62 or as soon as possible if the client is older than 62. 

Based on the information entered, each strategy may offer separate recommendations for each spouse. For example, a strategy might suggest that a wife file for her own retirement benefits at her full retirement age but delay taking spousal benefits until her husband stops working and files for his own benefits at age 70.  

Advisors can also create different “what if” scenarios. Vary the filing ages and see how suspending current benefits or applying restricted applications to delay spousal benefits (for those born before 1954) could impact lifetime benefits. 

Cash flow analysis functionality can show the impact of these decisions. On a yearly or monthly basis retirees can see the amount they would receive from Social Security and other income sources and compare it to their estimated monthly retirement expenses, highlighting years where shortfalls could occur (such as when one spouse stops working or passes away). Advisors can specify an annual inflation rate, which the software uses to adjust the future numbers and account for Social Security cost of living increases. 

Social Security Timing can also calculate the impact of earnings test failures on projected benefits, which is helpful when one or both spouses wants to file before their full retirement but plan to keep working. In these situations, both the suggested and earliest-possible strategies calculate how estimated monthly benefits could be reduced based on their supplemental income. 

The results of this analysis can be viewed in a customizable report on screen or printed as a PDF. 

To help advisors get up to speed on both the software and the Social Security issues it encompasses, Covisum offers a wide array of training and educational materials, including a comprehensive video tutorial, quick reference guides and articles on various Social Security topics. Advisors also have full access to the expert Covisum support team via email, phone, or chat. Additionally, Covisum offers numerous client-facing marketing materials, including customizable educational seminar presentations, social media share graphics, print brochures and direct mail pieces. 

Retirement income planning is one of the most perplexing challenges for pre-retirees, and one area where financial advisors can add the most value. Covisum’s suite of financial planning software helps advisors streamline their practice, offer actionable insights to prospects and clients and utilize proven marketing approaches. Clients who will depend on Social Security benefits to provide a sizable portion of their retirement income need help understanding the long-term implications of their filing decisions—and the risks of making the wrong choices. Using Social Security Timing, an advisor can help ensure that their clients’ filing strategy can give them a better chance at sustaining long-term financial security. 

To learn more about Social Security Timing and to sign up for your free trial visit


More Articles