How to Get the Most Out of a Social Security Analysis

Written by Corey Keltner

On May 29, 2019

When you are preparing a retirement plan for a client, you may plug the Social Security information into your planning software and get information as to how Social Security will work within the entire plan.

Today I am going to discuss why it is worthwhile to dig into a Social Security analysis both by itself and as part of the larger retirement plan.

Let me start by saying that I really like holistic retirement planning software but it usually has a flaw. Once I plug in all of the moving parts into a retirement plan, it becomes somewhat difficult and unwieldy because you can’t always see how to optimize each part of the retirement plan when you make adjustments.

The first thing I usually need to know to start any retirement plan is the spending part. And not just today’s spending, I need to convert to spending in retirement and then consider any changes that may occur over time. This can be a process in itself. Ultimately you are going to need to have a pretty good understanding of the client’s basic and discretionary living expenses in order to do this right.

Now you want to look at Social Security benefits from ages 62 to 70. You are trying to get a handle on how much of those basic expenses may be covered in retirement. And if the clients have an expected retirement date, you can easily tell whether Social Security will pay for all or just some of those expenses.

If the client is married, I would then want to look at spousal situations to determine how to get the most out of it. There are several things we would want to consider here.

  • They could be eligible for the Claim Now, Claim More Later Strategy
  • The lower earning spouse may receive more by taking half of the higher earners portion
  • If they plan on retiring at different times, then we probably want to look at delaying benefits until at least both spouses are retired if that is possible.

Next, we need to consider taxes. We recommend a separate piece of tax planning software here because tax planning is difficult to understand when mixed in with the whole plan. When viewed from the tax planning software, we can see how the federal brackets, capital gains and Social Security create opportunities for potential tax savings. This is how we can round out the picture for the timing of taking benefits including Social Security.

Finally, we want to plug Social Security into the holistic retirement planning software and run some what-if scenarios. At this stage I am trying to figure out whether certain life events will make the plan fail and how we should make changes if we see a problem. I would specifically be running scenarios around things like one spouse dying early, major changes in the markets and big unexpected expenses.

I know all of this is a lot of work but it can yield great results as you start finding additional ways to optimize the plan. Not everyone is going to need an in-depth analysis like this but we always want to have the right tools available for the right situations. Lastly, if you are not charging for planning now, I would suggest you reconsider. A service like this can be highly valuable for retiring clients and by paying for the plan, it puts a dollar value on all of the work you do.


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