Timing your Social Security filing: Where to get assistance with the big decision

The study also found that many advisors frame Social Security decisions in terms that incorrectly encourage early filing decisions. And a relatively small number were inclined toward strategies that encourage delayed filing.

One clue about your planner’s Social Security smarts is whether she uses software to analyze choices. Popular programs include SSAnalyzer, Social Security Timing, Maximize My Social Security, SS Income Planner, and Social Security Explorer. Maximize My Social Security is included in ESPlanner, a widely used financial-planning software package for professionals.

Asking your planner a few basic questions also can help you determine whether she is up to speed, says Andy Landis, a former SSA employee who now educates financial advisors and retirement-plan sponsors about Social Security benefits. “Simply ask the planner–‘Are you familiar with the file and suspend strategy or spouse-only restricted applications?’ That should separate the wheat from the chaff instantly.”

Although it’s not a litmus test, a growing number of planners are taking Social Security training classes, and two companies have launched certification programs. The National Social Security Advisor designation was introduced last year, and the Certified in Social Security Claiming Strategies designation will be rolled out in September.

Advice at Work

If your workplace retirement plan includes a third-party financial advisory service, Social Security claiming may be part of the offering. You may already be paying a fee for the advisor’s investment advice, so it’s worth finding out if Social Security help is available as part of the package.

Financial Engines, the country’s largest independent advisory service, offers an online Social Security claiming tool for workers or retirees in plans it serves, coupled with help on integrating Social Security income with portfolio drawdowns; one-on-one guidance from an advisor is also available.
Guided Choice also has a Social Security optimization feature coupled with one-on-one advice; the service is available to active employees and retirees. Morningstar, which also works with 401(k) plans, doesn’t offer Social Security claiming guidance yet but plans to add it, a spokeswoman says.

Advice From a Specialist

Several companies that specialize in Social Security claiming can help you design a claiming strategy for a small fee. Some of these services are software based; others connect you with an advisor for one-on-one counseling. When evaluating an online or software-based service, look carefully at the usability and complexity of the tool–some require that you input a great deal of information on the front end, while others require only very basic information from you and your spouse. At minimum, you should have your date of birth, Social Security numbers for yourself and your spouse, and the benefits information from your most recent Social Security statement.

Social Security Solutions was developed by financial-services veteran William Meyer and William Reichenstein, a professor of investment management at Baylor University. The company’s web-based tool is simple to use–you get started by inputting basic data about yourself and your spouse–date of birth and initial benefit information from your Social Security statement. A report listing your options–and likely amounts gained–is delivered. Fees range from $20 to $250, depending on the amount and degree of personalized advice you prefer.

Maximize My Social Security was developed by Laurence Kotlikoff, an economics professor at Boston University who also created ESPlanner, a broader financial-planning software suite. Kotlikoff licenses the Social Security offering for $40 per year; it delivers options as a PDF report. This tool may require up to a dozen data points from you in order to deliver its findings.

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Social Security Choices was developed by a team of economists; you can get a custom report for $39. Several free basic calculators are offered; in-depth software is sold to financial advisors for a fee.

Free Tools

If you want to roll up your sleeves and work the numbers on your own, some very good free tools are available online that can provide an assist.

Social Security Administration Retirement Estimator: This tool estimates benefits based on your personal earnings record. It also allows you to run scenarios based on alternate filing dates. But you can’t run spousal or survivor scenarios here.

AARP Social Security Benefits Estimator. AARP offers a calculator that lets you do “what if” planning based on taking Social Security at different ages. It’s similar to the SSA’s estimator in this way, though it also estimates the percentage of your living expenses that will be covered by Social Security–and it allows you to tweak the expense assumptions. AARP also offers a searchable database of thousands of frequently asked questions about Social Security.

Financial Engines offers a free version of the Social Security tool that they use to serve 401(k) clients. The tool allows you to input an initial claiming strategy and then computes likely lifetime benefits. Then it walks you through possible options that pay more. (The key difference is that the free version doesn’t offer portfolio integration.)

A Caveat About Online Tools

Social Security filing is a key financial life decision, so be careful about relying too much on tools of any sort. I ran the numbers for myself and my wife on several of the free websites; each is built with slightly different decision-tree choices, and they didn’t all agree on our recommended strategies. This is a decision you’ll want to double-check carefully by running numbers in more than one tool or by consulting an expert advisor.

“Using a calculator can help with the process, but you don’t want to rely on them alone,” says Jim Blankenship, a financial planner and author of A Social Security Owner’s Manual. “It’s possible that you mis-typed an answer–like a birth date–or that you didn’t fully understand a particular option that you selected.”

Blankenship, who has been conducting a survey of online tools that won’t be finished until later this year, also warns that calculators don’t always have sufficient flexibility to deal with the nuances of an individual’s situation. An example: None of the free calculators he’s been surveying include a way to show the impact of the Windfall Elimination Provision and Government Pension Offset provisions of Social Security, which adjust benefits for some government workers participating in pension plans.

He notes that most of the free tools also don’t help with survivor-benefit calculations for widows. “That can have a huge impact on some folks,” he says.

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