Many Social Security calculators focus on how to maximize benefits over a married couple's lifetime. Such strategies usually involve at least one spouse waiting until age 70 to collect the maximum benefit.
But what if your client doesn't want to wait that long?
Mutual Fund Company T.Rowe Price launched a free new tool this week that puts the client in the driver seat by focusing on their goals, such as their desire to maximize their income during their years together or to minimize the drop in income after the death of the first spouse. The Social Security Benefits Evaluator (www.troweprice.com/socialsecurity) then prescribes the claiming strategy to accomplish those goals.
“We don't see how you can create a retirement income strategy without considering Social Security,” said Christine Fahlund, senior financial planner for T. Rowe Price who has devoted the last two years to developing the Evaluator.
The robust tool, designed for both consumers and financial advisers, is easy to use. Just fill in your name, birth date, and salary for you and your spouse. Then enter either your desired retirement age or goal you want to achieve, such as to collect benefits as soon as possible or create the biggest survivor benefit later. The Social Security Evaluator does the rest.
“It will give you a good strategy, not necessarily the optimum strategy,” said “That's where the adviser comes in,” Ms. Fahlund added. “This tool will enable advisers to have a good conversation with clients.”
The tool is simple on the surface, but is driven by sophisticated planning software. There are no passwords or registration requirements so you can't save your estimate. But you can print it out and compare multiple strategies.
Most importantly, the tool displays the results in various ways using year-by-year cash flow charts as well as cumulative benefits to help clients visualize the pros and cons of various claiming strategies.
It's not as detailed as some of the professional Social Security software packages, but it can be a great resource when talking to current or prospective clients. For example, the T. Rowe Price tool uses default life expectancies of 83 and 95 for married couples as an illustration of how cash flow can be affected after the death of one spouse or to estimate lifetime benefits for a couple
In its initial phase, the tool offers Social Security strategies for individuals, married couples and surviving spouses. The next phase will include strategies for divorced spouses. T. Rowe Price plans to unveil a separate website for financial advisers next month, which will be powered by the same calculator but include more explanatory information. The company also plans to offer training sessions for registered investment advisers.
But don't wait for the official unveiling. Give it a spin now. And use the feedback button when you're done. The folks at T. Rowe Price want to know how to make it better.
And there's certainly an appetite for this information. A recent survey by Securian Financial Group found that just 18% of baby boomers are making decisions now about how and when they'll claim Social Security benefits. “But their focus on Social Security may be rising because half of the 18% tweaked their plans within the last three years,” said Michelle Hall, manager of Securian's market research.
Nearly half of these so called “planners” started to create their plans between the ages of 60 and 65—prime time for financial advisers to discuss Social Security strategies with their clients. The most frequently cited triggers for Social Security planning was concern over whether their retirement savings would provide sufficient income and the need to decide when to retire.