With all of the interspersed factors to consider when helping determine a client's best Social Security claiming strategy, software can be a godsend. But which tool offers the best output for the cost?
I looked into and ran test scenarios through two of the most popular Social Security software options, and found some interesting results.
Although Social Security Analyzer (from Social Security Solutions Inc., ssanalyzer.com) is, without a doubt, the Lamborghini of tools for analysis in this area, many advisers will need something less sophisticated and less expensive. But if an adviser plans to make Social Security analysis a mainstay of their practice and is pretty sure they will encounter innumerable exceptions in client scenarios, Social Security Analyzer is your choice. Currently priced at $1,200 per year, Social Security Solutions Inc. will be coming out with lower-cost versions of its software May 1.
For those who need to do less comprehensive analysis for their clients, Social Security Explorer (from Impact Technologies Group Inc., impact-tech.com) might be a more suitable choice — at $249 for an annual license right now (it is likely to go up to approximately $300 sometime soon according to company officials as a few enhancements are added). As Explorer's user guide points out, there are 81 possible start-age combinations you could be confronting when you sit down to work with clients. But that is just the start. Because Explorer provides users with seven different strategies for the 81 start-age combinations, there are 567 options available.
My colleague Mary Beth Franklin came up with several hypothetical scenarios for me to plug into each software tool and see whether they suggested similar strategies. In some cases they were similar, and in others a bit divergent. Find the results of those tests in the full version of this story to be included in the Retirement Income special report publishing in the May 13 issue. In the meantime, an overview of two company's product offerings should be useful:
Social Security Explorer
Think of Explorer as the Toyota or perhaps a Lexus to Analyzer's Lamborghini. That is not meant to be a put down — the tool is intended to provide more of a quick analysis. It has simple inputs including a mix of dropdown menus, numeric input fields and slider bars. It is also probably more inviting in terms of how user-friendly its interface is.
An adviser enters the marital status of a client, the age and that of the spouse, the monthly benefit and that of the spouse — and then comes to a slider widget where the adviser estimates the age of death. It sounds harsh, but that is how all these tools work. You have to guess when your client and his or her spouse are likely to pass away.
Two other slider bars are used for the investment rate (0% to 10%) and cost of living adjustment, which is set at a default of 2.5%.
Run the simulation and results populate a square with 81 boxes. These are color-coordinated, and as one might expect, green equates to good and the others less so.
Social Security Analyzer
More than 1,800 rules related to Social Security selection have been entered into the algorithm engine that runs the Analyzer product. It has a lot in the way of tax consequences built into the algorithm as well. Analyzer includes a very robust reporting engine that is highly customizable.
The single most obvious difference between Analyzer and Explorer is that Analyzer can present an adviser and clients with a side-by-side comparison of hypothetical results.
Household profiles is another area of strength in the program. There is nothing worse than having a client whose situation doesn't fit a cookie-cutter mold and therefore cannot be entered into a software program. With Analyzer, in addition to the predictable single, married, divorced, widowed options, there are also profile choices that include families with minor children at retirement and those with non-covered pensions, for example — profiles that Explorer lacks.
A “strategy list” tab allows an adviser to keep track of strategies they can recommend to clients based on goals. Additionally, an adviser can download a strategy into a few different formats for upload into other applications, including several financial planning programs.
Social Security Solutions also has a marketing program on Social Security planning that includes a turnkey seminar system, ready-made microsites an adviser can use with his or her website, and an education and lead program.
For pricing of the three tiers of software options, with lower-cost applications expected to be available May 1, see Mary Beth Franklin's blog covering the Analyzer suite.