The practices of estate planning and financial planning must take into account the timing and amount of the client’s Social Security benefits. This isn’t a simple process and calculation of the benefits and their income tax effect often requires electronic assistance. Benefit information and estate planning suggestions are available on the Internet to assist advisors in Social Security benefit practice and to help integrate benefits with the client’s retirement and estate planning.
Free online facilities
The Social Security Administration has online quick benefit calculators (including a detailed calculator, charts and other calculators) and a Retirement Estimator that computes benefits based on an individual's exact retirement history.
Bankrate.com has a Java based Social Security monthly benefit estimator that is a good example of this type of calculator.
CalcXML presents How Much Of My Social Security Benefit May be Taxed?, a calculator that estimates the income tax increment resulting from Social Security benefits.
Anspach, Social Security Calculators – Don’t Claim Without Trying One First A Good Social Security Calculator Can Help You Get More Lifetime Benefits (AboutMoney) examines the need for use of Social Security calculators and the strategies they offer. It includes a list of questions to ask in evaluating Social Security calculators, lists fee-based online calculators, free online calculators and calculators for financial advisors. It links to the Social Security website, but stresses that while their calculations are sufficient for understanding individual benefit amounts, they don’t allow the calculation of claiming strategies that can be used to increase the amount of benefits.
Social Security Solutions furnishes recommended strategies for maximizing benefits.
A Commercial Program
The Quicken Social Security Optimizer provides calculations that assist in maximizing your client’s Social Security income. It contains detailed instructions on when to file, how to file for the clients and their (ex-) spouse’s benefits, and whether filing strategies should be changed at a given point in time. You should compare this “optimal” strategy to various other strategies, such as filing earlier than recommended, to determine the most appropriate strategy for your client. The program helps you organize the many factors that need to be taken into account when determining the benefits and drawbacks of various Social Security filing strategies. See the discussion of this program as powered by Life Yield.
As listed on the Quicken Social Security Optimizer website, it addresses the following considerations:
- Actual or estimated benefit a worker could expect to get at Full Retirement Age (FRA). This benefit is known as the Primary Insurance Amount (PIA).
- Determining a worker’s FRA, which can vary based on year of birth and also has special rules regarding the day of the month on which someone was born.
- The reduction in benefits a worker should expect if filing for benefits prior to the FRA.
- The increase in benefits (Delayed Retirement Credits) a worker should expect if filing after the FRA.
- The benefits a spouse (or a divorcee) could expect when claiming Spousal Benefits off the primary worker’s Social Security record, including any discount for filing prior to the FRA.
- The benefits a widow(er) could expect when claiming Survivor Benefits, including any discount for filing prior to the Survivor FRA (which can be different from the worker’s own FRA).
- The calculation of monthly, annual and cumulative benefits over a claimant’s lifetime, resulting in a recommended strategy for comparison against a common baseline strategy (e.g. filing immediately upon retirement).
- Details of the way in which a worker, spouse or widow(er) should file for benefits, commonly termed “filing instructions.”
The Quicken Social Security Optimizer begins with a screen asking for personal data. Next, it displays the results of the optimal filing age(s) scenario. It then displays a graph with the monthly benefits, annual benefits and cumulative benefits comparing the initial and optimal strategies, including a panel displaying your data entries and permitting changes to them. Buttons then appear for downloading a report and for how to claim benefits.
Support is provided through a Frequently Asked Questions webpage; a glossary is available and email support is provided.
This product is sold on a subscription basis at $49.99 for the first year with unlimited scenarios, unlimited reports and continuous updating. Subsequent years are $19.98 per year, if purchased individually, or $9.99 if purchased with automatic updating.
Procurement is at www.quickensso.com/Portal/Home/SocialSecurityOptimizer_Landing
Technical Social Security issues
Elder Law Answers provides articles on a number of Social Security issues covering topics such as maximizing benefits, taxation of benefits, determining eligibility, the effect of earnings from work, the effect of living overseas, when to take benefits and the file and suspend strategy.
Lange, Optimizing Social Security Benefits for Unmarried Couples (Trusts & Estates, Aug. 29, 2014) – Quantifying the financial advantages of marriage, the article addresses the issue of marriage, the apply and suspend technique and assessing your client’s long-term strategy.
Estate planning with Social Security
Kron, Does Social Security Have a Place in Your Estate Plan? (Blackrock, The Blog, 6/5/2014) explains how the timing of applying for Social Security Benefits affects the benefits’ retirement value and highlights key points that the survivor needs to be aware of.
Ofseyer, Coordinating Social Security Benefits with Other Retirement Assets (Newsletter, Summer 2013) discusses factors to consider in planning to incorporate Social Security Benefits with other retirement income planning, personal savings and other government retirement programs.
Soss, Thirty-Three Social Security Planning Tips (Lexis/Nexis 8/21/2012) offers a variety of strategies for optimal Social Security retirement and spousal benefits planning.
Shikuma, Maximizing Social Security Retirement Benefits for Married Baby Boomers (Shikuma Law Offices) considers the more sophisticated aspects of planning for optimal benefits for married couples.
Campbell, Basic Strategies for SSI Planning (Law Offices of John J. Campbell) discusses the various aspects of disability planning for Social Security benefits.
Bottom Line
Social Security retirement benefits form a substantial part of many clients’ retirement planning and a variety of helpful calculation resources and technical information is available on the internet.
Trusts & Estates magazine is pleased to present the monthly Technology Review by Donald H. Kelley—a respected connoisseur of the software and Internet resources wealth management advisors use to further their practices.
Kelley is a lawyer living in Highlands Ranch, Colo., and is of counsel to the law firm of Kelley, Scritsmier & Byrne, P.C. of North Platte, Neb. He is the co-author of the Intuitive Estate Planner Software, (Thomson – West 2004). He has served on the governing boards of the American Bar Association Real Property Probate and Trust Section and the American College of Tax Counsel. He is a past regent, and past chair of the Committee on Technology in the Practice, of the American College of Trust and Estate Counsel.
Trusts & Estates has asked Kelley to provide his unvarnished opinions on the tech resources available in the practice today. His columns are edited for readability only. Send feedback and suggestions for articles directly to him at [email protected].
