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By Cyril Tuohy
Financial advisors, many of whom describe their knowledge of Social Security claiming strategies as “modest,” rely on commercially available software and subscriber-based applications and tools for support, a new in-depth report has found.
Advisors use the tools and applications to help clients identify claiming options and deepen their own knowledge of Social Security claiming strategies, according to the report.
About three quarters of advisors are likely to seek out more support, content and tools related to Social Security over the next year, the report also found.
The findings are based on a survey of more than 600 financial advisors conducted in the spring. The 91-page report is one of the first in-depth studies of financial advisors and their familiarity with when and how best to approach claiming Social Security benefits.
The report titled “Social Security Support and Financial Advisors — Insights and Opportunities 2014,” was published by Practical Perspectives in Boxford, Mass., in conjunction with GDC Research in Sherborn, Mass.
Howard Schneider, president of Practical Perspectives and author of the report, said discussions about Social Security claiming strategies were figuring more prominently in discussions advisors are having with clients.
”Social Security is an increasingly important part of the discussions advisors have with clients as they approach and transition to retirement, yet advisors vary considerably in the degree to which they provide assistance on this topic,” he said in a news release.
More than 90 percent of financial advisors provide some kind of Social Security support to prospects and clients. Advisors pointed to BlackRock and the Social Security Administration as sources on which they rely most frequently.
Many clients, however, aren’t familiar with the different options with regard to claiming benefits and exhibit “concerns related to possible reductions in benefits during retirement, and clients wanting to begin taking benefits as soon as they are able.”
With millions of baby boomers retiring over the next 20 years, when to claim Social Security benefits is bound to become a hot topic among pre-retirees. Meanwhile, headlines warn of impending doom as the program is projected to run into the red by 2030 if lawmakers don’t implement reforms.
Individuals who delay the receipt of Social Security payments by several years benefit from as much as $700 or $800 extra in their monthly deposit. For a retired couple, the difference is even bigger and adds up to tens of thousands of dollars over the course of a lifetime in retirement.
The earliest workers can begin to collect is at age 62. Waiting until after age 70, however, doesn’t offer any additional accrual advantages, which is why advisors have an important role to play in estimating the most opportune time for clients to being collecting on Social Security.
Advisors, the report found, rely on software from third-party vendors, and tools available through the Social Security Administration.
Training and information on Social Security continues to be presentations and off-site conferences, the report also found.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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