Fifteen years ago, most financial institutions weren't interested in the opportunity to counsel clients on Social Security start-date decisions. This service was considered "too downscale."

Now, as millions of boomers hit the retirement trail two recessions later, these same institutions are rushing headlong to offer Social Security calculators and "claiming strategies."

In March, T. Rowe Price joined the stampede by introducing a Security Benefits Evaluator, which you can evaluate here: http://individual.troweprice.com/public/Retail/Retirement/Social-Security-Tool

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The Rowe Price process is not very different than many competitors'. It just pushes the discussion of Social Security benefits over the edge of reality by equating each dollar of Social Security benefits with a dollar of savings withdrawal. They are not the same for several reasons – including tax treatment, time value of money, cost of living adjustments, and the probability that today's scheduled Social Security benefits will be reduced in the future. Social Security benefits are not guaranteed or even promised by the U.S. government. They are simply a law, which (like all laws) can be changed by Congress at any time.

Some professional financial advisors are taking a different approach to Social Security start-date counseling – more qualitative and client-centric, less quantitative and promissory. Four basic questions can help to move clients toward the best personal choice, whether or not you use any calculators.

  1. Do you plan to keep working, full- or part-time, through age 66? A "yes" answer to this question usually takes the idea of starting benefits before age 66 ("full retirement age") off the table, due to  the "earnings limit." For details: http://www.ssa.gov/pubs/EN-05-10069.pdf

  2. What percentage of currently scheduled benefits do you believe the federal government will pay, over your full retirement? This question gains insight into the client's confidence that the U.S. government can (and will) continue to pay today's scheduled benefits over the long-term. Few clients will answer 100%, and many will be in the range of 70% to 90%, which probably is realistic. If the percentage is below about 80%, it's a good reason to start benefits sooner.

  3. How long do you expect to live, and how high do you think inflation will go? If clients think a high percentage of scheduled benefits will be paid, and they also expect to live a long time with inflation, they may want to maximize Social Security's lifetime payout and annual Cost of Living Adjustment by delaying the start of benefits beyond age 66.

  4. Do you want more taxable income in the early years of retirement? For most affluent people, 85% of benefits are included in federal taxable income. If taxes are a concern, the opportunity to delay the benefits start date, defer tax impact, and increase future benefit can be compelling.

Social Security start-date counseling is a valuable client service and a golden opportunity to learn more about your clients' perspectives on retirement. So, put the calculators and pat answers in perspective – and have real conversations that focus on personal values and choices.

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