Adding Social Security Planning Services to Your Practice

More and more pre- and early retirees are asking questions about how and when to exercise their Social Security income benefit election. In this paper, we highlight four considerations accountancy rofessionals should understand in order to help their pre- and early retiree clients decision.

Tax professionals and financial advisors ought to have good answers and resources to help clients with these important questions. The myriad of rules and potential claiming strategies can be daunting to the client. CPAs are uniquely positioned to be the point person to help guide clients to make a well informed Social Security income election decision.

As CPAs assist clients with their Social Security income claiming issues, the CPA will need to determine what level of Social Security planning services to provide in their practice for the client. They may opt to outsource certain aspects—or perhaps all—of these services to outside vendors. If they choose to provide these services in-house, they should become well educated on the topic as well as employ effective technology and practice management solutions. For those who choose to outsource this service, it is important to have a good feel for the issues confronting the client, what entities ( i.e. business and their interests) are providing this service, and what the client can expect from these providers.

The financial services industry is changing rapidly with respect to Social Security income planning technology (e.g. software functionality and applications). Learning more about Social  Security claiming issues and technology tools can help you bring more value to existing clients. If your intention is to grow you practice with Social Security planning, there are tools available to help you work both with existing clients and to attract new clients.

The Social Security income election may be one of the most important financial decisions your client makes in their lifetime. For clients to both maximize and optimize their Social Security income benefit, they will need to commit to good planning, apply smart decision tools, and utilize the guidance of a competent advisor. As their tax advisor, it may be prudent for you to become more familiar with these concepts and tools.

Consideration #1: Recognize the need for Social Security planning and understand trends in this financial planning channel.

The issue of making a smarter Social Security income election has become very important to baby boomers for many reasons. Pre-retirees and early retirees are now living longer than previous generations. Also, there has been a shift away from defined benefit plans (i.e. pension plans) to self-retirement funding. Financial market forces, such as low interest rates and the potential for a cool down or potential correction in the equity stock market, also make the Social Security income election very important for the client.

Singles, and especially couples, can miss opportunities to collect hundreds of thousands of dollars of additional income over their lifetimes when they make poor Social Security income election decisions. By applying little-known, yet creative claiming strategies, your clients may be rewarded with significant additional lifetime retirement income.

There are literally hundreds of Social Security income election combinations available for your clients to choose from. You will want to help guide them to make a choice that will maximize and optimize their lifetime Social Security benefit. At first glance, these election strategies may seem complicated and confusing. Unfortunately, a good portion of financial professionals may not understand how to successfully navigate the Social Security income election waters. Furthermore, only a handful of diligent retirees investigate this critical financial decision at a deeper level.

Consideration #2: Become educated to help clients with key elements of Social Security planning and learn of resources that can help them.

Few financial professionals are fully fluent and experienced in the art of Social Security income planning. Accountants and tax professionals are often focused on traditional practice areas,such as tax preparation, tax auditing, and bookkeeping. A fair majority of financial advisors work primarily in the area of investment management and administratively maintaining client relationships.

Social Security Administration staff typically only help the public with information requests, case management, and routine claiming requests. The local Social Security staff are not allowed to provide customized financial advice or to suggest case-by-case Social Security optimization financial planning recommendations for singles or married couples.

Social Security income planning is an emerging area in financial services, and the rules for electing Social Security are complex. Consequently, it may be to the clients’ advantage to take some extra time to find a qualified Social Security planning professional who can help them with their decision.

A significant portion of pre-retirees and early retirees do not “do the math” to make the optimal Social Security income decision for their unique situation. First of all, many folks are not aware that these Social Security claiming strategies even exist. And, if they are aware, many do not take the time, or are not counseled by a Financial Advisor who is familiar with how to maximize Social Security income. Failure to examine and implement these advanced claiming strategies can result in a significant reduction in total lifetime income for many retirees.

There are compelling financial income incentives for applying some of the advanced claiming strategies. Depending on a couple’s Social Security “vitals” (earnings history, relative ages, and life expectancy) and their goals, they may wish to apply claiming strategies such as “File and Suspend,” or “Claim Some Now, Claim More Later.” A detailed description of these strategies is beyond the scope of this article. In short, these strategies all involve the timing of filing for benefits and utilization of the spousal and survivor benefit concepts to maximize lifetime income.

A significant portion of those who claim Social Security execute the “land grab” strategy and take it as soon as possible at age 62. Others may partially understand the potential merits of waiting to claim later at age 66 or or even up to age 70.

For various reasons, more people are now waiting and claiming their Social Security later. The Center for Retirement Research at Boston College published paper titled “Trends in Social Security Claiming” which examines Social Security claiming trends. In 1985, 52.4% of men turning age 62 began collecting Social Security early versus 41.9% in 2013. And for women, 63.7% claimed early at 62 in 1985 versus 47.5% in 2013. The author states in the conclusion “the good news is that more people are claiming retired-worker benefits at later ages, and this pattern is consistent with increased labor force participation at older ages and the rise in the average retirement age.”

Advisors should also be aware of special circumstances that may impact their client’s Social Security income election decision. Clients may have special situations, such as working and having earned income while collecting Social Security or a pension from non-covered employment (e.g. government employees). These individuals are often impacted by the Government Pension Offset (GPO) and/or the Windfall Elimination Provision (WEP), which can impact their Social Security income benefit and often make the Social Security decision less transparent and more complicated.

There are vendors and service providers that can help your clients maximize their Social Security income benefit over their lifetime. Following are a few named providers: Pillars Social Security, Enlighten Social Security, Premier Social Security Consulting, and Social Security Advice Online are just a few. These providers typically include the maximization calculation and a follow-up phone consultation. The price points for these services typically range between $200 for singles and $400 for couples. Please keep in mind these services are almost always for the Social Security maximization versus Social Security optimization and financial planning services.

Consideration #3: Be aware of the difference between Social Security maximization versus optimization and know of software applications to handle this.

It is important for CPAs and advisors to recognize the difference between Social Security maximization and optimization. The Social Security maximization decision is based on math to target the highest lifetime dollar amount of Social Security income that the government will pay you. This is essentially a calculation that is done in a vacuum. This maximization calculation does not consider other aspects of the client’s bigger picture financial situation, such as income taxes and how other assets or income streams impact the taxation of the Social Security income stream. On the other hand, Social Security income optimization considers the Social Security income election technique and timing and includes other aspects of retirement financial and tax planning to work with the client towards harvesting the client’s maximum net after tax (i.e. post Uncle Sam!) lifetime income.

Some Social Security claimants think their Social Security income is, or will be, tax-free. For many, this may not be the case. Up to 85% of Social Security income may be taxable due to what is called provisional income. Provisional income, according to Kevin McCormally of Kiplinger, is “... basically your adjusted gross income plus any tax-exempt interest, plus 50% of your Social Security benefits.” In the media and amongst professionals this is often referred to as the stealth tax, because the taxation of the Social Security income benefit tends to “sneak up” on both consumers and tax professionals.

Several sources of income can contribute toward triggering the provisional income taxation thresholds for a client. These income sources may impact the taxation of their Social Security income benefit. These income sources include, but are not limited to, distributions from your 401k or IRA account(s), wages, pension income, CD and bond interest, and stock/mutual fund dividends.

Of course, clients ought to be mindful and attempt to minimize taxation of the Social Security income benefit if possible, and this often requires advanced planning. Therefore, it is important to investigate and determine in which sequence clients might draw upon their retirement income stream and/or retirement asset account buckets. When and how clients take their Social Security income can significantly enhance or reduce the longevity of their retirement assets and income stream.

Questions clients ought to be asking their advisor(s) might include:

• Should I take Social Security early or later?

• Which Social Security income election strategy will give me the most lifetime net after tax income?

• Does it make sense for me to first draw upon my 401K and/or IRA account(s) and then claim Social Security later?

• Does it make sense to re-distribute some of my assets into other investment vehicles that minimize, or altogether possibly eliminate, the taxation of my Social Security benefit?

The timing and election of the Social Security benefit in conjunction with investment and taxation management can lead to potentially higher standards of living in retirement for our clients.

Consideration #4: Marketing and adding Social Security planning services to the accountancy practice

Clearly, there is a need for Social Security income planning and an opportunity to potentially expand a CPA practice with this service. Tax professionals and financial planners are uniquely positioned to guide their clients with the Social Security income election decision. As they venture into this topic area, they will need to determine what level of Social Security income planning service to provide for their clients. If they choose to provide these services in-house, you will want to utilize effective means of marketing.

Of course, it is always prudent to do your homework before marketing and launching into a new service space. Therefore, you might ask yourself these questions:

1. How will Social Security services fit into our current practice?
2. Who is my/our competition that is providing this service and what services do they provide?
3. Should I go after the B2B (business to business) marketplace or the B2C (business to consumer) space?
4. What tools and marketing strategies are available to reach out to affiliates and Centers of influence?
5. How can I best prepare and present effective Social Security seminar PowerPoint presentations?

These are just a handful of marketing and practice management questions that the CPA, or accountancy practice, might reflect upon.


The Social Security income election can have a major impact upon standard of living for clients in retirement. Clients often do not do the proper planning for optimizing their Social Security income election in the context of their bigger picture retirement income plan. The CPA and tax practitioners are in the ideal position to help direct clients to the proper services to help them with this important decision. Social Security income planning may also present a viable service and business opportunity for many accountancy practices. The combination of getting more educated and helping and/or directing clients to the right services and technology for the Social Security income election can be a win-win proposition for all.


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