Even if your clients are years away from claiming Social Security benefits, both clients and their advisors need to understand how Social Security fits into the larger retirement planning picture.

Through these conversations about Social Security retirement planning, advisors can accomplish several objectives at once. These include everything from strengthening clients' wealth management strategies to making sure investors understand the implications of decisions they may make around Social Security benefits and other retirement planning strategies.

As you approach these conversations, here are some specific goals to keep in mind.

Identify Gaps in Your Clients’ Retirement Planning Strategy

Any given retirement strategy can look great on paper—especially in a favorable scenario where investment assets keep growing in value, and investors can maintain or reduce their monthly expenses. Unfortunately, this ideal scenario rarely comes to fruition. A failure to account for a wide range of retirement scenarios can lead to gaps in your clients’ strategy that could ultimately result in financial shortfalls. Make sure they understand this.

In the course of discussing Social Security planning, advisors should be mindful of these gaps and offer recommendations to reduce the risk of a future shortfall. Common gaps can include the following:

Accounting For Evolving Expenses Over Time

Rising health care costs, inflation, and other cost-of-living changes are almost sure to come over time. Social Security retirement planning can help clients prepare for these new expenses.

Funding Disability and Life Insurance

What happens if your client’s working years are cut short? What if a spouse passes away earlier than expected?

Laying Groundwork For Sustained Asset Management in Retirement

Even in retirement, clients should manage investments and other assets to maximize their growth.

Non-Guaranteed Income Sources

Although IRAs, 401(k)s, and other retirement assets are relatively reliable sources of income, this income isn’t guaranteed. In recessions or other economic events, the value of these assets, and their resulting income, could plummet. Accounting for worst-case scenarios is a crucial component of retirement planning.

Long-Term Care

How might Social Security fund elderly care through nursing homes, assisted living, in-home care and other services?

The Death of a Spouse

In addition to the spousal death planning motivating disability and life insurance purchases, broader retirement planning should account for survivor benefits offered through Social Security.


Taxation of Social Security

How you combine Social Security benefits with other taxable income can dramatically impact the amount of tax owed on these benefits. Clients must consider the impact of combining different taxable and tax-free sources of income with Social Security and what the tax implications are in these scenarios.

Potential Benefit Cuts

With some experts cautioning consumers that funding for Social Security benefits could run out within the decade, advisors need to help clients understand the implications of this event — and build a retirement plan that accounts for this possibility.

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Advise Your Clients on How to Maximize Their Social Security Benefits

Social Security benefits play a crucial function in addressing retirement savings gaps, but how clients plan to claim these benefits can also affect the role of Social Security in providing retirement income for your clients.

Delaying Social Security benefits is a straightforward option for increasing your net Social Security income, and reducing your dependence on other sources of retirement income in your golden years. But delaying benefits also requires you to find other sources of income earlier on — especially if you plan to retire early while delaying Social Security benefits. Otherwise, you could face a financial gap at the start of your retirement that ends up taking money away from income tabbed for later in your retirement.

Clients also need to account for potential Social Security benefit taxes. As an advisor, it’s important to note that not everyone pays taxes on benefits, but clients relying on other forms of income in retirement, in addition to Social Security, will likely pay taxes on their benefit. However, certain types of income, such as Roth IRA distributions, are withdrawn post-tax and won’t impact the taxation of Social Security.

Clients need to understand that when income from other sources exceeds certain thresholds set by the Social Security Administration, they need to add part of their Social Security benefit to their taxable income on their tax return.

Educate Clients With Easy-To-Understand Visual Tools

From webinars to PowerPoints to interactive experiences, visual education tools can help your clients understand the implications of various decisions they make.

Visual scenario-planning tools can illustrate potential gaps and financial shortfalls resulting from different decisions they make or events they may experience, improving their comprehension of long-term retirement planning. Retirement planning software can be an excellent resource for delivering interactive modules and content that uses a client’s specific financial information. Financial advisors can use software, like Social Security Timing®, to illustrate the implications of different wealth management strategies, and demonstrate how various events and variables may affect their retirement outlook.

Find out how Covisum can help your business improve Social Security planning for your clients while also enabling better communication and education on this complex topic. Sign up for a free trial today.


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