Wall Street Journal recommends Social Security Solutions
Today the Wall Street Journal recommended Social Security Solutions after its evaluation of software to help consumers maximize their Social Security benefits.
Anne Tergesen evaluated a number of different software providers and says, “Social Security Solutions gets my vote for most user friendly.” As part of her evaluation, Social Security Solutions also provided the largest amount of benefits based on the tested client case.
Overall, Social Security Solutions has the deepest logic engine developed by Dr. William Reichenstein from Baylor University. He and William Meyer have published more than anyone else in the country on Social Security strategies.
Anne concludes, “Social Security Solutions - takes into account the widest variety of household configurations and the impact on Social Security of a higher number of other sources of retirement income, and thus allows for greater customization.”
We are proud to bring an easy to use and powerful solution on this important financial decision.
2013 Cost of Living Adjustment is 1.7%
The media asked me about the new 2013 adjustment to Americans’ Social Security. Today the announcement came in, as expected, at 1.7%.
As most people know, last year the adjustment was 3.6% and the previous two years were 0%.
I have 3 comments on this cost of living adjustment:
- Most people will see an increase of about $12 a year ($25 at the high end). Yes, this is it. The joke is that Medicare Part B, which is taken out of most peoples’ Social Security monthly payment is going up $7 a month. So, did the cost of living adjustment really work! NOT.
- The cost of living adjustment calculation needs to change. Without going into details the adjustment is based on CPI-W, which does not accurately assess inflation for health care cost for a senior. Unfortunately, this is an area that is not well understood, but I think more Americans are feeling it since the adjustment is not keeping up with inflation.
- Don’t count on the adjustment making up for claiming sub-optimally. You need to make sure you get all the money you are entitled too. Create smart strategy which may find thousands more.
Run your numbers. Our tool allows you to assess the right variables and compare strategies to figure out how to maximize your benefits.
WARNING – 6 strategies are not enough
In my last post, I spoke about the importance of QUALITY. All Social Security tools are not the same. You need to understand the recommendations you are given on how to claim, but you need to make sure the advice is actually good. How do you know if the advice is good?
We have studied this area extensively. We know the details matter.
Previously, I have written and been quoted about deficiencies in the AARP Social Security calculator. Be careful, you can receive bad results since it does not solve for or give you a strategy for the most benefits you receive over your lifetime.
My point in this post is different. Be careful, also, about the depth of the logic in tools you use. There are 2 new tools that say they “optimize” when they only use 7 default strategies. People, there are way more than 7 strategies to consider. If you do not comprehensively evaluate your situation, you may leave a lot of money on the table.
Here is an example, of the leading financial planning software financial advisors use. They just released functionality to “optimize” social security looking at only 6 strategies. Enclosed is a comparison where the software uses their optimized recommendation compared to our recommendation. This leading tool, tells you that you are going to have a “rainy day” (i.e., in the red zone) and can’t afford your retirement goals. Using the same couple and uploading the results from our software with more detailed logic, we got them more money and showed them that they could afford their retirement goals (i.e., our results got them into the green zone).
The take-away is that quality matters. Make sure you run your numbers and create a strategy on how to claim benefits. But, make sure the answer is accurate and truly maximizes your benefits.
The Quality of Social Security Advice MATTERS!
For the last year, we have quietly known, and have pride, that the QUALITY of our advice is better than everyone else. I know this sounds smug and conceited. But, it is true and we verified it with an independent source.
I founded our firm on 2 principles: 1) we had to be easy to use and work with. Basically, that normal people could understand our recommendations and how to claim their benefits; and 2) we had to be smart…our results had to be the best. This means we show you how to maximize your benefits.
For the last 4 years, we have been dedicated to research on how to create Social Security strategies. To us this means, how to leverage the rules to figure out how to claim to get you the most benefits over your lifetime.
This last year we have published 3 articles in the Journal of Financial Planning, Journal of Wealth Management, and Retirement Management Journal. Our book continues to sell out.
As you have heard me say, there is a huge difference between a good and bad strategy. Be careful, when you hear someone say they will “optimize” your benefits. There are a lot of bad tools and advisors that are not prepared to give you good advice.
Make sure your advisor is using a smart tool as this topic is too complicated to figure out without software. If you are doing it yourself, make sure the service you use is backed by real research. Right now there are free tools that don’t give you the right answer and new services that are too general. I’ll give you an example in another post
The take-away, is that details matter in this niche. If you don’t use a service that is smart, you could be leaving thousands of dollars on the table.
New Research Released By Meyer and Reichenstein on Strategies for Singles
New research on Social Security strategies for singles was released today in the Retirement Management Journal. This report complements Meyer and Reichenstein’s research on Social Security strategies and illustrates the knowledge and expertise that is the foundation of Social Security Solutions’ advice.
The research extends previous knowledge that singles should only consider “breakeven” analysis. The work illustrates important filing dates and ranges where a single person should never claim benefits.
Behavioral Biases in Selecting Social Security
I was recently asked to provide a list of “biases” we observe related to how Americans view and start their Social Security benefits. I’m excited that “awareness” is growing about the positive impact of creating a smart strategy. You will see some good research coming out in the this area using our work and evolving this list:
Behavioral Biases regarding claiming decision with Social Security
1. Bias – “immediate gratification” over significant increase in “delayed gratification” (I’ll take my 1 marshmallow now versus waiting a week for 3 marshmallows)
Over 70% of Americans claim early when they can garner significantly more by crafting a strategy that leverages the rules. Many of the optimal claiming strategies involve a delay of starting benefits. An optimal strategy for a married couple typically pays about $100,000 more in cumulative benefits than starting early.
2.Bias – Fear drives irrational behavior (the “sky is falling” so I’ll get what I can now)
The media has stirred a lot of misconceptions about the viability of the Social Security Trust and the perception that it is a “Ponzi scheme.” History and leading experts show coverage of SS benefits and easy resolutions to fix the system. Many clients, especially those who are retiring near-term, should not be worried.
3. Bias – barriers to “financial planning” (a financial plan is for a rich person and I don’t know who to talk to)
Only 32% of Americans have a financial plan. Research shows a financial plan leads to better outcomes and greater confidence. However, there is a barrier to plan even with a value proposition that you can find significantly more Social Security money.
4. Bias – reluctance to pay for advice (I can find the same information for free)
Many people are hesitant to pay for advice. Some people don’t know who to trust or where to start. Others have been trained that “free” content on the web is all they need. A significant chasm exists between the quality of advice from free tools and general marketing lessons that don’t show a consumer exactly what to do. Payment of a small sum can lead to a significant added amount of benefits, but we hear from prospects a reluctance to spend money on this important decision.
5. Bias – I can do better than the government (I’ll take my money early and invest my proceeds ending up with more money or I will grow my savings faster than if I drew it down to wait to get a higher SS income later)
Both financial advisors and consumers have this misconception. A significant amount of research shows that Social Security is the cheapest annuity a person can buy. Similarly, the 8% credits per year for a delay past full retirement age are significant. I don’t know many advisors or consumers who can find a guaranteed 8% return. We have also shown that the “reinvestment” idea misaligns risk and expected return assumptions that are typically not appropriate for someone over 55 years of age (i.e., you are not going to earn 8% when the risk tolerance expectation for a balanced portfolio is 5%).
6. Bias – never tap your principal (don’t touch your savings for as long as you can)
Many consumers believe a smart strategy is to delay tapping their savings (principal) for as long as possible. Our research in the Journal of Financial Planning shows that using your savings while delaying Social Security from 62 to 70 can add over 10 years of longevity for someone with $200,000 of savings.
7. Bias – the self-fulfilling prophecy (finding content or a firm that tells me what I want to hear)
With the proliferation of content on the web and in social media, it is easy for an individual to find an article or firm that thinks they should take their money as early as possible. We recently had a client who was told by a Vanguard high net worth advisor that it was best for him to start as early as possible. We redid this client’s Social Security and found $127,000 more for his family. He started early because Vanguard told him to do this.
8. Bias – unwilling to consider longevity risk (I may not live that long, so I’ll start benefits early)
People are living longer, healthier lives. Yet we often hear clients say they want to start Social Security as early as possible because they may not live a long life – even though they are currently in excellent health with no concerns. These clients don’t consider there is greater than a 75% chance that at least one of them will live beyond age 83. They fail to compare the risk of living a long life against the risk of depleting their savings. Our tools allow a consumer to make a better decision about when to claim benefits based on their mortality prediction and to compare side-by-side the monthly, annual and cumulative amounts for each strategy.
Please email me if you can identify some other biases!
New research shows SS is the cheapest annuity you can buy, and we agree!
Quoted in the news today – new research is out on Social Security. The take away is that it “pays” to create a smart strategy…sound familiar.
The twist is that the authors use different terminology and relate Social Security to an “annuity.” Yes, it is like an annuity…but, a cheap one. The point of the article is that with low interest rates it is the cheapest annuity you can buy.
The implication is 1) you should maximize your benefits and 2) figure out how to withdrawal your other savings to maximize benefits which will result in your money lasting longer.
Overall, this is consistent with my research published in the Journal of Financial Planning 2 months ago. We showed we could make someone’s money last 2 to 10 years longer by optimizing Social Security.
People, this is a “no brainer” decision. However, the implementation is hard. Make sure you don’t cut a corner to figure out your strategy since you will likely have a lot more money.
The reason to take benefits early, emergencies and tragedies only!
Do you really have to take your Social Security early? Below is an article from the New York Time that talks about some people being forced to take Social Security early.
There are definitely a lot of instances where Americans are forced to take Social Security early…emergencies, tragedies, personal crises, etc. However, many people who feel pinched by cash flow, but are NOT in a crises, still opt to start benefits early.
BEWARE – taking Social Security suboptimally can cost you a lot of money. I published research in the Journal of Financial Planning a month ago that showed how someone with $200,000 of savings could make their money last over 10 years longer by delaying Social Security. It’s even more for married couples. Yes, this means it is better to draw down your savings to claim Social Security later.
What’s the take away? – 1) If you have an emergency and don’t have any options, you may need to take Social Security early. But, if it is not an emergency, don’t start early! 2) Run your numbers. Make sure you understand the trade-off of starting Social Security early. Once you have your personal evaluation, you can make a good decision. Spending money to have an expert help you with this decision is well worth the thousands of dollars that are on the table.
Finally, for those that are really in a pinch, think about “Goldilocks.” Maybe you will need to start early, but even small adjustments can make a big different. Our software and advisors that use our software can come up with strategies that are “a compromise.” Again, run your numbers to see different incomes and the total benefits you can receive out of the system.
More people have money fears
Updated research – should you be scared? Ameriprise released a great research report that updates their findings from 2007…are you feeling worse off? The data says so.
“In 2007, when the first survey was conducted, perceptions were fairly positive. For example, 51% of baby boomers were “very confident” of their ability to assure “a financially secure life” for themselves and their children. Today, however, perceptions are quite a bit darker: only 33% of boomers are confident of their ability to guarantee their own financial security. And, among their millennial children, perceptions have plummeted even more sharply — in 2007, 58% were very confident of their ability to assure their own financial security; today, 37% are.”
Most research shows Boomers’ number one fear is running out of money. I agree this is a scary time, BUT it doesn’t have to be for YOU.
Here are my recommendations:
1) Action time – whether you have saved a lot or a little, there are a number of smart moves to make the most of what you have. Don’t make a mistake. Get help or educate yourself.
2) Plan – don’t put your head in the sand. Run analysis on your situation to see how long your money last.
3) Find an expert. You can be in control of your financial affairs, but spending time with an expert as you transition into retirement or if you are already retired and don’t have a withdrawal strategy is worth the time and money!
4) Withdrawal strategy – make sure you focus in the areas you can control…be tax efficient keeping more of your money. Make sure you keep your costs low. Stay on top of your plan monitoring your spending and how your money is drawn down relative to your plan.
All these steps should be fun. If you are scared, don’t be. Find a fee-only advisor to work with.
Finally, Social Security is the biggest financial decision a majority of people make. ”Run your numbers.” You will be shocked at the difference between a good and bad strategy. Claim benefits to maximize the money you take from the system could result in a lot more money and make you be more confident.
Recommended again in the news on where to go to get personalized help for Social Security
In the news again – It’s always nice to get recognized for good work. I’m happy because more people are learning that choosing Social Security in a smart way can get them a lot more money. Remember most Americans don’t think about this decision and start as early as possible.
Below is the article on us that hit Yahoo and Reuters, and a couple other resources, that talks about how you can get the maximum out the Social Security benefits you are entitled to. What makes us different, is that we tell you exactly what to do. Other calculators and services allow you to enter in start dates, but they don’t tell you what to do. Based on your information, we tell you a strategy that “gets you more.” It’s based on real academic and published research from us you can learn about in our book on Amazon entitled, Social Security Strategies or in the Journal of Financial Planning.
The article below is one of the first articles that talks about “getting help.” It is worth getting help and making sure you have a smart strategy. Remember the difference could be a ton of money for you. Don’t make a mistake. Do your research and consider talking to an expert related to this decision. The good people in the Social Security offices are NOT allowed to give you advice. You will need to find and advisor or resourced online to figure this out.
New research from us in the Journal of Wealth Management. Low interest rate environment impacts claiming decisions.
New important research from us – Today I received my Journal of Wealth Management. You can see the article abstract attached below.
I’m impressed as it is the prettiest journal, wrapped in plastic, and printed on thick paper. Most importantly, I think it is the premier journal in financial services. The editor is Jean Brunel who is the famous former Chief Investment Officer at JP Morgan years ago and trustee of the CFA research institue. The research is for a investment managers and technical. Mostly geared to advice and strategies for the ultra rich.
Look for our next working to come out soon directed to help Government Employees and Teachers. I think it is the best work I have ever done. Our software includes the logic which rolled out over the weekend. I’ll share more about this later as a lot of good things are coming to life.
I’m very proud to have our work accepted here.
Why mortality is so important in creating a strategy
The bottom line is “run your numbers”…see the difference in cumulative benefits so you can make a good decision. Remember this is the largest financial decision you will make in your life. And, you can’t change once you make an election.
Our software is recommended for advisors by leading financial services analyst
Can’t we all get along? I’m laughing after reading this article about our firm in this month’s Financial Advisor Magazine, see below. It is written by a well known expert on technology and advice tools that help advisors.
I’m proud about his nice comments about our technology and how Social Security is important for advisors. He is very complimentary about our application and talks about many of the powerful features. However, at the end of the story he talks about how advisors may not want to use our software because we also help consumers directly. Hmmm?
Well, I have some experience in this topic first working at Charles Schwab that has a direct-to-consumer business and the leading platform independent advisors use (tools and services to support advisors). Also, this topic has come up in a number of larger firms I have provided consulting services to. Anyway, most advisors worry about the wrong thing. The personalized and expert service good advisors provide is always better than an online tool!!!!!
Some consumers may want to go online and play around…learn. Some people will want to “validate” ideas before they make a decision. Others, will just hire an advisor and let them take care of all their affairs. My experience is most consumers who use online tools are not the typical “delegating” type where they just hand everything over to an advisors. So, I say, “can’t we all just get along.” Our services to consumers are designed differently for individuals. And, our application to advisors is designed for advisors to help their clients.
I can tell you our mission is simple….help as many people as we can get more benefits from Social Security. I don’t care if it is through our company or through an advisor that uses our tools. Actually, I’m even good if a consumer or advisor just reads our research or learns techniques from us where we make no money. At the end of the day, this is about making smart informed decisions. It might be a better move for us to focus on only servicing financial advisors…we definitely would make more money. But, we will never do this! Again, we simply want to get the word out on how important Social Security is and help as many people as we can make a better decision.
If You are Under 40, Do Not Bank on Social Security
Quoted in the Wall Street Journal – over the weekend I was quoted in the WSJ…I think the title of the article is funny. “If You’re Under 40, Don’t Bank on Social Security.” http://online.wsj.com/article/SB10001424052702303592404577362204167117454.html#articleTabs%3Darticle
The key is that there is a lot of misinformation about impact if you are over 50…the bottom line is that if you are close to retirement, use the existing rules and evaluate how you get all the money you are entitled to. You might be surprised that a few small maneuvers could result in a lot more money to live on in retirement.
We have smart tools on www.socialsecuritysolutions.comthat allows you to see how to maximize your benefits and “compare” other claiming dates you think fit your plans.
Meyer quoted on CBS MarketWatch
Finding patience in a firestorm is very hard…I’m quoted in an article today about Social Security. The “story of the day” is the funding of the US entitlement programs. People, this is old news….nothing is really different. These results were expected by the specialists and experts running the program.
Yes, the system will need to change. The key issue for you is ”what is your plan related to Social Security?” Many people see the media spin on all the negative news and take benefits early thinking they will “take their money and run.” I suggest this might make sense for some, but a thoughtful evaluation might result in a different strategy for you.
The system is not likely to impact or change over night given the complexity, the fact the government can’t move quickly to implement anything, and finally the political fallout. All the experts say near-term retirees should use the current rules to evaluate their options related to Social Security.
There is no contesting that you can find a lot more money by creating an strategy to pull your benefits out of the system in a smart way. We have shown this in the leading academic journals with our research.
I conclude by admitting that I am not a very patient person. And, in an environment of “fear” it is easy to make rash financial decisions. Don’t do it. It could cost you dearly. Hire an expert to help you see how to take your Social Security and integrate it into your financial plan.
Finally, if you have a component of delay in how you take your benefits, watch the news over time. We have developed a system to do this for you and notify you about impending change and the impact to your plan. Let your advisor “watch out for you.”
So, run your numbers and get informed about the recent news. But, don’t overreact or be emotional as you might leave a lot of money on the table.
Fewer people claiming at 62
The word is getting out. Here is a recent article reporting on data that 10% less men and 8% less women are claiming as early as possible at 62. This is consistent with findings from another poll that will soon be released by Kiplinger that says more impending retirees intend to wait to receive more benefits.
I contend this trend is the combination of 2 factors: 1) the economy is getting better, and 2) people are starting to learn that they can find a lot more money by constructing a smart strategy as opposed to just filing as early as possible.
Want a guaranteed 7% return in todays market? Then maximize your Social Security
Here is an article in this weekend’s Wall Street Journal about some recent research done by a Stanford and Occidental professor sponsored the Social Security Administration. I’m familiar with the research since it referenced our research we published on how to create a Social Security Strategy.
They focused on “returns” or return comparisons by maximizing your benefits. Check out the picture (enlarge image at the top) – return of a 10 yr Treasury Inflation Protected Bond -.26% OR return of an example married couple maximizing Social Security 7%. We have a paper coming out very soon in the Journal of Wealth Management on this very same area.
People, I don’t care what dimension you use…1) how much longer will your money last by maximizing Social Security, 2) how much more Social Security benefits you can receive, 3) how much more income you will receive, or 4) added “return”….all the numbers show the same thing. If you create a smart strategy to maximize your benefits, you will be a lot better off.
We have the leading application based on our research to help you get the most benefits. Also, the best planning process to show you how to combine your Social Security with a withdrawal plan on our other site www.retireeincome.com.
This is a very important decision. Make sure you take time to do some research to increase your benefits.
Putting the hoopla to rest that Social Security is going away
April 23rd we get the new numbers on the funding status on the Social Security Trust Fund.
As we have reported, the “sky is not falling.” This article predicts rosier news from Trustees on the funding status. The media has confused a lot of people into thinking taking benefits as early as possible is smart. The system will need to implement changes over time, but people over 55 years of age are likely to not be impacted.
Here is a quote from the article below regarding a new educational campaign to broaden education in this area, “The Campaign says the trustee report will also help put to rest the “misunderstanding” that Social Security has entered a cash deficit situation where it is paying out more in benefits than collecting in income. “Social Security is prohibited by law from doing that. It can only pay benefits if it has sufficient income to cover all costs. If there were less income than outgo this year, the Trustees would be reporting that benefits would not be able to be paid in full during the remainder of 2012!,” the Campaign says.”
Every speech or interview I give on Social Security the topic of “funding status” or that Social Security is going bust comes up. I will be relieved to have more people and data to help you feel confident that your Social Security is not going away. The bottom line is that you should figure out how to maximize your benefits to get the most money out of the system.
Social Security Trustees Will Report Large, Growing Surplus: Advocacy Group
Do not get torpedoed
Tax Torpedo – be careful how you withdrawal your retirement savings. It is easy to make a mistake and increase the taxes on your Social Security. I’m quoted in Investment News today. Mary Beth Franklin, expert on Social Security and retirement planning, interviewed me a while back on the tax torpedo. This is an article for advisors, but there are a few examples that are worth reading.
What is this? If you withdrawal your money from your savings the wrong way, your taxes on Social Security could go up SIGNIFICANTLY. Don’t let this happen to you. Some simple analysis and advice on the order to withdrawal your assets, can save you thousands of dollars.
“Advisers need to be careful to consider taxation on Social Security to ensure they don’t bump their clients’ taxes on benefits from 50% to 85%,” Mr. Meyer said. “If you control for taxes on Social Security, you can help your clients keep more money to fund their retirement.”
Our New Research is Out!
I’m very proud of this work and want to give you some of my thoughts. I see this research as a large “breakthrough” for retirees and improving financial advice. Overall, the premise of the research is so simple it makes sense! If you get more Social Security, your money will last longer.
1. Deciding when to take Social Security is the largest decision you will make in your life. We showed that this decision adds 2 to 10 years to the length of how long your savings will last depending on your affluence.
2. The amont you have saved doesn’t matter. You should consider a strategy that maximes because it will have a huge impact on your financial situation. Note, the greatest impact is for families that haven’t saved as much. For example, someone who has $200,000 of savings can add +10 years of longevity to their money by maximizing Social Security.
3. This is the first study that addresses Social Security and taxation in the retirement income literature about the “4% rule.” It is crazy to me that there are all these “rules of thumb” that exclude the biggest elements that will impact your retirement strategy…taxes and Social Security.
I’ll post more about the research over time. But, here is the bottom line: 1) if you haven’t started Social Security, definitely spend time learning about creating a smart strategy to get more money, and 2) if you have started Social Security, make sure you withdrawal other saving you have to minimize the taxation of Social Security. We’ve developed tools to help you with this. Also, we can give you some educational pieces or guide you.
People, by carefully integrating Social Security into your financial plan every year can add thousands of dollars back into your pocket.
So, I’m proud to share our research with you and the financial services industry. We worked on this for a long time. I’m hopeful other institutions can use these ideas to help more Americans live better in retirement.
On behalf of our team, welcome to our site. We are proud to bring you services that will help you “Get More” Social Security.
Dr. Bill Reichenstein, from Baylor University, and I have worked for many years to develop the research, published in the Journal of Financial Planning, that underlies our technology.
Our mission is to help you maximize your retirement benefits! This is a very important decision and you won’t be able to change your strategy in the future. Within seconds you will receive a “recommendation” from us that will show you how to get the most amount of benefits. However, this is just a place to start. Our interactive tools will allow you to create and personalize other strategies that you believe are good for you.
My advice to you is “compare.” Come in and look at our recommendation and also compare it to other strategies. You will have the diagnostics and tools to see the difference in benefits and income one strategy will give you over another strategy.
There are a lot of rules and complexity. Register for our service so we can help you and make it easy to see the difference between claiming strategies. Again, our goal is simple…”get more” benefits. So, don’t leave money on the table. Come and receive your Recommended Solution and read our educational content to make the best decision possible for your situation.
Best of Luck, Bill
Social Security Solutions
Social Security Strategy
Cost of Living Adjustment
Social Security funding