Six Steps for Effective Social Security Claiming

Clients struggle with making right the Social Security claiming decision. This article provides a six-step process to guide clients through the complexity of Social Security.

1. Obtain the client’s Social Security statement

The first step is to understand where your client stands with Social Security. This information is contained in the Social Security statement. The statement includes the earnings history up to the maximum taxable limit for each year, which the client should double-check for accuracy, as well as estimates for benefit amounts. These estimates include retirement benefits if claimed at 62, full retirement at age 70, as well as disability, family, and survivor benefits if claimed in the current year due to disability or death. The Social Security statement is mailed every five years, and then annually after age 60. But you should encourage your clients to signup up here to view the statement online and to prevent fraudsters from opening an account in their name.

2. Understand the assumptions used in the statement and how to make adjustments

The benefits shown on the Social Security statement are based on numerous assumptions. The first, which is very important to recognize, is that the benefits are expressed in today’s dollars. That makes them straightforward to understand in terms of current income and spending. The actual benefits received will be adjusted for future inflation and cost-of-living adjustments.

More generally, the benefits shown on the statement do not consider inflation or wage growth. Future inflation and economy-wide wage growth, as expressed through the average wage index, are assumed to be flat. As well, future earnings are assumed to match the value shown on the statement, which is based on the earnings from the most recent one or two years shown.