How LifeYield Found the Johnson’s an Extra $100,000 in Social Security Benefits

Social Security is far more complex than many people realize, and this complexity can make the decision regarding when to claim Social Security benefits a daunting one.

There are many options to consider around timing, as well as, how to file for benefits, and how to choose between these options, which can lead to a significant difference in Social Security income over an individual’s or a couple’s lifetime. In addition to the many possibilities, people have their own worries, such as time they took away from the workforce or their spouse’s life expectancy.

Advisors can help their clients overcome these worries and navigate through filing options to determine the ideal age to claim Social Security benefits and maximize their income.

Using the LifeYield Social Security Advantage, advisors can analyze numerous filing options, and find a filing strategy which may provide the greatest total benefit over the client’s lifetime at a specific point in time and given certain specific circumstances.

Here’s an example—

Chris and Amy Johnson both want to retire at age 66. Chris was born in September 1953 and Amy was born in January 1958. Their advisor input this information into the LifeYield Social Security Advantage tool to determine the ideal time to file for Social Security Benefits.

Option 1 (Delay filing)

• Chris files for his own retirement benefits at age 70 in September 2023.
• Amy files for her own retirement benefits at age 69 in January 2026.
• Amy switches to survivor benefits at age 84 in October 2041.

In this scenario, the couple’s cumulative benefit would be $1.398 million.

The results for this scenario are great. But it will mean that Chris and Amy must find a way to bridge the income gap between retirement at age 66 and filing for Social Security benefits at age 70.

Maybe that is not possible or not ideal. Should they file at a different time? To determine the answer to this question, the advisor ran several more scenarios through Social Security Advantage that look at different ages to file (there is no limit to the number of scenarios that can be run).

Option 2:

• Chris files for his own retirement benefits at age 66 in January 2020.
• Amy files for her own retirement benefits at age 66 in July 2023.
• Amy switches to survivor benefits at age 84 in October 2041.

In this scenario, the couple’s cumulative benefit would be $1.297 million ($100,000 less).

Knowing now that filing at age 66 would result in $100,000 less from the Social Security Administration, the Johnson’s must decide if they will wait to file and cover the gap, or if they will file earlier and ultimately earn less in Social Security benefits.

The right strategy for a couple might not be the optimal strategy. It is up to the advisor to help guide couples through this process to determine outcomes that they can live comfortably with.

The LifeYield Social Security Advantage® tool is available to both advisors and plan sponsors in order to help their clients enjoy their personal LifeYield tax-smart retirement income throughout their retirements.