Re-Think Social Security

Social Security isn’t just a government program; it can be an important component of your client’s retirement income plan. One of the deciding factors is the age at which they start taking benefits, as it directly — and permanently — affects the amount of their monthly benefits check. With your help they can change the way they view their social security benefits.

To help you develop their benefits claiming strategy use the Social Security Optimizer, a simple tool with a step-by-step guide. It uses certain assumptions to produce benefit estimates that seek to maximize the benefits paid. You can also customize a benefits filing strategy based on data inputs for your client's specific situation and compare it with the maximized strategy.

The Optimizer can also identify the amount of assets needed to help supplement income while delaying Social Security benefits or to replace benefits lost after the death of a souse.

Helping them develop this strategy may also make them more likely to consolidate their retirement assets with you as well as refer their friends and family.

Launch the Social Security Optimizer Tool

This hypothetical example illustrates the impact of the Social Security claiming decision. Filing to begin benefits at the earliest age possible, 62, results in 23% less benefit than waiting until age 66+6mo, Full Retirement Age (FRA). Delaying until age 70 produces an even higher benefit.

Tip:

Try allocating Social Security benefits to the fixed income portion of a client’s asset allocation and allow for other assets to be invested in growth-oriented strategies. This approach could provide the long-term inflation protection clients need for a lengthy retirement.

Total Lifetime Benefits Age 902

Age 62 $742,516

Age 66+ 6mo3 (FRA) $966,917

Age 70 $1,161,521

$419,005 MORE if
you wait until 70

Here are some Frequently Asked Questions and Answers to help with some of your clients’ concerns.

Important Legal Information

This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. How and when to claim Social Security benefits is a personal decision, and can depend on a number of factors --such as your financial and individual situation, health, family longevity, and tax and social security laws which can be complex and subject to frequent change. Any investment products or services named herein are for illustrative purposes only, and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial advisor for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance.

Franklin Templeton Investments (FTI) does not provide legal or tax advice. FTI is not responsible for content on the Social Security Administration's website. Federal and state laws and regulations are complex and subject to change, which can materially impact your results. FTI cannot guarantee that such information is accurate, complete or timely; and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.

All investments involve risks, including possible loss of principal. Investing in a Franklin Templeton fund does not guarantee that you will have sufficient funds to meet future retirement needs.

Your clients should carefully consider a fund’s investment goals, risks, charges and expenses before investing. Download a prospectus, which contains this and other information. Your clients should read the prospectus carefully they invest or send money.

Footnotes

  1. The Franklin Templeton Retirement Income Strategies and Expectations (RISE) survey was conducted online among a sample of 2,002 adults comprising 1,000 men and 1,002 women 18 years of age or older. The survey was administered between January 17 and 28, 2019, by Engine’s Online CARAVAN®, which is not afiliated with Franklin Templeton Investments. Data is weighted to gender, age, geographic region, education and race. The custom-designed weighting program assigns a weighting factor to the data based on current population statistics from the U.S. Census Bureau.
  2. This chart is hypothetical and for illustrative purposes only; individual Social Security benefits will vary. Taxes have not been taken into account. Source: Franklin Templeton with data derived from the Social Security Administration, Quick Calculator on ssa.gov website as of January 2019. For this example, we assume the individual has a birth date of 6/5/1957, is earning $80,000/year in current earnings covered by Social Security and has a future retirement date of June in the selected year. Additionally, the Quick Calculator assumes the individual works every year until benefits are received. Future increases are estimated using the national average wage index (AWI) under the intermediate assumptions in the 2018 Trustee’s Report: www.ssa.gov/OACT/TR/TRassum.html. Total lifetime benefits assume cost of living adjustment (COLA) increases of 3% per year effective January of each year.
  3. Normal (or full) retirement age based on a birth year of 1957.

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