To help your clients plan their Social Security filing options, your first challenge will often be to help them evaluate the right benchmarks to guide their decision-making.

Two of the best SS benchmarks are highest wage earner benefits (HWEB) and total lifetime benefits. Focusing on these will generally provide the greatest value to a family’s financial picture.

Clients, however, often see things differently. They will focus more on the short-term and may be driven by emotional issues and, consequently, risk making uninformed choices and missing out on enhanced benefits. As financial planners we need to understand common mental errors and help move clients’ perspective.

One common client worry is “getting my money back.” Many people expect to “get back” what they paid into the system. This is a common, and somewhat understandable attitude. But it ignores the fact that Social Security is an insurance program: the money is pooled and there are no individual accounts.

This concern is further fanned by worries about the solvency of the SS system. Clients often hear about the IOUs in the SS trust fund. While this is literally true, it is also unnecessarily alarmist. In the investment world, we call them bonds and they are really not so scary. But it is a common type of fear-inducing comments that clients will encounter in the mainstream media.

Loss aversion is likely also part of the picture. This concept was popularized by Nobel prize winner Daniel Kahneman, who famously showed that humans are inherently conservative and we feel loss more strongly than gain. Even a remote possibility that a client will not get the Social Security benefits to which they inaccurately but sincerely feel entitled may push them to get all they can as soon as they can.

All of these dynamics conspire to induce people to collect benefits at the earliest possible age. Today almost 80% of Americans are still claiming early benefits, often forgoing enhanced payments and ignoring their best long-term interests.

As financial planners, we need to help clients understand the challenges they face (particularly increasing longevity) and how to maximize SS to help manage these challenges.

Optimizing the highest wage earner benefits is one of the most important goals and benchmarks for Social Security planning. This will be the amount that will be collected by the surviving spouse when the first spouse dies. Having this optimal, inflation-adjusted benefit guaranteed to the surviving spouse, when they are typically at an advanced age, should be a core SS planning goal.

Another important benchmark is projected total lifetime benefits. Based on mortality tables, the basic health history in the couple’s families, the planner and clients should look at maximizing the present value of projected lifetime benefits.

Lastly, emphasize to clients the importance of guarantees. The annual Health and Retirement study from the University of Michigan has been polling 25,000 Americans over age 50 annually for most the last 15 years. Their results are clear and confirmed by numerous other studies. People who collect guaranteed, annuitized income, such as what Social Security provides, are consistently more satisfied with their lives. This is especially true among families with less wealth. Help your clients look at the big picture and make it your goal to help them maximize the benefits they get from this important program.

Paul Norr is a financial planner in Thousand Oaks, California and writes about planning and retirement. His website is

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