The Social Security Optimization Insight helps you compare different Social Security claiming strategies to see how they may affect your client's lifetime benefits.
Rather than telling you the "best" age to claim Social Security, the Insight illustrates the trade-offs between claiming benefits earlier or waiting. This allows you to have a more informed conversation with your client based on their expected longevity, retirement income needs, and overall financial plan.
Understanding the Results
In the example below, the client is expected to live until age 90, and their Social Security benefits are currently set to begin at age 67.
The Insight shows a Break-even Age of greater than 90, indicating that the client would need to live beyond age 90 before waiting to claim Social Security would provide more total financial value than claiming earlier.
The report provides three key pieces of information:
- Break-even Age
- Total Social Security Received
- Value of Investable Excess
Let's look at what each one means.
Break-even Age
The Break-even Age tells you how long your client would need to live before delaying Social Security becomes the more financially beneficial claiming strategy.
Think of it as the point where the larger monthly benefit from waiting has finally caught up with, and then surpassed, the value of receiving smaller monthly payments over a longer period.
In this example, the Break-even Age is greater than 90.
Because the client's life expectancy in the plan is 90, the Insight indicates that claiming benefits earlier may provide greater financial value over the client's projected lifetime. If the client were expected to live well beyond age 90, delaying benefits may instead result in greater lifetime value.
A Simple Way to Think About It
- Break-even Age is greater than your client's life expectancy? The client may receive more lifetime value by claiming benefits earlier.
- Break-even Age is lower than your client's life expectancy? The client may receive more lifetime value by delaying benefits.
Total Social Security Received
Total Social Security Received is simply the projected amount of Social Security benefits the client will receive over their lifetime.
The calculation adds together all projected Social Security payments from the selected claiming age through the client's expected mortality age in the plan.
Value of Investable Excess
A common question when comparing claiming strategies is:
"If my client claims earlier, what if they invest those extra payments instead of spending them?"
The Value of Investable Excess helps answer that question.
When a client claims Social Security earlier, they receive additional benefit payments before someone who waits to claim. The Insight assumes those additional payments are invested rather than spent.
To estimate their value, Voyant creates a hypothetical investment account and:
- deposits the additional Social Security payments into the account,
- uses the growth rate assigned to the plan's Surplus Investment Account, and
- projects what those invested payments would be worth at the comparison age.
Value of Investable Excess at Age 70 shows the projected value of those invested early payments when the client reaches age 70.
Bringing It All Together
The Social Security Optimization Insight is designed to help you compare the financial impact of claiming Social Security at different ages.
- Break-even Age tells you how long your client would need to live before waiting becomes the more financially advantageous strategy.
- Total Social Security Received shows the projected lifetime benefits based on the selected claiming age.
- Value of Investable Excess estimates what earlier Social Security payments could be worth if they were invested rather than spent.
Together, these values help you explain the trade-offs between receiving benefits sooner and receiving larger monthly payments later, allowing you and your client to choose the strategy that best fits their overall retirement goals.