With all of the factors to consider when helping determine a client's best strategy for claiming Social Security, software can be a godsend. But which tool offers the best output for the cost?
I looked into two of the most popular Social Security software options, running test scenarios on each, and found some interesting results.
Although Social Security Analyzer (from Social Security Solutions Inc., ssanalyzer.com) is, without a doubt, the Lamborghini of tools for analysis of this sometimes confounding aspect of a client's retirement, many advisers won't need something so sophisticated and expensive. But if advisers plan to make Social Security analysis a mainstay of their practice and are pretty sure they will encounter innumerable exceptions in client scenarios, Social Security Analyzer is their best choice. Traditionally priced at $1,200 per year, Social Security Solutions came out with lower-cost versions of its software May 1.
For those who need to do less-comprehensive analysis for their clients, Social Security Explorer (from Impact Technologies Group Inc., impact-tech.com) might be a more suitable choice — at $300 for an annual license. As Explorer's user guide points out, there are 81 possible starting-age combinations you could be confronting when you sit down to work with clients. But that is just the beginning. Because Explorer provides users with seven different strategies for the 81 combinations, there are 567 options available.
My colleague Mary Beth Franklin came up with several hypothetical scenarios for me to plug into each software tool, and I kicked the tires of each, with the following results:
WHAT TO READ A closer look at Davis' Social Security software face-off
Think of Explorer as the Toyota or perhaps a Lexus to Analyzer's Lamborghini. That is not meant to be negative — the tool is intended to provide more of a quick analysis. It has simple inputs, including a mix of drop-down menus, numeric input fields and slider bars. It is also probably more inviting in terms of how user-friendly its interface is.
An adviser enters the marital status of a client, his or her age and that of the spouse, the monthly benefit and that of the spouse — and then come the sliders, where you must estimate the age of death. It sounds harsh, but that is how all of these tools work. You have to make a guess as to when your client and his or her spouse are likely to pass away.
Two other slider bars are used for the investment return estimate (0% to 10%) and cost-of-living adjustment, which is set at a default 2.5%.
Run the simulation, and results populate a square with 81 boxes of potential claiming-age combinations. These are color-coordinated, and as one might expect, green equates to good, and the others less so.
More than 1,800 rules related to Social Security selection have been entered into the algorithm engine that runs the Analyzer product. Tax consequences are built into the algorithm, as well. Analyzer also has a very robust reporting engine that is highly customizable.
The single most obvious difference between Analyzer and Explorer is that Analyzer can present an adviser and clients with a side-by-side comparison of hypothetical results.
HOUSEHOLD PROFILES
Household profiles are another area of strength in the program. There is nothing worse than having a client whose situation doesn't fit a cookie-cutter mold and therefore cannot be entered into a software program. With Analyzer, in addition to the predictable single, married, divorced and widowed options, there are also profile choices that include families with minor children at retirement and those with non-covered pensions — profiles that Explorer lacks.
A “strategy list” tab allows advisers to keep track of strategies they can recommend to clients based on goals. Additionally, an adviser can download a strategy into a few different formats for uploading into other applications, including several financial planning programs.
Social Security Solutions also has a marketing program on Social Security planning that includes a turnkey seminar system, ready-made microsites an adviser can use with his or her website, and an education and lead program.
As mentioned previously, the company came out recently with lower-cost versions of its software. The basic Analyzer product is $300 per year and offers the logic available in the full Analyzer tool, including strategy analysis and diagnostics, comparison of strategies side by side, the input of household profiles, report and proposal generation, and technical support.
The more robust Analyzer Pro is $650 per year during a “summer promotion,” with a regular price of $850. It will have all of the features listed above, with the addition of Social Security Zone, which allows an adviser to consider a spectrum of mortality combinations.
Finally, Analyzer Premier is $1,000 per year during the initial promotion period, with a regular price of $1,200. Everything above is included, plus access to product support in the form of certified financial planners who can answer questions and assist advisers with those unexpected conundrums.
