How employers can help their employees with Social Security planning

Your employees’ retirement timing decisions will depend on a variety of factors, including their accumulated vested assets in your company’s plan. Another key variable is Social Security. But the Social Security benefit “claiming strategy” that’s best for them isn’t always easy to determine. Online Social Security benefit calculators can help.

Choices of age

The basic task for most people is weighing the pros and cons of retiring and claiming benefits at:

The earliest possible age of 62 (in which case the annual benefits will be the smallest),
“Normal” retirement age (which varies depending on the year the person was born),
Age 70 (at which point deferring claiming benefits doesn’t increase the annual amount), or
Some point in between.
Keep in mind that your employees can begin taking Social Security benefits before they retire from your company. If they do so, their current benefits might be reduced, depending on their age and how much they’re earning. But their future Social Security benefits can increase. There are also tax considerations involved with taking Social Security benefits while continuing to work.

Various calculators

The SSA issued a study comparing six free online calculators that focus exclusively or primarily on Social Security benefits. One was created by the SSA itself, and the others by the Consumer Financial Protection Bureau, the Center for Retirement Research, AARP, Financial Engines and Bankrate. Many more exist.

The SSA study, A Comparison of Free Online Tools for Individuals Deciding When to Claim Social Security Benefits, doesn’t rate the different calculators. But in describing how each works and detailing their advantages and limitations, the study concludes that there’s no single available free tool that meets every need. However, the resources identified can provide some useful guidance to employees.

Overall effectiveness

Advising your employees to review the SSA study and the different online tools could be helpful as they begin to contemplate the timing of their retirement. The study is available on the SSA’s website (https://www.ssa.gov/policy/docs/rsnotes/rsn2016-03.html). Our firm can help you find ways to enhance the overall effectiveness of your retirement benefits.