How to Help Clients With Make-or-Break Social Security Claiming Decisions

By the time the generation finishes its retirement journey, more than 70 million baby boomers will collect Social Security. In claiming their benefits, they will have potentially life-altering financial decisions to make.

According to Nicole Birkett-Brunkhorst, certified financial planner and wealth planner at U.S. Bank Private Wealth Management, Social Security is arguably more important than ever now that pensions have declined in prevalence.

That decline has left many older Americans (and future generations) expecting to navigate retirement with only their private savings and their Social Security checks.

In a new interview, recounted in Q&A format below, Birkett-Brunkhorst told ThinkAdvisor that this state of affairs means financial advisors have both an opportunity and an obligation to step up their game with respect to “all things Social Security,” and on the income planning issue more generally.

That’s why Birkett-Brunkhorst recently went through the effort of becoming a registered Social Security analyst via a course administered by the National Association of Registered Social Security Analysts. She said the course (in addition to her extensive planning experience) has given her deeper insight into the critical considerations that go into Social Security claiming — when to claim, how to claim and what these decisions mean for a client’s lifetime benefit.

“People need personalized answers about Social Security,” Birkett-Brunkhorst said. “By getting the claiming decisions right, you can help clients potentially gain tens or hundreds of thousands of dollars in additional Social Security income.”

For clients who are in the middle class, these decisions can make or break the retirement plan, she explained, while those in the mass affluent and highest-income segments can generate additional income that can be essential in meeting more ambitious discretionary spending needs or achieving their desired legacy plans.

In the end, advisors who can deliver timely and actionable Social Security insights will be well positioned to win and retain highly desirable clients, while those who lack such insight may find themselves losing relevance among the baby boomers and future generations.

THINKADVISOR: Can you please start by telling us about your background and role at U.S. Bank Private Wealth Management? Specifically, how important are retirement-focused topics today among your clients?

NICOLE BIRKETT-BRUNKHORST: Yes, to begin with, I have been with the bank for about 15 years now, including serving in this current role helping to lead the financial planning work for our clients since 2013.

At U.S. Bank Private Wealth Management, we function as a team of advisors, and as I said, my role is to be the lead financial planner, which means helping our clients identify their goals and create holistic strategies to achieve them. It touches on a lot of different things, from retirement income planning to home purchases to helping individuals save for their children’s college education.

To your question, yes, retirement is a consistent theme and topic of planning for our clients, especially those who are in the baby boomer generation. This is why, last year, I became a registered Social Security analyst.

While serving clients who are focused on retirement, it became apparent that there is a real lack of awareness of how to claim Social Security effectively and why that matters. People out there might have a basic idea about the potential to delay claiming to get a bigger benefit, but they don’t know all the nuance, and a lot of advisors don’t, either.

It is interesting and rewarding work, and it’s very collaborative. Within U.S. Bank, we have a “one bank mentality.” Wherever you are in the wealth spectrum as a client, we want to help you, and that starts with lower income people and it ranges all the way up to high-net-worth and ultra-high-net worth services.

When it comes to Social Security claiming, what are some of the key themes you would highlight for advisors?

It’s all about understanding how to maximize your Social Security benefits — both while you are working and when collecting.

To begin with, this means making the most of the 35 years of work history that are factored into the benefit calculations. Any year where there is no work history, or insufficient money earned, will result in a zero being used in the calculation. That’s not a great thing.

It’s not the end of the world to have one or two zeros, but it can really drag down your benefit if you have a lot of them. Fortunately, there are various ways to bolster your work history, for example by working a few years longer than you might have expected to.

You can also be more strategic earlier on in your career by ensuring you meet the amount of earnings required for a quarter of coverage. In 2023, that is just $1,640 per quarter, which is not a ton of income.

Other fundamental steps are creating a strategy for married couples to get the most out of survivor benefits and understanding the income tax implications of drawing benefits while you continue to work before your full retirement age.

Another key is to understand how cost-of-living adjustments will affect your clients’ projected benefits over time. Generally, I advocate for using conservative COLA assumptions. Since 1975, there have been three years without a COLA — in 2009, 2010 and 2015. Looking back at the last 20 years, the average COLAs were much more modest than the ones we saw for 2022 and 2023, averaging about 2.5%.