Social Security Optimizer User Guide
Overview Quickly and easily determine the most optimal Social Security claiming strategy for your clients. Stress test complex scenarios, such as a reduction of Social Security benefits in the future or the impact of different life expectancy assumptions, and the opportunity costs related to delaying benefits. What strategy would produce the most li...
What is 'Opportunity Cost' for Social Security?
When the Social Security Optimizer talks about Opportunity Cost, it’s really answering one question: “What is the value of getting money now instead of later?” A dollar today is worth more than a dollar in the future, that’s the time value of money. A dollar today can be used, enjoyed, or invested right away. A dollar you get years from now might no...
Ways to Estimate Social Security Income
Social Security Eligibility For each client in the household, select whether to include Social Security benefits using the application's built-in Social Security calculations. To use the Social Security calculator, just choose Yes for the Include Social Security benefit option under the client's name. If you're dealing with a special Social Securit...
Why do Social Security and other lifetime income streams run through the end of the plan in the Income Sourcing graph?
The Income Sourcing graph and table show all lifetime cash flows as lasting through the end of the plan, whether those cash flows continue through the end of one person's life or both lives. In other words, this graphic shows the income makeup if both clients live through the end of the plan. This is meant to avoid showing an arbitrary death in the ...
Why don't I see exactly 50% or 85% of Social Security benefits being taxed?
The taxability of Social Security has a meaningful effect on tax estimates and can be a key part of tax-smart distribution planning. So, it's important to get those estimates right. For example, if a plan simply assumed that fully 85% of benefits would be taxed every year of the plan, that plan would likely be far from the truth for many plans. The ...
Advanced Settings for Social Security Modeling
 Video: Advanced Settings for Social Security Modeling Video Transcript Welcome. This video will walk you 0:02 through one of our latest features in 0:03 the Income Lab software, the ability to 0:06 now have advanced settings to better 0:08 customize Social Security modeling. So, 0:10 to get to the new feature, we want to go 0:13 to the advanced se...
How do I enter Social Security income that is already being received?
You can enter regular Social Security benefits in the 'Social Security' tab of the plan inputs. If the plan includes Social Security benefits under a special situation, such as survivor benefits or windfall elimination (WEP), you can enter them on the 'Other Income' tab. If you are entering benefits on the 'Social Security' tab, you have two options...
How is inflation applied to Social Security income?
Social Security income that is entered using Income Lab's Social Security inputs are all treated as adjusted for inflation. For projections, that means Social Security is treated as providing a cash flow that keeps up with inflation and, in nominal dollars, grows at the assumed inflation rate. For parts of the app that show future projections, you c...
How is Social Security break-even age calculated?
The Break-Even Age displayed in the Social Security section(s) of Income Lab shows the age at which total net-of-inflation benefits received after delaying claiming Social Security would equal or exceed total benefits received if they are taken as early as possible. "As early as possible" is either age 62 (if the client(s) are not yet 62) or as soon...
How to enter special Social Security benefits
The Social Security section of Income Lab covers situations where clients are alive and are receiving or will receive Social Security under their own benefits (or a spousal benefit based on the spouse's benefits), using standard calculations and the plan's assumed inflation rate. For any special situations or planning needs, you may need to enter So...
How to handle Spousal Social Security benefits
Spousal Benefits A spousal Social Security benefit is one that is based on not on a person's own earnings, but on those of their spouse. A spousal benefit is based on 50% of the spouse's PIA (primary insurance amount), reduced if the person receiving the spousal benefit claims Social Security before normal ("full") retirement age. Note that spousal...
Social Security FAQs
1. What is an 'Estimation Method' for Social Security benefits? Social Security benefits that will be received in the future depend on a person's 'Primary Insurance Amount' (PIA). If you know this number, that is the most accurate method of estimating future benefits and how they differ depending on the claiming date. However, when someone doesn't k...
Why do Social Security Benefits start lower than I expected and then change?
If a Social Security Benefit begins after 'Full Retirement Age' (FRA), or what the Social Security Administration calls 'Normal Retirement Age', it usually benefits from deferral credits, meaning the benefit will be higher than it would have been if the person had begun Social Security at or before FRA. If the benefit begins mid-year, however, you m...
Why don't I see spousal benefits starting earlier than other benefits in Social Security scenarios?
Prior to the Bipartisan Budget Act of 2015, there were ways to take spousal benefits to begin either before someone's own benefits or the spouse's benefits. File and Suspend: In this strategy, someone could file for benefits, making their spouse eligible to receive spousal benefits, but then suspend their own benefits, allowing those benefits to gro...
How Social Security Benefits are Adjusted for Earned Income Before FRA
Social Security retirement benefits are for those who are retired. In recognition of this, the Social Security Administration (SSA)Â will make adjustments to benefits if someone claims benefits before Full Retirement Age (FRA) but continues to earn wages or self-employment income (earned income) above a certain level. When benefits are reduced due to...
Why don't Social Security benefits start when they should?
Here's a common situation: you have an Income Lab plan where Social Security benefits are claimed at 62. But then you go to the Cash Flows > Income Sourcing screen and see that they don't start until age 67. Or maybe you see a few months of benefits here and there before age 67, but there are a bunch of gaps. What's going on? The reason you see t...