Social Security and your clients' retirement plans

Some clients will be surprised at the choices they have when it comes to their Social Security payments.  They may not want to simply turn on the benefits as soon as they’re eligible.  Here’s why. 

How are Social Security benefits calculated?

Your clients’ Social Security benefit payments will depend on a number of factors: how many years they worked, how much they were paid, their age when they begin receiving benefits, and whether they continue to work while taking benefits. 

The Social Security Administration uses the 35 years in which your clients earned the most money, applies a calculation, and comes up with their “primary insurance amount,” which is the benefit they’ll receive at their full retirement age. 

If they wait to take benefits, they’ll get more

While your clients can start collecting Social Security at age 62, if they can wait longer, they should.  That’s because their benefits go up if they wait until full retirement age or the maximum age of 70.

  • Take benefits at age 62 and their benefits will be permanently reduced by 25 to 30 percent.
  • Start collecting at full retirement age (65 to 67, depending on when they were born) and they’ll receive 100 percent of their benefits. 
  • Delay taking benefits until after full retirement age and they’ll receive what’s called Delayed Retirement Credits.  Basically, for each year they delay receiving benefits, up until age 70, they’ll get benefits that are 8 percent greater. 

Need the retirement age?

You can find your client's full retirement age using the Social Security Retirement Planner

Consider how working can affect clients’ benefits

If your clients plan to work while receiving Social Security benefits, they may want to make sure they’re at least at full retirement age.  Here’s why:

If they are at full retirement age, they can work as much as they want and still receive full benefits.  If they’ve not yet reached that age, their benefits will be reduced, potentially by as much as $1 for each $2 they earn. 

Encourage clients to plan for Social Security

For many clients, Social Security payments will be an integral part of their retirement income.  They may also need personal assets to fill the gap between what Social Security and pensions provide and what they ultimately need in retirement, which is why these clients may benefit from a plan to maximize their Social Security payments by delaying receipt of their benefits. 

Will Social Security still be around?

Good question.  As more Baby Boomers retire, the strain on Social Security is expected to increase.  According to the Social Security Trustees, by 2034, the trust funds that feed the system will be exhausted and Social Security will only be able to pay 79 percent of program costs.1 

With that in mind, it’s wise to establish a retirement strategy that makes the most of other income sources and uses Social Security as a safety net.

1  Social Security Administration, Fast Facts & Figures About Social Security, 2017.

Life insurance products are issued by Equitable Life Insurance Company (NY, NY) or Equitable Financial Life Insurance Company of America (EFLOA), an Arizona stock corporation with its main administration office in Jersey City, NJ 07310 and are co-distributed by affiliates Equitable Network, LLC (Equitable Network Insurance Agency of California in CA; Equitable Network Insurance Agency of Utah in UT; Equitable Network of Puerto Rico, Inc. in PR), and Equitable Distributors, LLC. Variable products are co-distributed by Equitable Advisors, LLC (Member FINRA, SIPC) (Equitable Financial Advisors in MI and TN) and Equitable Distributors, LLC. When sold by New York based (i.e. domiciled) Equitable Advisors financial professionals life insurance is issued by Equitable Financial Life Insurance Company (NY, NY).

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IU-3269022 (10/2020) (Exp. 10/2024)