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Education | Sep 15, 2022

Social Security Planning: An Important Part of Any Retirement Strategy

Steven Kohler


Nancy I. Kunz


For most, Social Security is a large lifetime asset and it should be planned for with that in mind. With rising life expectancy, Social Security can be one of your most important financial assets. But long-term planning should be focused on more than just monthly benefit amounts.

The average Social Security benefit today is approximately $1,668 per month, or around $20,000 annually.¹ While that may seem paltry to some, this benefit totals nearly a half-million dollars over a 25-year retirement. Since you could have considerably higher benefit amounts, you should understand what is at stake regarding Social Security and your retirement planning. Our firm has always held the opinion that Social Security is one of the most important retirement benefits for most households.

Start with a claiming strategy

Making smart decisions about claiming can be a game changer. In addition to understanding the important decision of claiming your social security earlier or later, we need to think about Social Security in the context of your other financial resources and family situation. For example, it’s important for married couples to have a coordinated claiming strategy, which should include spousal and survivor benefits. In both cases, couples will typically benefit if the higher-benefit spouse delays filing to earn delayed credits. A coordinated delay strategy increases the odds that lifetime benefits will be greater.

For example, when a spouse dies, the survivor is entitled to receive the greater of their own benefit or up to 100% of the spouse’s benefit, including any cost-of-living increases earned along the way. In many cases, a delayed filing by the higher wage earner can be a critical way to boost lifetime retirement security for their surviving spouse at a time of life when savings may be diminished.

Spousal benefits are reduced for those who file before their own Full Retirement Age (FRA). For example, a spouse whose FRA is 66 could receive 35% of the worker’s unreduced benefit at age 62. The amount of the benefit increases at later ages up to the maximum of 50% at FRA. Unlike workers’ benefits, spousal benefits are not increased beyond that spouse’s FRA.

Understand your tax liability

In addition, many people don’t know whether their benefits will be taxed. More than half of Social Security beneficiaries pay income taxes on some part of their benefits. Importantly, you will want to ask your financial professional whether other sources of income could trigger Social Security taxes, such as tax-deferred retirement accounts.

In order to calculate your tax, you need to determine what Social Security calls combined or provisional income. This amount is equal to your Modified Adjusted Gross Income (MAGI) plus nonexempt interest plus 50% of your Social Security benefits. For most taxpayers, MAGI consists of everything in adjusted gross income except the taxable portion of Social Security benefits. This calculation can be complicated, so engaging a tax professional would be wise.

The future of benefits

For many Americans, however, there are concerns as to whether they will even have Social Security benefits when they retire. Many experts believe Social Security trust fund reserves could be exhausted by 2034. Social Security will exist after 2034, but it is projected that retirees will receive only 78% of their full benefit starting then.

A Harris Poll survey conducted on behalf of Nationwide Retirement Institute found that 66% of respondents are more concerned now than they were before about their retirement income, a 10-percentage-point jump from 2021.² Seventy percent of consumers across generations worry that Social Security will run out of funding in their lifetime, and a third of adults who are not yet receiving benefits believe they will not receive any of what they have earned when they retire.

Among those who do not currently receive Social Security but plan to do so, 75% of millennials and 66% of Gen Xers said they would seek to find out how to use different income streams in order to delay filing before they reach Full Retirement Age, compared with 52% of baby boomers.

The situation forces Congress to do something soon, even though no major Social Security legislation has been passed since the early 1980s. New legislation, Social Security 2100: A Sacred Trust, has been designed to address Americans’ concerns. Among other things, the legislation adopts the consumer price index for the elderly as the basis of the annual cost-of-living adjustment (COLA) and reapplies the payroll tax to annual wages above $400,000.

Additional bills have been proposed as well, but any solution to the issue is going to need bipartisan support in Congress. That makes predicting a timeline for having a solution in place difficult.


Depending on where you are in your retirement timeline, Social Security needs to be an important part of your planning. If you are considering claiming soon, a knowledgeable financial advisor can assist you in maximizing your benefits and those of your spouse, while helping you reduce tax liability. If you are several years away from claiming Social Security, your advisor can help you plan for additional retirement income streams in case future funding reserves are reduced.

Thanks for reading.

¹ AARP, How Much Will I Get from Social Security

² PR Newswire: July 19, 2022 New Study: More Than Two-Thirds of Americans Don't Know that Social Security is Protected Against Inflation

This material has been provided for general, informational purposes only, represents only a summary of the topics discussed, and is not suitable for everyone. The information contained herein should not be construed as personalized investment advice or recommendations. Rather, they simply reflect the opinions and views of the author. D. B. Root & Company, LLC. does not provide legal, tax, or accounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionals for advice that is specific to your situation. There can be no assurance that any particular strategy or investment will prove profitable. This document contains information derived from third party sources. Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such sources, and take no responsibility therefore. This document contains certain forward-looking statements signaled by words such as "anticipate," "expect", or "believe" that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. As such, there is no guarantee that the expectations, beliefs, views and opinions expressed in this document will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. All investment strategies have the potential for profit or loss. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. The impact of the outbreak of COVID-19 on the economy is highly uncertain. Valuations and economic data may change more rapidly and significantly than under standard market conditions. COVID-19 has and will continue based on economic forecasts to have a material impact on the US and global economy for an unknown period.

Steven Kohler


Chief Planning Officer

Nancy I. Kunz


Senior Financial Advisor

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