Adding Social Security Income (Data Entry)

Entering Social Security overview

RightCapital will automatically generate an Social Security income card for each client and co-client created on a profile. To edit the values, simply click on the card to expand it.

If the client / co-client is already receiving benefits, check the Already receiving box on the card. You will be able to enter the monthly amount they are receiving. You can also enter the year in which the client started receiving benefits, which will allow us to calculate any spousal benefits for the co-client.

If the client has not begun receiving benefits, select the filing age, filing month and the estimated benefit amount:

The Filing age & month is the time when benefits will be included in analyses of the client's current plan. Social Security Benefits will begin the month after filing. It is also what will be reflected in the Current strategy for comparison in the Social Security optimization screen.

We assume that Social Security benefits will begin in the month following the client's birthday. Benefits in the first calendar year will be prorated accordingly.

Use the Estimated benefit amount drop-down box to select how Social Security benefits will be calculated. The options are:

  • Use simple estimate – the social security benefit is estimated using the income and projected annual increase entered in any Salary or Self-employment income card. The income is projected backward and forwards to generate a history of earnings that is used to determine the benefit amount.
  • Based on full retirement benefit – Enter the client's Projected Insurance Amount (PIA) at full retirement age that can be found on their Social Security statement. Tip: enter the value at full retirement age, irrespective of the Start age. RightCapital will reduce benefits or add delay credits to the benefit amount as appropriate based on the Start age.
  • Based on historical covered earnings – Enter an annual covered amount for each year and RightCapital will use those earnings to calculate the Social Security benefit. The future income based on the Salary / Self-employment income will be added in.
  • No Social Security – no Social Security benefit will be calculated for the client; we will exclude any retirement, spousal, or survivor benefit for that individual.

Social Security inflation

All Social Security benefit amounts are be inflated by the Social Security inflation rate before and after the client starts receiving benefits. The Social Security inflation setting can be adjusted in the Advisor Portal >Assumptions area.

The Social Security inflation setting is based on historical cost of living adjustments (COLA) by the SSA. This setting is used to adjust the PIA bend point and other variables needed to calculate social security benefit. It also adjusts the Social Security salary base every year for the purpose of calculating maximum social security benefit.

Adjustments to Social Security income

When estimating Social Security income amounts, RightCapital will automatically include spousal benefits, survivor benefits, and child benefits when applicable. Earnings test adjustments and family max reductions are also built into the future Social Security income calculations.

The impact of these adjustments are detailed in the future cash flow projections. To see the breakdown of Social Security income visit the Retirement > Cash Flows > Income Inflows > Social Security income area. Click the underlined column headers to reveal additional information.

Windfall Elimination Provision (WEP) & Government Pension Offset (GPO)

RightCapital does not calculate the impact of the Windfall Elimination Provision (WEP) on Social Security benefits. If clients are subject to WEP, enter the value after WEP.

If clients are subject to a Government Pension Offset (GPO) that will reduce any spousal benefits they would otherwise receive, check the Non-Covered box to have that pension amount offset the spousal benefit.

Customizing income

To customize Social Security income or reflect benefits that are not calculated in RightCapital, add an Other Income card on the Profile>Income page. This can be substituted for the default Social Security income card or illustrate additional benefits that clients may be receiving. If substituting the Other Income card for the default Social Security income card, turn the default card to "no Social Security" under the estimated benefit amount dropdown menu to avoid duplicate inflows.

If using the Other Income card to reflect Social Security, use the drop-down box to select Social Security as the tax attribute. This income is calculated separately from the client/spouse’s retirement benefit but will taxed as social security income.

Excluding salary income from Social Security tax

To exclude salary income from Social Security taxes and from being considered in the estimated Social Security calculation, click on the Exclude from SS tax checkbox on the Salary card.

For additional information on using the Social Security Optimization Tool or accessing the Social Security knowledge base please clink the links above.