Social Security Income - RightCapital Help Center

RightCapital will automatically generate a Social Security income card for both the client and co-client within the Profile > Income section of a client plan (or Step 2 of the initial data entry). These cards are used to enter a client’s Social Security Retirement benefit. To edit the values, simply click on the card to expand it.

This is a data entry article, designed to walk advisors through the process of entering Social Security income within a client plan in RightCapital. For a Social Security Overview, or for additional information on using the Social Security Optimization tool, please review the linked help center articles.

Entering Retirement Benefits

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 RightCapital to calculate any spousal benefits for the co-client.

Be sure that social security benefit amounts are entered gross of medicare deductions. Retirement health care costs are reflected as a separate expense in the Profile > Goals tab.

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.

Estimated Benefit Amount

Use the Estimated benefit amount drop-down box to select how Social Security benefits will be calculated. Each option has different use cases, and will calculate the monthly retirement benefit differently.

Use Simple Estimate

When using the ‘Use Simple Estimate’ option, no additional inputs are required. The social security benefit is estimated using the income and projected annual increase entered into that client’s Salary or Self-employment income card in the Profile > Income section. The income amount is projected forward and backward to generate a history of earnings, which is then used to determine the benefit amount.

In addition to Salary and Self-employment income cards, the simple estimate will also factor in any Bonus cards entered, as well as Other Income cards that are set to Earned Income. ‘Use Simple Estimate’ is the default setting in RightCapital.

Based on SS Statement Value

When using the ‘Based on SS Statement Value’ option, you will be prompted to enter the client's projected benefit amount at FRA or any other age listed on the client's Social Security statement. RightCapital will reduce benefits or add delay credits to the benefit amount as appropriate based on the filing age listed above. Future income based on a client’s Salary or Self-employment income card will not be factored in when using this option.

Start age from statement: Enter the age the estimated monthly benefit amount is based on, as seen on the Social Security statement.

Monthly benefit from statement: Enter the estimated monthly benefit amount that corresponds with the start age entered above.

If clients do not have a social security statement, they can receive a benefits estimate via the Social Security website. This link is also included at the bottom of the Social Security income card for your convenience.

When using ‘Based on SS statement value’ as the estimated benefit amount option, be mindful of the difference between the ‘Filing age’ and the ‘Start age from statement’. inputs The ‘Start age’ is specifically the age listed on the client’s SS statement, along with its corresponding monthly amount. The ‘Filing age’ is when the client is presumed to file in the RightCapital retirement projections.

In cases where the ‘Filing age’ and the ‘Start age from statement’ do not align, RightCapital will automatically recalculate the benefit accordingly. For example, if a client’s statement lists their benefit at FRA, but the client is planning to wait until age 70 to file; enter Full Retirement Age as the ‘Start age from statement’ and age 70 as the ‘Filing age’. Delay credits will be applied to the FRA benefit amount to account for the delay in filing.

Based on Historical Covered Earning

When using the ‘Based on Historical Covered Earning’ option, a detailed worksheet will populate allowing you to enter an annual covered amount for each year. RightCapital will use those earnings to calculate the client’s Social Security benefit. Future income based on a client’s Salary or Self-employment income card will be factored in when using this option.

Client’s can obtain their historical covered earnings from the Social Security website. This link is also included at the bottom of the Social Security income card, for your convenience.

When using the ‘No Social Security’ option, RightCapital will not calculate a retirement benefit for the client. RightCapital will also exclude any spousal or survivor benefits for that individual within the plan.

Although the Social Security income card cannot be deleted, using the ‘No Social Security’ option will functionally turn off this card. Use this option whenever you’d like to prevent or remove a client’s social security benefits in RightCapital.

Entering Spousal & Survivor Benefits

Within joint plans, spousal benefits do not need to be entered manually. RightCapital will automatically generate a spousal and/or survivor benefit when clients are eligible, and financial plans will include the greater of a client's retirement benefit or the spousal/survivor benefit in order to produce the best outcomes. To stop RightCapital from automatically including a spousal or survivor benefit, select "No Social Security" as the estimated benefit amount within that client's Social Security income card.

Financial plans with only one client will have the option to add the Spouse Social Security income card. This card can be used to model benefits based on a divorced or deceased spouse’s record. To add the Spouse Social Security income card, navigate to the Profile > Income section, and then click Add Income > Other > Spouse Social Security.

The Spouse Social Security card will allow you to capture the essential information required to illustrate Spousal Social Security benefits the client may be entitled to. This benefit will be calculated using the rules for either a divorced spouse or a deceased spouse. The data inputs will adjust based on the relationship selected and whether the spouse was already receiving Social Security income.

Benefits from a Spouse Social Security card will be factored into the Social Security Optimization module.

Divorced Spouse Benefit

Clients may be entitled to a spousal benefit based on the earnings record of their previous spouse after being married for ten or more years. The Divorced Spouse benefit is based on half of the ex-spouse’s full retirement benefit (PIA). If that amount exceeds the client’s own retirement benefit, the client will receive the difference as a spousal benefit. Select ‘Ex-spouse married for 10+ yrs’ within the Relationship field to reflect a benefit from a divorced spouse.

If the ex-spouse is already receiving Social Security Income, the client’s benefit will be based on the ex-spouse's Social Security Income and when the ex-spouse filed for benefits.
If the ex-spouse is not already receiving, the client’s benefit is based on the ex-spouse’s monthly benefit value (PIA).
If the ex-spouse is not already receiving, they must be divorced for over two years before the client starts to receive benefits.
Clients may also receive a survivor benefit after the ex-spouse is assumed to have passed away, based on their birthday and life expectancy as entered in the Spouse Social Security card.

Deceased Spouse Benefit

Clients may be entitled to a survivor benefit based on the earnings record of their deceased spouse. The amount the client will receive is based on the benefit amount the ex-spouse was receiving, or the ex-spouse’s Primary Insurance Amount (PIA) value if they had not started to receive benefits. If that amount exceeds the client’s own retirement benefit, the client will receive the difference as a survivor benefit. Select ‘Deceased Spouse’ within the Relationship field to reflect a benefit from a deceased spouse.

To calculate the survivor benefit, enter the ex-spouse’s PIA (if not Already Receiving) or their benefit amount & filing age (if Already Receiving). In addition, we need to know the ex-spouse’s birthday and age at death.
Benefit amounts may be reduced if clients start receiving the survivor benefit prior to their full retirement age.
We assume clients begin receiving survivor benefits as soon as they are available. Benefits are only available once the client reaches age 60 and the ex-spouse would have been eligible to file (age 62).

In financial plans that include a co-client, spousal and survivor benefits will be automatically calculated from the default Social Security income cards. The Spouse Social Security income card is only used when a single client needs to document spousal/survivor benefits from a previous relationship. The Spouse Social Security card will be automatically removed from the financial plan if a co-client is added to the Family profile.

Entering Child Benefits

In RightCapital, child benefits are automatically applied when the client files for Social Security, and there is a minor child listed as a dependent in the plan. The child benefit stops once the child reaches age 18. Although the benefit itself is automatically calculated, the child must be added as a participant and listed as a dependent in order to see these benefits reflected.

To add the child as a participant in the plan, navigate to the Profile > Family tab (or Step 1 of the initial data entry) and click Add Participant > Child. Within the Child card, select ‘Yes’ in the Dependent dropdown.

To eliminate Child benefits generated by minor children within the household, select ‘No’ from the Dependent dropdown. Grandchildren and Other family members cannot be claimed as dependents.

Disability Benefits & Customized SS Income

To customize Social Security income or to reflect benefits that are not calculated in RightCapital, such as Disability Benefits, an Other Income card can be used. To add this card, navigate to Profile > Income and click Add Income > Other > Other Income. 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.

When 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/co-client’s retirement benefit, but will be taxed as 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 > Summary tab, and click into the Income Inflows > Social Security column. For a detailed overview of each adjustment, please review this article.

Government Pension Offset (GPO)

Clients with government pensions may have a Government Pension Offset, which affects spousal and widow(er) benefits if the client didn’t pay Social Security taxes. If clients are subject to a Government Pension Offset (GPO) that reduces any Social Security spousal benefits they would otherwise receive, check the Non-covered box in the pension income card to have that pension amount offset the spousal benefit.

How to Apply GPO to Pension Income

In the Profile > Income area (or step 2 when creating a client), add a Pension income card, fill out the necessary data fields, and check the "Non-Covered" box in the bottom left. Once checked, the pension amount will offset any Social Security spousal benefits that the client would otherwise receive.

Windfall Elimination Provision (WEP)

RightCapital will apply the WEP reduction to Social Security benefits when there is a non-covered pension income card entered. This calculation will not impact Social Security income when the ‘Already Receiving’ box is checked, nor will it affect Social Security income when "Based on SS Statement Value" is selected as the estimated benefit amount. The WEP reduction will only impact estimated SS benefits when "Use Simple Estimate" or "Based on Historical Covered Earning" are selected as the estimated benefit amount.

WEP can affect monthly retirement benefits, spousal benefits, child benefits, family maximum benefits and annual earnings test calculations within a financial plan. Survivor benefits will not be impacted by the Windfall Elimination Provision. RightCapital will also apply the WEP guarantee that restricts SS benefit reduction to half of the client's pension income.

How to Apply WEP to a Financial Plan

In the Profile > Income area (or step 2 when creating a client), add a Pension income card, fill out the necessary data fields, and check the "Non-Covered" box in the bottom left. Once checked, the WEP reduction will be automatically calculated and applied.

In the Profile > Income > Social Security card, there are three different options to choose from when calculating future Social Security benefits. WEP calculations will be uniquely impacted by each choice within the ‘estimated benefit amount’ dropdown.

Use simple estimate – The social security benefit is estimated using the income and projected annual increase entered in any Salary or Self-employment income cards. WEP will affect this calculation, as long as "exclude from SS tax" is not checked within the Salary income card.
Based on SS statement value – Enter the client's projected retirement benefit and age that can be found on their Social Security statement. WEP will not affect this calculation in RightCapital- when using this option, be mindful to enter a PIA value that is properly WEP adjusted.
Based on historical covered earning – 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 included. WEP will affect this calculation based on the number of covered earnings that meet the substantial earnings criteria for each year.

The WEP reduced Social Security benefit can be tracked in the Retirement > Cash Flow > Summary tab, within the Income Inflows > Social Security column.

If a client is working a job that does not pay into Social Security, there is an option to exclude that client’s salary from Social Security taxes. Within that client’s Salary card in the Profile > Income section, check the Exclude from SS tax box to indicate that the salary is not subject to SS tax. Once selected, the salary income will only be subject to Medicare tax.

All Social Security benefit amounts in RightCapital are inflated by the Social Security Inflation rate, both before and after the client starts receiving benefits. This setting can be found and adjusted at the global level in the Assumptions tab of your Advisor Portal, or at the client level within the Gear Icon > Settings > Other Assumptions tab.

The default Social Security inflation rate of 2.5% 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 benefits. It also adjusts the Social Security salary base every year for the purpose of calculating the maximum Social Security benefit.