How do I add Social Security income to my plan?

If you started reading Create a New Plan or Adding Income to Your Plan and want to go into deeper detail on adding Social Security as an income stream, you’re in the right place. This article walks through all the steps of adding Social Security to your plan.

Social Security is a federal program in the United States that provides retirement, disability, and survivor benefits. Funded through payroll taxes, it is designed to support the elderly, disabled, and families of deceased workers.

Income is the second stage of creating a plan, after adding Milestones. You can also add income after creating your plan by scrolling below the graph to Income, located between the Accounts and Expenses sections.

Adding Social Security

Click + Add Income > choose Social Security. Below we walk through all the options.

Estimate Benefit

Estimate Benefit is an enhanced feature that lets ProjectionLab compute your benefit automatically, with early reduction factors and delayed retirement credits built in. Spousal and survivor benefits are modeled, and the earnings test is applied for early claimers who are still working. Benefits use your plan’s projected employment and respond dynamically, so results adapt inside Chance of Success trials.

• Primary Insurance Amount – your monthly benefit, in dollars, at your Full Retirement Age assuming no additional work. Click the link to SSA My Account or ssa.tools to calculate your estimate (e.g. $2,000).
• Include Planned Earnings – toggle on to include earned income from your plan when estimating your benefit.
• Full Retirement Age (FRA) – set automatically based on your year of birth.
• Claiming Age – when you start collecting Social Security. Defaults to your FRA but can be changed.
• Monthly Benefit – set automatically based on your Primary Insurance Amount.
• Expected Percentage – defaults to 100%, but can be adjusted based on how much of your full benefit you expect to receive.

Advanced

• Years of Covered Earnings – how many years of Social Security-covered earnings you have prior to the start of this plan.

Enter Amount

• Starting Amount – your benefit in dollars and the frequency (e.g. Monthly, Yearly).
• Time Range – defaults to starting at your Full Retirement Age (which ranges from age 65 to 67 depending on your year of birth) and ending at your end of plan.
• Change Over Time – defaults to Match Inflation. Other options include Increase by a set percent, Decrease by a set percent, Increase by Inflation + %, Decrease by Inflation + %, or a non-linear advanced schedule.

Tax Handling

• Type – automatically set to Ordinary. Unlike other income types, this is not changeable.
• Withholding – withhold some for taxes to fine-tune cash flow timing: Auto, Fixed Rate, or None.
• Tax-Exempt – toggle on if this income is exempt from taxes in specific jurisdictions; if toggled on, choose your jurisdiction.

How Social Security works

Below the inputs, ProjectionLab displays a summary of key Social Security rules:

• Your benefit is based on your Primary Insurance Amount, adjusted for when you claim relative to your Full Retirement Age.
• Earliest claiming age is 62; latest is 70.
• Claiming before your Full Retirement Age reduces your benefit.
• Delaying past your Full Retirement Age earns delayed retirement credits, increasing your benefit each month you wait.
• Your benefit is based on your highest 35 years of earnings. Fewer years of work means $0 years in the average, which lowers your benefit.
• If your spouse also has Social Security, you may receive a spousal benefit (up to 50% of their Primary Insurance Amount) if it exceeds your own benefit.
• If you claim early and have earned income, $1 is withheld for every $2 above the annual exempt amount ($1 per $3 in your Full Retirement Age year).
• Expected Percentage lets you model reduced future benefits.
• Each person gets Social Security individually based on their earnings.

Click Save to add Social Security as an income stream to your plan.

Social Security spousal benefits

We recommend using the Estimate Benefit option even if you are already receiving Social Security, as it allows spousal benefits to be properly incorporated. Both individuals need to use the Estimate Benefit option.

• If 50% of your spouse’s Primary Insurance Amount (PIA) exceeds your own worker benefit, you receive the difference as a spousal benefit on top of your own.
• Claiming before your FRA reduces the spousal benefit using spousal-specific reduction rates.
• Spousal benefits have no delayed retirement credits. The maximum is 50% of your spouse’s Primary Insurance Amount at your Full Retirement Age.