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How Does Social Security Fit Into Your Financial Plan?

By: Kathleen Fay, CFP®, SVP and Financial Advisor  

Social Security is a complex topic. Commonly held assumptions about Social Security might not be applicable to your unique situation. What year were you born?  Did you work 40 quarters? Are you married, divorced or widowed? The answer to each question puts you on one of many paths to determining the best approach to taking your Social Security benefits.

If you have not already done so, go to and create an account. This will allow you to see your statement online, including details such as the amount of your anticipated monthly benefit and your full retirement age (FRA) – the age you must reach in order to receive 100% of your potential benefits.

Create a Plan: Social Security’s various claim options should be considered as part of your overall financial plan. For example, one strategy to consider, if you have retirement income from other sources, is to defer taking benefits past your full retirement age (FRA) so you get an increased Social Security benefit later.

If you are currently working and considering taking Social Security, you may want to reconsider if you have not yet reached FRA. If you are younger than your FRA, Social Security will deduct $1 in benefits for each $2 in earnings you have above the annual limit ($17,640 in 2019). In the year you reach FRA, Social Security reduces your benefits $1 for every $3 you earn over a higher annual limit ($46,920 in 2019) until the month you reach FRA. One you reach FRA, you receive your full retirement benefits, no matter how much you earn.

If you are a married couple, you can either take 100% of your benefit or 50% of your spouse’s benefit, a decision that would be made depending on the relative benefits and your respective ages. 

Once you’ve created an account and obtained the details of your benefits, your financial planner can help you look at how Social Security benefits fit into your comprehensive financial situation.

Payment and Taxes: Benefits are paid monthly, with the payment date dependent upon the date of your birth. If you take your spouse’s benefit, it will be based on their birthdate, not yours. About 40% of all people receiving Social Security must pay taxes on their benefits. If you are an individual and your total annual income is more than $25,000, you will have to pay taxes on your benefit. If you file jointly, you will pay taxes on the benefit if your combined income is over $32,000.

Important Info: You must advise the Social Security Administration of particular changes that may occur.  Failure to do so may result in penalties. The following notifications are required:

  • If you move;
  • If your estimated earnings change;
  • If you change direct deposit accounts;
  • If a person isn’t able to manage funds;
  • If you get a pension from non-covered work; or
  • If you get married or divorced.

Protect Yourself: Social Security will typically mail you a letter when they want to notify you of something. If someone calls you on the phone and says they are from Social Security, it is likely a fraudulent attempt to obtain personal information or money from you. Proceed with caution!

Keep in mind that Social Security is not the same as other government benefits, including Medicare.  About three months before you turn 65 you should apply for Medicare even if you do not yet plan to apply for Social Security. When you do plan on applying for Social Security, be sure to apply three months in advance.

Social Security is a complex topic and once started is, most likely, irreversible. As such, before electing to receive your benefits, speak to your wealth advisor to determine when it may be best to start Social Security and how it may affect other parts of your financial plan.


Information contained in this article was obtained from the Social Security Administration website,

These articles and reports are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. The information in these articles or reports, and any opinions expressed therein, do not constitute a recommendation or an offer to buy or sell any security or financial instrument. Viewers should consult with their financial and/or legal professionals before making any financial decisions.