Social Security remains one of the most foundational—and misunderstood—components of retirement income planning. In our recent webinar “Maximizing Social Security: Navigating the Client Conversations,” we explored why these discussions are essential, the core risks retirees face, and how financial professionals can better guide clients toward informed, confident claiming decisions.
For advisors striving to build more sustainable retirement income businesses, this session emphasized the power of education, planning, and partnership to help clients maximize one of their most valuable lifetime benefits.
Why Social Security Matters More Than Clients Realize
For many Americans, Social Security represents around 30% of their retirement income and serves as the foundation for covering basic living needs such as housing, food, and medical expenses. Making the right claiming choice can dramatically shape a retiree’s long-term financial outlook. A poorly timed strategy can cost a couple an estimated $250,000 in lifetime benefits, underscoring the significant stakes involved.
Despite its importance, the system’s complexity creates challenges. A married couple faces up to 9,000 possible claiming combinations, and with the Social Security Administration legally prohibited from providing personalized advice, retirees often make uninformed decisions. Adding to the challenge, laws and rules change annually—including several key updates this past year. Advisors, therefore, play a critical role in helping clients make sense of their options.
Understanding the Six Retirement Risks Clients Face
- Taxes: Decreased income and assets and/or the impairment of legacy assets from increasing taxes
- Mortality: Loss of financial assets as the result of a partner’s or spouse’s death
- Market: Unexpected reduction in the value of financial assets at the time of withdrawal
- Longevity: Outliving financial assets as the result of a longer life
- Liquidity: Limited access to assets to meet life’s unexpected financial needs
- Inflation: Reduction in real purchasing power as the result of increasing cost of living
Though all six are important to consider, longevity is emerging as one of the most impactful. Thanks to advances in medicine and healthier lifestyles, life expectancy has increased by five years since 1980 and is projected to reach age 84 by 2060. Longer lifespans mean retirees must plan for income that stretches further—and Social Security often forms the bedrock of that plan.
Another meaningful shift is the dramatic decline in traditional employer pensions. Today, only 19% of civilian workers and 11% of private sector employees participate in a defined-benefit pension plan. Without guaranteed income, retirees must rely more heavily on Social Security and personal savings to create a sustainable income stream.
Key Social Security Changes in 2025
Several important updates took effect in 2025 and influenced retirement planning conversations. Among the highlights:
- 2.5% COLA increase for Social Security beneficiaries.
- Maximum taxable earnings rising to $176,100, subjecting more wages to Social Security tax.
- Maximum benefit at full retirement age increasing to $4,018 per month.
- Higher payouts for survivors, with average benefits increasing for widows and widowers.
- Adjustments to earnings test limits, impacting those who claim benefits before full retirement age.
- Landmark changes through the Social Security Fairness Act, which eliminates benefit reductions tied to certain public pensions and affects nearly three million public-service retirees.
These shifts emphasize the need for advisors to stay informed of the yearly changes so they can guide clients through an evolving benefits landscape.
Helping Clients Make Informed Claiming Decisions
This Social Security webinar also discusses key claiming scenarios like whether to file early or delay benefits, how spousal and survivor benefits work, and what divorced spouses may be entitled to. Many clients can benefit from waiting to claim, particularly when coordinating spousal benefits. However, valid reasons for claiming early include financial need, health concerns, limited earnings, or specific family circumstances.
Important nuances to discuss include:
- Spousal benefits offer up to 50% of a worker’s full benefit but do not earn delayed credits.
- Divorced spouses may claim benefits on an ex-spouse’s record if they meet age, marital status, and duration-of-marriage requirements.
- Surviving spouses may receive benefits based on the higher earner’s amount—including delayed credits—and may file as early as age 60 (or 50 if disabled).
These rules carry major implications for lifetime income and require careful evaluation.
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