How Social Security Fits Into a Millionaire’s Retirement 

Clients with a million dollars saved for retirement are likely in a solid position, especially if they have a fairly modest lifestyle.

What advisors often overlook, though, is the critical role Social Security plays as a backstop for worse-than-expected portfolio performance or higher-than-expected expenses. Social Security is often the largest inflation-adjusted lifetime income stream on the balance sheet, even for households with a few million saved. For that reason, the decision to claim early for a reduced benefit or wait longer for a higher benefit is one of the levers that can either permanently raise or lower a household’s guaranteed income floor. All too often, however, the claiming strategy is more afterthought than careful calculation.

“Social Security claiming gets less attention than it deserves in planning for wealthy clients,” said Ray Harris, founder of Social Security Claiming Experts in Chicago. “It’s not because advisors or clients don’t care, but because claiming sits in an awkward place. It’s not AUM. It’s technical. It’s full of exceptions, and many clients assume it’s simple until they’re in it.”

Make a Plan

Clients often focus on scary headlines about Social Security’s finances, but they fail to grapple with the mechanics, especially how spousal and survivor benefits work. They don’t bother ensuring earnings record accuracy, nor do they do the math and calculate their potential lifetime household benefits based on different claiming ages.

“The affluent rely on it less as a percentage of income, but Social Security plays an outsized role in their plan’s durability,” Harris said, particularly for the surviving spouse and for sequence-of-returns protection. “Building an effective strategy is less about finding a secret trick and more about preventing irreversible mistakes and aligning Social Security with the broader plan.”

Other key considerations include:

• Identifying missed eligibility (especially in divorce or remarriage cases) that clients and advisors don’t uncover until someone asks the right questions.
• Preventing execution failures regarding account access, identity proofing and spousal filing order so a good plan doesn’t collapse at implementation. 

Firms looking to step up their game can focus on creating a repeatable workflow, Harris said, making Social Security planning consistent, documented and defensible. 

Monday Morning Quarterback. “This is why the specialist gap matters to wealth firms,” Harris said. “Advisors are expected to quarterback retirement, but Social Security rules are exception-driven and can create liability when handled casually,” Harris said. . 

Ultimately, it’s not that wealth firms don’t care, he said. “It’s because the incentives and training don’t match the complexity and liability.”