If you’re a high-income earner, such as a physician, executive, dentist, or business owner, it’s important to understand how Social Security fits into your overall retirement plan. This article answers common questions, clears up misinformation, and explains how your income level may impact your benefits.
Social Security is a federal program that provides income to retirees, survivors, and people with disabilities. Your benefits are based on your 35 highest-earning years, adjusted for inflation, and how much you've contributed via payroll taxes.
The Social Security Administration (SSA) tracks your earnings and calculates your monthly benefit using a progressive formula. Because the formula favors lower earners, high-income individuals often receive less in proportion to what they paid in.
Have you seen the headlines: "Social Security Will Run Out of Money by 2034"? Whether clickbait or not, they can spark real concern, especially if you’ve spent decades contributing through payroll taxes.
Despite what you may hear, Social Security is not going bankrupt. The SSA's 2024 Trustees Report projects that the trust fund reserves will be depleted by 2034. However, incoming payroll taxes would still cover about 80% of scheduled benefits.
Congress has options: increasing the retirement age, adjusting the payroll tax cap, or implementing other reforms. The system may evolve, but benefits aren’t disappearing overnight.
You can create a free "my Social Security" account at ssa.gov to:
Check your account annually to verify that your income history is accurate. Mistakes could reduce your future benefits.
Full retirement age (FRA) depends on your birth year. If you were born in 1960 or later, your FRA is 67. You can file as early as age 62, but your benefits will be reduced. Delay past FRA, and your monthly benefit grows by about 8% per year until age 70.
There is generally no financial advantage to waiting beyond age 70.
| Year of Birth | Full Retirement Age |
| 1943-1954 | 66 years |
| 1955 | 66 and 2 months |
| 1956 | 66 and 4 months |
| 1957 | 66 and 6 months |
| 1958 | 66 and 8 months |
| 1959 | 66 and 10 months |
| 1960 and later | 67 |
If you’ve consistently earned more than the Social Security taxable maximum, which is $168,600 in 2024 and indexed annually, only income up to that threshold is used to calculate your benefit. To receive the maximum benefit, you must:
Even for high earners, Social Security provides guaranteed, inflation-adjusted income, and that makes it a valuable part of retirement planning.
Important note: If you decide to delay your benefits until after age 65, you should still apply for Medicare benefits within 3 months of your 65th birthday. If you wait longer, your Medicare medical insurance (Part B) and prescription drug coverage (Part D) may cost you more money.
Let’s say your FRA benefit is $3,800/month:
That difference — over $2,000/month — can be meaningful in retirement, especially when benefits last as long as you live.
If you’re under FRA and earn more than the earnings limit ($22,320 in 2025), your benefits may be temporarily reduced by $1 for every $2 you earn above the limit.
Once you reach FRA, there’s no penalty. And any benefits withheld before then are recalculated into your monthly benefit going forward, so you’re not penalized long-term.
High-income retirees should be aware that up to 85% of their Social Security benefits may be taxable, depending on their total income (including 401(k) withdrawals, dividends, and other sources). This is often overlooked.
If you're married, spousal and survivor benefits could be a planning tool. The lower-earning spouse may be eligible for up to 50% of the higher earner’s benefit. Widows and widowers can claim survivor benefits starting at age 60.
Timing these elections carefully can increase lifetime income for the household. However, you will want to discuss any considerations with your accountant, CPA, and financial advisor to learn how it will affect your household.
Social Security alone likely won't replace your income. It should be integrated with your 401(k), IRA, taxable investments, and other income sources.
As planners, we prepare clients assuming Social Security will change, but not disappear. By treating it as a bonus, not a backbone, you can ensure your financial security regardless of what happens in Washington.
Let’s plan your retirement with confidence. Schedule a conversation today.
Source: Social Security Administration website: https://www.ssa.gov/
Any discussion of taxes is for general information purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax, or accounting advice. Clients should confer with their qualified legal, tax, and accounting advisors as appropriate.
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Shane Tenny, CFP®, is Managing Partner of Spaugh Dameron Tenny, where he helps high-net-worth individuals and families navigate complex financial decisions with clarity, structure, and confidence. Since joining the firm in 2000, Shane has worked with clients through major financial transitions, including career changes, liquidity events, retirement, and multigenerational planning. His approach combines comprehensive financial planning with a focus on behavioral finance, including advanced studies in Behavioral Economics through the University of Chicago Booth School of Business. Shane is the author of Your Next Million, former host of the Prosperous Doc® Podcast, and a nationally recognized financial advisor, speaker, and educator.
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