by Carolyn Rothwell on November 6, 2012

Social Security Benefits - Today’s Dollars or Future Dollars?

Money Tree’s support team is often asked by advisors if the Social Security benefit amount should be entered into the financial planning software in today’s dollars or future dollars.

The answer is in today’s dollars.  Money Tree’s software does increase the Social Security benefit amount entered prior to the start age, as well as after.  As a result, the program will display an inflated, future value benefit upon the Social Security start age. 

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There is often confusion on if the benefit listed on the statement from the Social Security Administration is in today’s dollars or future dollars but from what we have found it is appropriate to increase the benefit with an inflation rate. 

“We show the resulting estimates in today's dollar amounts (rather than in "future dollars" adjusted for assumed inflation) so you can compare them with today's living costs.”

Please review the FAQ article from the Social Security Administration for more information: 

Calculating retirement benefit estimates on your Social Security Statement in today's dollars

12/15/2015 Update:  This remains a popular blog post and the link included to the Social Security's page as referenced in quotations is no longer available.  In previous versions of Social Security statements, a line on page two under "How Your Benefits Are Estimated" that stated "These estimates are in today's dollars."   It appears the benefit are still in "today's dollars" but the Social Security department no longer includes this text on statements.  

Here are a couple helpful articles:

How to interpret your Social Security benefit statement
"They are likely somewhat smaller than the dollar amount you will receive when you actually claim benefits, because they are expressed in today’s dollars - before adjustment for inflation."
By Mark Miller - August 21, 2014 - Reuters

Good news on Social Security?
"An inflation gap means you may get more than you think – even if benefits are cut. It's a 'good' glitch, but it needs fixing."
By  - AprilThe Christian Science Monitor 

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Carolyn Rothwell

Carolyn enjoys spending her time building Money Tree Software's brand and products. Her experience creating and delivering financial plans for a full-service financial planning firm and supporting advisors working to provide the best planning to their clients as a Money Tree support member has provided an excellent understanding of the importance of financial planning.