Maximizing Social Security

Your Social Security retirement benefit represents the culmination of a lifetime of work, savings, and contributions. While many Americans are familiar with the basics of Social Security, few fully understand the strategies available to help them maximize their benefits. Deciding when and how to file can have a significant impact on the total value of your benefits over time. There are several common issues that individuals face when claiming Social Security retirement benefits:

1. Understanding Full Retirement Age (FRA): Many need to know their exact FRA, which varies based on birth year. Claiming before FRA reduces benefits, and waiting until after FRA increases them (up to age 70).
2. Impact of Continued Employment: Working while collecting Social Security before reaching FRA can reduce benefits if earnings exceed a specific threshold. Many claimants don't fully understand how the earnings limit affects their payments.
3. Timing of Claiming Benefits: Deciding when to start claiming benefits is critical. Claiming too early (as early as age 62) results in permanently reduced benefits, while delaying Social Security benefits until age 70 can provide a higher monthly payout. However, various challenges can make this difficult for some individuals, even outside of health-related issues. One major challenge is the financial strain of living without those benefits for several years, which may require withdrawing more from retirement savings, such as 401(k)s or IRAs, potentially depleting those funds faster than anticipated​.
4. Spousal and Survivor Benefits: Understanding how to maximize spousal or survivor benefits can be complex. Many are unaware of how their spouse's or deceased spouse's earnings can impact their benefit or when to claim to maximize these payments.
5. Coordination with Public Pension: Two provisions, the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO), can reduce the Social Security benefits of those receiving a public pension.  
6. Taxation of Benefits: Social Security benefits can be subject to federal taxes if combined income exceeds certain thresholds. Many retirees are surprised they owe taxes when they file their tax return after their first year receiving Social Security benefits, reducing their expected income.
7. Longevity Risk: Many need to pay more attention to their potential lifespan and outlive their savings, which affects the timing of Social Security benefits. Claiming too early can lead to insufficient income in the later stages of retirement.
8. Changes in Life Circumstances: Major life events, such as divorce or the death of a spouse, can complicate Social Security claiming strategies, especially when considering eligibility for spousal or survivor benefits.

How we can help

At Life Stages, we will help you understand your options for claiming and maximizing your Social Security benefits. While Social Security has over 2,700 rules and an operation manual over 20,000 pages long, we can simplify it by presenting only relevant information. If you want to make the most of your Social Security benefits, contact us today for a personalized consultation. Let our team of financial experts guide you through the process and help you secure the retirement you deserve.