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Savvy Strategies to Help Maximize Your Social Security Benefits

Discover essential strategies to help maximize your Social Security benefits and strengthen your retirement.

Tips to Help Make the Most of Your Benefits and Boost Your Retirement Income

Did you know that, when Social Security was introduced in 1935, it was never meant to serve as a primary source of income in retirement? Rather, it was meant as a safety net for retirees who were lacking sufficient savings. However, in today’s economic landscape, attitudes around Social Security have dramatically changed and too many retirees are overly reliant on these benefits. In fact, Social Security benefits this year represented around 30% of retirees’ income. As you consider your own retirement income plan, remember that you’ll likely need more than one source of income. However, we believe it’s also critical to have a strategy for maximizing your Social Security benefits, and that’s what we’re discussing in this article.

Help Maximize Your Social Security Benefits Step #1: Delay Your Benefits

It can be very tempting to apply for benefits at your earliest opportunity, which is age 62. However, consider maximizing your Social Security benefits through strategic claiming decisions. As you plan your retirement, you’ll encounter three viable options for timing your benefits: early claims, on-schedule claims, and delayed claims. Each option presents its distinct set of advantages and drawbacks, requiring careful consideration based on your unique financial circumstances.

For instance, opting to postpone claiming your benefits until you reach the age of 70 may bring significant rewards. You’ll receive a more substantial monthly check and benefit from lower taxes. However, this choice also means waiting for financial support during your retirement years. Conversely, if you choose to claim your benefits earlier, you’ll enjoy immediate financial assistance but will face a permanent reduction in your monthly checks. Selecting the right approach is helpful for optimizing your Social Security benefits and securing a more comfortable retirement.

Help Maximize Your Social Security Benefits Step #2: Increase Your Earnings

The foundational piece of the puzzle in calculating your Social Security benefits is your lifetime earnings. To help maximize these benefits, be intentional throughout your working life about steadily increasing your income. The concept is simple: higher earnings lead to a higher average indexed monthly earnings (AIME), a critical element in determining your ultimate benefit amount. Devote efforts to invest in your career development, explore avenues for professional growth, and strive to help unlock your maximum earning potential. These proactive steps may lead to elevated benefits and greater financial security when you reach retirement age.

Help Maximize Your Social Security Benefits Step #3: Optimize Spousal Benefits

For those who are married, divorced, or widowed, there is the potential for spousal benefits based on your partner’s work record. Crafting an optimal Social Security strategy as a couple requires delving into the rules and requirements governing these spousal benefits. By exploring various claiming options, you may maximize the combined benefits for both you and your spouse.

Consider this approach: if you are currently married and one spouse earns more, they might choose to delay claiming benefits to maximize their own payments. Simultaneously, the other spouse could claim spousal benefits once eligible. This coordinated effort not only fine-tunes individual benefits but also boosts your overall retirement income as a couple. By understanding – and coordinating – your spousal benefits, you may help maximize your Social Security benefits and help build an informed financial foundation for the future.

Help Maximize Your Social Security Benefits Step #4: Get Smart with Your Tax Strategy

Many retirees make the mistake of underestimating the potential tax impact on their Social Security benefits and retirement savings withdrawals. Overlooking this crucial aspect may lead to taxation on up to 85% of your Social Security benefits. To help shield yourself from this potential burden, we believe it’s essential to assess your provisional income once you start claiming benefits. This provisional income is computed using your adjusted gross income, any nontaxable interest, and half of your Social Security benefits.

To help safeguard your savings, consider postponing the claiming of benefits until after you retire. By doing so, you may manage your provisional income effectively, ensuring it stays below the threshold that triggers higher taxation and helps minimize the risk to your hard-earned savings.

Help Maximize Your Social Security Benefits Step #5: Investigate Claiming Strategies

There are multiple claiming strategies retirees can use to maximize Social Security benefits. Take, for instance, the “file and suspend” strategy, which permits one spouse to file for benefits and then suspend them promptly, allowing the other spouse to claim spousal benefits. Moreover, the “restricted application” strategy enables you to claim spousal benefits while allowing your own benefits to grow through delayed retirement credits. These strategies can be complex to navigate properly, so seeking guidance from a financial advisor or Social Security specialist is wise. Working with a professional may help you make well-informed decisions tailored precisely to your unique circumstances.

Concluding Thoughts

We believe successfully navigating the Social Security planning process demands a deep comprehension of the system and how each strategy aligns with your broader financial goals. As you chart your course, keep in mind that every individual’s circumstances are unique. It’s often helpful to assess your options in collaboration with a financial advisor who can look at your Social Security strategy alongside your larger, comprehensive financial plan and offer tailored guidance. By adopting the right approach and seeking personalized advice, you may harness the full potential of your Social Security benefits and gain more peace of mind on your journey toward a financially secure retirement.

If you’d like assistance in maximizing your Social Security benefits, we can help. At Paces Ferry Wealth Advisors, our team is here to help guide you through the decision-making process so you can create a financial plan and retirement income strategy that suits your needs. Take this opportunity to explore, strategize, and make the most of your Social Security benefits by reaching out to us today. We look forward to hearing from you!

Paces Ferry Wealth Advisors, LLC is a registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”).  This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor.

Zachary Morris

Zachary Morris, CFP®

Having traveled to over 35 countries, Zach is a believer in Ralph Waldo Emerson’s statement that Life is about the journey, not the destination. Being a CERTIFIED FINANCIAL PLANNER™ provides Zach the opportunity to help clients define and realize their journey, and co-founding Paces Ferry Wealth Advisors, an independent firm, allows the freedom to define the client experience along the way.