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Maximizing Your Social Security Benefits

Maximize your social security benefits through these proven strategies.

Are you retiring soon? Unsure of if you will have enough money to get by? Social Security is supposed to give you financial support when you are no longer earning an income of your own but its process can be confusing. If you’ve already started your benefits or found you have made a mistake, these solutions may help. Taxes and the age you start collecting Social Security benefits can all change how much you get from the government each month. You should understand the basics of Social Security for maximizing social security benefits. More detailed strategies are dependent on your individual situation, as you will read below.

Tax Strategies

A common question about Social Security is whether the money you receive will be taxed. The answer depends on your total income, not including benefits. If you earn more than $25,000 single or $32,000 married filling joint, up to 85% of your Social Security benefits can be subject to taxes. These taxes eat away portions of your income and could leave you in a tight position. The best strategies to reduce the effect taxes have on your Social Security are:

  • Tax Planning
  • Tax Efficient Investing

Social Security Strategies

The age you begin to collect social Security benefits, also impacts how much you earn monthly. If you collect it early, there is a 7% reduction to your benefits per year before your full retirement age (FRA). If you collect at FRA, you receive 100% of your benefits. Finally, if you collect Social Security at 70, you receive an 8% credit to your benefits per year after FRA. When you decide to collect your benefits comes down to several factors you should consider:

  • Financial Need
  • Life Expectancy
  • Health Condition
  • Genetic History
  • Advantages of Delayed Claim
  • Options to Claim Spousal Benefits
  • Long Term Care Needs

Each of these factors can help you to determine the right age to start collecting benefits. The strategies that we go over below are focused on single retirees. Those who are married should strategize in a way that takes advantage of both their social security benefits and spousal benefits.

Age-based Strategies

While you can start collecting at any age after 62, we have compiled the general characteristics for collecting at the three key ages for Social Security.

  • Age 62 (Earliest)
    • Immediate cash needs
    • Limited resources
    • Shorter life expectancy
  • Age 66/67 (FRA)
    • Optimal for most people
    • No penalty for earned income
    • Average life expectancy
  • Age 70 (Late Commencement)
    • Highest Benefit
    • Conservative investment portfolio
    • Other sources of income (pension, earned income)
    • Above average life expectancy

Life expectancy is the primary factor in maximizing Social Security benefits. You can use the break even point in addition to your life expectancy to see when the benefits of collecting at one age is surpasses the benefits of collecting at another age. For example, if a retiree was 62 years old in 2023, their benefits for collecting at age 67 would surpass their benefits of collecting at age 62 when they turned 76 years old. At 78, benefits for collecting at age 70 would surpass the benefits for collecting at age 62. Last, 80 years old is when collecting at 70 surpasses the benefits of collecting at 67.

You can calculate your own break-even points using your estimated Social Security benefits from ssa.gov. If you need help determining a Social Security Plan, contact our expert financial planning team. For more information, please contact Judith Barnhard via our online contact form.

Councilor, Buchanan & Mitchell (CBM) is a professional services firm delivering tax, accounting and business advisory expertise throughout the Mid-Atlantic region from offices in Bethesda, MD and Washington, DC.

Contact Judy Barnhard, CPA, CFP®, CDFA®View Profile

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