Social Security is a big topic on a lot of our clients’ minds. The rules can be confusing, but the good news is you have a lot of choices that can really help in retirement.
1. Social Security becomes a more important retirement income source later in life
For many retirees, Social Security benefits become a larger part of retirement income over time. For long‑term recipients, these benefits often provide the majority of reliable cash flow later in retirement. As a result, Social Security claiming decisions should account for longevity and place greater emphasis on the later years of retirement—not just the early ones.
2. How much of your Social Security benefit is taxed depends on your income
There are three tiers of income that, when reached, cause more of your benefit to be subject to tax. So, income from a withdrawal from a traditional IRA or dividends from investments can boost you into a higher tier, and cause more of your benefit to be taxed. This can have big implications for whether you choose to work in retirement, how your assets are invested, and the timing of withdrawals from retirement accounts. To learn more about taxes on Social Security benefits, watch our video.
3. Spousal benefits can provide a big boost
You can collect a Social Security Spousal benefit of up to 50% of your spouse’s full retirement age benefit, even if you have little or no work history. In order to start collecting, you have to wait until the working spouse starts his or her own benefits. However, a working spouse can “File and Suspend” his or her benefit, allowing the other spouse to start the spousal benefit while the working spouse delays starting. This provides a supplemental stream of income while the working spouse delays payments and accumulates delayed retirement credits.
4. Social Security can be even more important for women
Because women tend to live longer lives, the inflation-adjusting income they receive adds up over more years, making it an extremely valuable benefit. Women who outlive their spouse (or men who outlive their spouse, for that matter) can collect a survivors benefit equal to the higher of her own retirement benefit or her spouse’s retirement benefit. What’s more, the “higher of” formula includes any delayed retirement credits the deceased spouse accumulated by delaying the start of retirement benefits during his life. Unfortunately, this cuts both ways: if the deceased spouse had started retirement benefits early, the survivor benefit may be reduced. The combination of survivor benefits and delayed retirement credits can be very important for survivors’ income later in life.
5. A divorced spouse may be eligible for benefits
If you are divorced, you may qualify for Social Security benefits based on your ex-spouse’s work record. To qualify, you need to:
- Have been married to your ex-spouse for at least 10 years;
- Have been divorced two years or longer;
- Be at least 62 years old and unmarried; and
- Not be entitled to a higher Social Security benefit based on your own work history.
If your former spouse is deceased, you may still be able to receive benefits as a surviving divorced spouse. If you remarry before the age of 60, you will lose the ability to receive a survivor benefit from your deceased ex-spouse. The good news is that your benefits are not affected by the decisions your ex makes, such as starting benefits early or re-marrying.
If the Social Security rules seem complicated, it’s because they are! However, we’re here to help you navigate these and other important Social Security facts for retirement. Our CERTIFIED FINANCIAL PLANNER® professionals can help you evaluate Social Security strategies in the context of your overall retirement plan. Schedule an introduction.
1) Why does Social Security matter more later in retirement?
For many retirees, Social Security becomes a larger share of retirement income over time—especially as other income sources change. That’s why it often makes sense to consider how your claiming decision supports long-term retirement income, not just the first few years.
2) Is it better to claim Social Security early or wait?
There isn’t one “best” age for everyone. The right choice depends on factors like longevity expectations, how you plan to fund early retirement years, and how Social Security fits into your broader retirement strategy.
3) How does longevity affect Social Security claiming decisions?
If you expect a long retirement, the later years matter A claiming strategy that supports sustainable income over decades can help reduce the risk of relying too heavily on investments later in life.
4) What are “retirement benefits,” and why do they matter?
In retirement planning, “retirement benefits” often refers to income sources that may include Social Security and other benefits tied to your working years. Maximizing retirement benefits means making choices that support your overall plan and financial goals.
5) How does Social Security strategy connect to taxes in retirement?
Taxes can influence how much of your retirement income you keep and how long it lasts. Because Social Security is part of the broader retirement income plan, it should be evaluated alongside tax planning to help reduce unnecessary tax drag over time.
6) If I’m financially secure, do I still need to think carefully about Social Security?
Yes. Even with substantial savings, Social Security can play an important role in creating reliable income and supporting long-term retirement confidence—especially when you’re coordinating multiple goals like lifestyle, family support, and charitable giving.
7) What should I consider before making a Social Security claiming decision?
You should consider:
- Expected retirement timeline and lifestyle goals
- Longevity and long-term income needs
- How claiming choices integrate with the rest of their plan
- Tax considerations and other retirement benefits
Taken together, these can help clarify a claiming approach that supports confidence over time.
8) Why is a “retirement income strategy” important?
A retirement income strategy is designed to create sustainable cash flow so you can enjoy retirement with greater confidence and less stress. It considers income sources, withdrawal approach, and how to keep the plan aligned with your priorities.
9) Who can help me evaluate Social Security strategies as part of retirement planning?
Many people prefer guidance from a credentialed professional who can help simplify retirement complexities and align decisions with their goals and values—especially when retirement involves multiple moving parts.
Have questions? Contact us.
