Optimizing Your Social Security Benefits

Social security retirement benefits are the cornerstone of retirement income for millions of Americans. They provide stable income for life and the life of a surviving spouse, with cost-of living increases over both lives. It’s a combination that is very hard to beat, and it is a stabilizing force for any retiree’s income situation. This makes knowing how to manage social security money a key factor in planning your retirement.

Choosing the Right Age to Start Benefits

When it comes to managing your social security in retirement, the age you start your benefits can make a big difference over time. As the Social Security Administration warns, retirement could last a lot longer than you think.

 If you start at the earliest opportunity (age 62), your benefits will be 25% less than if you start at your Full Retirement Age. (66 for people born from 1943 to 1954, 67 for anyone born 1960 or later). Also, if you start early and continue to work, there is an earnings test. For every two dollars over the earnings limit (currently $18,240), Social Security will deduct $1 from your benefits.

 On the other hand, you can wait past your full retirement age to start benefits and accumulate Delayed Retirement Credits. If you wait until the maximum age of 70, your benefits will increase by 25%. That difference can really add up over a long life, and even more so over two long lives.


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The decision of when to start benefits should be carefully weighed as part of your overall retirement planning. It should consider factors such as your other income sources and assets, your taxes, income needs, assets, and debts.  You can use Social Security’s retirement calculator to compare the retirement benefits you will receive at different start ages.

Increasing Your Benefit

The Social Security benefit formula takes your highest thirty-five years of work history. You can see what those numbers are by looking at your Social Security Statement.  If you have less than 35 years of work history, or if there are low earning years among the 35 years, working more years allows you to replace lower earning years with higher ones. Also, if you or your spouse have worked in the public sector, adding a few years of work in the private sector could mitigate or wipe out the benefit reductions from the Government Pension Offset or the Windfall Elimination Provisions.

Protection for You and Your Spouse

The Social Security Retirement program protects spouses in several ways. For one, if you or your spouse become disabled before you start retirement benefits, the disability program can help bridge the gap. Second, the retirement program provides spousal income benefits even if your spouse has little or no work history. And third, if you die before your spouse, your spouse can receive survivor benefits for the rest of their life. In effect, these benefits are akin to a life insurance benefit.

Looking Further Ahead- Will Social Security Be There for Me?

Many people worry if their benefits will be less in the future, or if they will get any benefits at all. The Social Security Board of Trustees say the huge $2.6 trillion cash surplus from past generations of workers is being spent down and will be depleted in 2037 if no changes are made.


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However, the Trustees report also notes, “At the time of depletion of the combined reserves, continuing income (payroll taxes on workers) would be sufficient to pay 80% of scheduled benefits.” And “Since the inception of the Social Security program in 1935, scheduled benefits have always been paid on a timely basis through a series of modifications in the law that will continue.”

The moral of the story is: count on the Social Security retirement program being there for you and future generations. However, if your start date is years off, you should also allow for future changes. These could include a later starting age, lower cost-of living increases, and higher payroll taxes. You should build these probabilities into your financial planning, and if lower benefits will affect your budget, look at ways to reduce your budget without sacrificing your lifestyle.

Your Overall Strategy

Creating a strategy to optimize social security benefits is one part of the overall financial planning we help our clients do. As fiduciary financial advisors in San Diego, our job is to make sure our clients meet their retirement goals, despite all the uncertainties they face. Contact us today to discuss how we can help you develop a multi-year plan that aligns with your goals. 

About Jon Beyrer

Jon Beyrer, EA, CFP® is a partner of Blankinship & Foster LLC and is the firm’s Chief Compliance Officer. As a lead advisor, he focuses on helping families achieve their goals with sound wealth planning. In the community, Jon serves on several boards and is co-founder of the Professional Alliance for Children, a legal/financial charity for families of ill children. He has been quoted in The Wall Street Journal, The New York Times, and the Journal of Financial Planning. Jon lives in San Diego with his family.

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