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If you have specific questions about optimizing Social Security in your retirement income plan, please contact us for a complimentary discovery meeting. As a fee-only Registered Investment Advisor, we offer comprehensive financial and investment advice to help people maximize their retirement income, including Social Security.


How Do I Qualify for Social Security?

As a source for retirement income, Social Security can’t be beaten. It provides:







You pay into Social Security over the course of your career, and you receive benefits based on the amount of taxes you paid.

Essentially, Social Security breaks down your work history into “credits.” To qualify for Social Security benefits, you need to have earned 40 credits, which amounts to 10 years of work.

To earn a credit, you need to have made a certain amount of money. For 2018, that amount is $1,320, and you can earn a maximum of four credits per year. The maximum benefit you can receive depends on the age you retire (see the next section for details). For 2018, the maximum amounts would be:


When Am I Eligible for Benefits?

You become eligible for benefits at age 62. However, it pays—literally—to wait. Between age 66 and 67 (depending on the year you were born), you reach what is called FRA, or full retirement age. By waiting to collect benefits at FRA, you will increase your benefits by about 30% for the rest of your life.

A lot of people delay even further because the Social Security Administration will continue to increase your benefits by about 8% per year after FRA. An important note: There’s no point in waiting till after 70 to claim benefits since the increases stop at age 70.

Obviously, the question of when to claim benefits is a crucial one. We’ll look at some of the factors you may want to consider in Question 5.

What's Your FRA?


Can My Spouse Use My Benefits?

We often call Social Security “household” income because it provides more planning opportunities to couples than it does to singles. That’s because as one-half of a couple, you can receive your own benefit or you can receive the spousal benefit.

The spousal benefit provides 50% of your spouse’s benefit, assuming they waited until full retirement age to claim Social Security. So, you and your spouse have the ability of receiving the benefit that would increase your household income the most (100% of your benefit or 50% of your spouses).

When one spouse passes, the surviving spouse can claim the survivor benefit. That means if your spouse passes before you, you can collect 100% of your spouse’s benefit, assuming you have reached full retirement age. In this way, the surviving spouse will always receive the highest benefit between the couple.

You may also be eligible to receive benefits based on an ex-spouse’s record. You will need to have been married to them for at least 10 years, and you need to be single to claim the benefit. Like the spousal benefit, you can receive up to 50% of their benefit—even if they haven’t yet applied.

Can I Keep Working and Collect Social Security?

A lot of people want to leave their career behind forever when they retire, but others want to keep on working, either because they need the money or simply because they’re productive types.

Whatever the reason, the Social Security Administration will still pay your benefits if you work. What’s more, if your earnings for the prior year were higher than the amounts the SSA used to calculate your benefits, your check will increase to reflect that increase.

It’s important to keep in mind the so-called earnings test, which essentially means that your benefits can be reduced while you’re working if you earn too much money. What’s too much? Here are the rules for 2018:

  • If you’re under FRA for the entire year you’re working and collecting benefits, then $1 will be deducted from your benefit payments for every $2 you earn above the annual limit. For 2018, the limit is $17,040.

  • If you reach FRA in the year you are working, then there will be no deduction from the month you reach FRA. However, before that month, $1 in benefits will be deducted for every $3 you earn above the annual limit. For 2018, the limit is $45,360.

The money that the Social Security Administration deducted will be returned to you in the form of an increased benefit once you reach FRA.

Signing Up for Social Security

You can apply for Social Security by:

  1. Signing up online

  2. Calling (800) 772-1213

  3. Making an appointment with your local
    Social Security office


The Big Question: To Delay or Not to Delay?

If you’re nearing retirement, you have a critical decision to make: Should you take Social Security early at 62, should you wait until you reach full retirement age (66–67), or should you hold off even longer until age 70?

For most people, the answer should probably be to wait until at least full retirement age; however, some people may want to claim benefits earlier. They may need the income, or they may not expect to live much longer. In the case of poor health, however, you may still want to delay benefits if you are married and your spouse is healthy and expects to live a long life.

Although delaying may be the best answer for you, it still presents a problem. By delaying your benefits, you will need to spend down your other income sources sooner, such as your IRA. This can reduce the money you have available in the future and also potentially creates a smaller inheritance for your children.

We’ve found that spending money early can be a hard concept to grasp, no matter how much you’ve saved for retirement. This is one of the reasons we advocate planning for retirement in your 40s and 50s, when you have more time to take advantage of financial strategies that can give you income flexibility.

Beyond just saving for retirement, you should also take into account:

  • TAXES: Many people assume that their tax bracket in retirement will be lower than it was when they were working. But when you add in Social Security to account withdrawals and other income sources, you might find yourself in a higher tax bracket! Delaying Social Security can help you keep your tax bracket down between age 62 and 70. This in turn can give you the opportunity to convert IRAs to Roth IRAs in low (or even 0%) tax brackets. It might also allow you to take capital gains in the 0% tax bracket.

  • ASSET LOCATION: The 401(k) has become the preferred way to save for retirement, but the problem is that you must pay taxes on withdrawals. So, if all you do is save into a 401(k) or other tax-deferred vehicle, then you have little tax control on the back end. Putting money into a Roth IRA or regular brokerage account gives you income in retirement with lower tax consequences. It can also allow you to delay your Social Security benefits while keeping your tax bracket low and taking advantage of the Roth conversions and 0% capital gain moves mentioned above.

  • THE BENEFITS OF SPENDING: Spending more early in retirement might be a good thing if a family has a large estate subject to estate tax. People tend to focus on reducing their estate tax by giving their assets to family and charity, but nobody said you can’t just spend the money.

Obviously, there is no single right answer to the question of “To delay or not to delay?” For many people, delaying benefits as a form of longevity insurance is going to be the right answer. However, whatever you decide, it’s best to consider all your options as early as possible and to consider Social Security as just one element of your entire financial picture.


Schedule a Discovery Meeting

Social Security planning can be complex, especially when you consider it as just one tool in a chest of tools for retirement income. The interplay of Social Security timing, retirement accounts, brokerage accounts, taxes, and estates can get complicated, and you may find that you need the help of a financial advisor for a clear path forward.

If you have specific questions about optimizing Social Security in your retirement income plan, please contact us for a complimentary discovery meeting. As a fee-only Registered Investment Advisor, we offer comprehensive financial and investment advice to help people maximize their retirement income, including Social Security.