Social Security Claiming Strategies for a Stronger Retirement

For many, Social Security isn’t just a benefit—it’s a key component in a broader retirement strategy. Whether you’re nearing retirement or already enjoying it, optimizing how and when you claim Social Security can enhance your overall financial picture and help preserve other assets.

At Crest Wealth Advisors, we believe that every piece of your financial plan should work together. A thoughtful approach to Social Security ensures it aligns with your broader retirement goals. Here are some key considerations:

Understand Your Full Retirement Age

Your Full Retirement Age (FRA) is the age when you are eligible to receive your full Social Security benefit based on your earnings record. Claiming before your FRA—available as early as age 62—results in a reduced benefit. However, delaying your claim beyond your FRA increases your benefit by approximately 8% per year until age 70.

The decision of when to claim should be guided by your financial needs, lifestyle, and long-term goals. Delaying benefits could enhance your monthly income in later years, while claiming earlier might provide flexibility if you have immediate financial priorities or want to preserve other assets.

Spousal and Survivor Benefits

Social Security offers unique benefits for married couples. A spouse can claim benefits based on their partner’s earnings record, even if they have limited or no earnings of their own. These spousal benefits can amount to up to 50% of the higher-earning spouse’s benefit.

For widows and widowers, survivor benefits provide another important option. These benefits can be claimed as early as age 60 (or 50 if disabled) and are based on the deceased spouse’s earnings record. For couples, coordinating Social Security strategies can help ensure both partners receive the maximum support available.

Integrating Social Security with Other Income

Social Security is just one piece of your retirement income strategy. By combining it with withdrawals from pensions, investments, or other sources, you can create a reliable and tax-efficient income stream.

For example, some retirees choose to delay Social Security while drawing from their retirement accounts first. This approach can help reduce required minimum distributions (RMDs) later on and minimize overall tax liability. Coordinating these income sources is essential to maintaining financial flexibility and protecting your savings.

Plan for Taxes on Benefits

Social Security benefits are often taxable, depending on your total income. If your combined income—calculated as your Adjusted Gross Income (AGI) plus tax-exempt interest and half of your Social Security benefits—exceeds certain thresholds, you may owe taxes on up to 85% of your benefits.

By strategically planning withdrawals from taxable and tax-deferred accounts, you can reduce the impact of these taxes. Understanding how Social Security fits into your overall tax strategy can help you retain more of your income for retirement.

Think Long-Term

When deciding how and when to claim Social Security, it’s important to consider more than just your immediate needs. Life expectancy, healthcare costs, and inflation all play a role in shaping your long-term financial security.

For instance, delaying benefits might provide a higher monthly income in your later years, offering more stability against rising costs or unexpected expenses. On the other hand, claiming earlier could be a good option if you need income sooner or want to preserve other assets.

Final Thoughts

Navigating Social Security decisions can be complex, but a strategic approach can maximize your benefits and contribute to a secure retirement. By understanding your options and coordinating them with your broader financial plan, you can make informed choices that align with your long-term goals.

For personalized guidance on Social Security strategies and retirement planning, contact Crest Wealth Advisors today.

Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, legal advice, a recommendation for purchase or sale of any security, or investment advisory services. Please consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Jason Dall’Acqua, and all rights are reserved.