How can you maximize your Social Security benefit? Social Security may be one of your primary sources of income in retirement, and you’ll learn the tips on how you can be sure to get the most out of your Social Security benefit in today’s video.
Timestamps:
00:00 – Introduction
1:15 – Full Retirement Age
3:00 – Cost of Living Adjustment
6:57 – Provisional Income
9:17 – State Income Tax
11:39 – Survivor/Spousal Benefits
13:11 – Example of Spousal Benefits
15:54 – TWO-Person Decision!
17:32 – Foundation of Planning
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How to Make the Most of Your Social Security Benefit
Social Security is an important safety net for many Americans, providing a steady income during retirement or in the event of disability. As the cornerstone of retirement planning, it is crucial to understand how to maximize your Social Security benefit. Here are some key strategies to help you make the most of this valuable resource:
1. Understand the Basics: Start by familiarizing yourself with the fundamentals of Social Security. Learn about the factors that determine your benefit amount, such as your earnings history and the age at which you choose to start collecting. The Social Security Administration website is a great resource for this information.
2. Delay Retirement: While you can start collecting Social Security as early as age 62, your benefit amount will be permanently reduced if you choose to do so before reaching your full retirement age. By waiting until your full retirement age (usually 67 for those born in 1960 or later), or beyond, you can maximize your benefit amount. For each year beyond your full retirement age that you delay, your benefit increases by a certain percentage, up to age 70.
3. Coordinate Spousal Benefits: Married couples can coordinate their Social Security claiming strategies to optimize their benefits. For example, a higher-earning spouse may choose to delay filing for benefits to increase the monthly amount, while the lower-earning spouse can file for spousal benefits based on the spouse’s earnings. This allows both individuals to receive some income while ensuring the higher earner benefits from increased benefits down the line.
4. Consider Survivor Benefits: If you are married or have dependents, it is essential to factor in survivor benefits when planning for Social Security. Survivor benefits can provide lifetime income to a surviving spouse or eligible children after the death of an earning spouse. Understanding survivor benefit options can help you make informed decisions about when and how to claim benefits.
5. Work Longer: Continuing to work and delaying Social Security benefits can significantly increase your monthly benefit amount. Your Social Security benefit is calculated based on your highest 35 years of earnings. By continuing to work and replacing lower-earning years with higher-earning years, you can potentially boost your benefit amount.
6. Seek Professional Advice: Given the complexities involved in maximizing Social Security benefits, it is often a wise decision to consult a financial advisor or Social Security specialist. They can guide you through the process, provide personalized recommendations, and help you make informed decisions based on your individual circumstances.
7. Plan for Taxes: It is essential to understand that Social Security benefits may be subject to income taxes. If your total income, including your Social Security benefits, exceeds a certain threshold, you may have to pay taxes on a portion of your benefits. Consider factors such as other retirement income, withdrawals from tax-deferred accounts, and other taxable income when planning for taxes in retirement.
Making the most of your Social Security benefit requires careful planning and an understanding of your options. By applying these strategies and seeking professional advice if needed, you can optimize your benefits and secure a more comfortable retirement. Start planning today to maximize your Social Security benefit and set yourself up for a financially stable future.
Great video! This is one of the best explanation of Social Security benefits and claiming guidelines that I have ever heard. As a 75 year retired CPA I went through the decision making process without good direction despite having a "so-called" financial planner.
If my spouse is 10 years younger than me and I'm 62, can I collect the spousal benefit?
Too complicated for me.
They expect you to pass by 71.
Good luck if you will reach 65 years old!!!!
The American government is for old people only not for the children!!!!
American kids are just toys!!!!
Work until you die – it's the American dream! Just ask Rick Scott, whose company committed the biggest Medicare Fraud in US history at that time – and he walked away with a golden parachute and a job in the US Senate! Murica! Land of opportunity! For career criminals!
Excellent explanation!
Just in case you were not aware, spousal benefits no longer exist. If you didn't reach age 62 by Dec. 31, 2015, you cannot claim spousal Social Security benefits and later switch to claiming your own benefit. A federal law was passed in 2015 eliminating that strategy, which some couples once used to maximize their Social Security benefit.
It's really ridiculous to think someone should have to work past 62 life is really short to think all you are going to do is work. Wake up people in US. This is crazy and wait… insurance what a rip off. Nuts!!!
Thank you for this great explanation on spousal benefit and survivor benefit. I needed clarity on that as we're considering taking my own benefit earlier and waiting for later on my spouse's.
I'd love you to make a video when the older spouse is the low earner. When to collect for either person.
I have a question: What if the US dollar ceases to be the world currency–which I believe will happen due to sanctions we place on enemies. When the dollar becomes weaponized, who would want it if it can be used against you? I am not pro-Russian but I believe Biden has done something very dangerous. So, what strategy do you suggest for a pre-retiree?
Thanks James for the good information. I just reached 62 and retired last year. My plan has always been to delay my social security benefits until 70 for all the pros people mentioned. Also, I have an adequate pension and dividend income. From my previous calculation my breakeven is at 82. However, I just recognized that the social security shortfall is getting worse and I believe a 20% cut will come in 2033 or so. If the across-the-board cut is to be factored in, would it still be a good strategy to delay the benefit at 70 (or 2031)? I will only collect two years of full payment… until the cut.
A very clear explanation of ss and the tax effect of retirement income. Thank you
After scouring YT for accurate info from 'retirement experts', you are the ONLY one that understands and explains that SS full retirement benefits depends COMPLETELY on the year you were born. Literally (correct use of the word) everyone else believes it is set at a universal age of 65 or 67… even 'experts' that have hundreds of thousands of subscribers! This misinformation is RAMPANT among the majority of the populace. Most people in the workforce right now are born after 1960, but think they will get full benefits at age 65!
i believe you are over-simplifying the explanation of how much ss is taxed. the 3 buckets (0,50,85) are progressive. if the provisional amount is 33k, then only 50% of the amount over 32k is taxable, so .5*(33k – 32k)=$500 of ss is taxable. and if the provisional income is 45k, then .5*(44k-32k) + .85*(45k-44k) = $4k + $850 => $4850 is taxable. and these thresholds (0 to 32, 32 to 44, 44+) are for joint returns. single filers have lower thresholds, but the same progressive rules apply.
Great info and presentation! I have watched several of your videos today. Really glad you got recommended to me! Subscribed!
Federal or state taxing SSI is just wrong.
Im waiting another 2 yrs to collect my maximum SS at 70. Since I was the higher earner, my wife started hers at 62. With her early SS, dividend paying stocks and 0 debt, it was an easy decision. Great explanation on SS benefit.
I'll be 67 this year and trying to stay in the 12% tax bracket while doing roth conversions and save on taxes when the RMD'S kick in. But I'm still not 100% sure if that is the best strategy. By holding off another 3 years for SS, I'm giving up on approx 100k.
I appreciate your videos! Sure beats trying to read the SS website!
Excellent video! Thanks! The link at the end didn't work for me. I'd like to watch it.
Great info James!
Although I believe most people know about some of this it's good to see information on SS benefits for planning on the whole financial picture. Helping a spouse after we're gone should be part of the equation assuming that our own health is good enough to work. I would hate to think that my wife was struggling after I'm gone or be a financial burden on our kids because she needs the money. Glad you did this!
If a Spouse begins taking their Spousal Benefit prior to their Full Retirement Age (= a reduced benefit) does that benefit reduction carry-over to the Spouse’s Survivor Benefit when their spouse passes away?
Thank you James. I just investigated whether I should wait to full retirement age or take it at 62. I would give up 180000.00 for five years to get 1000.00 per month more per month.