The Power of Social Security Maximization in Retirement
For many retirees, Social Security is more than just a monthly check, it’s a critical piece of their long-term income strategy. Yet, the decision of when and how to claim benefits is often made without a full understanding of the lasting financial implications. At Blue Marble Advisors, we believe Social Security maximization should be a cornerstone of retirement planning.
Why Timing Matters More Than You Think
Claiming Social Security as soon as you’re eligible, often at age 62, may feel like a safe choice. However, doing so locks you into a reduced benefit for the rest of your life. On the other hand, delaying benefits until your full retirement age (FRA), or even until age 70, can significantly increase your monthly income and lifetime benefit total.
For example, someone with a FRA of 67 who claims at 62 will receive about 30% less each month than if they had waited. Delaying until age 70 can result in an increase of roughly 24% above the FRA amount.
Strategies That Make a Difference
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Spousal Benefit Coordination
Married couples have unique opportunities to optimize benefits. In some cases, one spouse can claim a spousal benefit while the other delays their own claim to maximize future income. -
Earnings and Tax Considerations
Continuing to work while claiming benefits can temporarily reduce your payout if you earn above certain limits before reaching FRA. Additionally, understanding how Social Security is taxed in combination with other income sources can help keep more money in your pocket. -
Integrating Social Security with Other Income Streams
The best claiming strategy is one that considers the big picture, retirement accounts, annuities, pensions, and taxable investments—ensuring your income plan is tax-efficient and sustainable.
A Real-World Example
Consider a couple, both age 62. The higher-earning spouse delays their benefit until age 70, while the other claims a reduced benefit at 62 to provide income now. This approach results in a much larger survivor benefit later on and increases their lifetime payout, providing more financial security in later years.
Partner with Experts Who See the Whole Picture
Social Security is complex, and there is no one-size-fits-all answer. The right decision depends on your health, income needs, tax situation, and long-term goals. At Blue Marble Advisors, we specialize in crafting personalized strategies that integrate Social Security with every other aspect of your retirement plan, helping you get the most from every dollar.
Ready to find your optimal claiming strategy?
Contact us today to schedule a personalized consultation.