Have you ever been locked out of your house?
It is incredibly frustrating, but most of us have a few fail-safe solutions, like a key in the garage or that basement window to crawl into. Then, when those don’t work, we call a locksmith for help.
Social Security is the same way. Most of us understand the basics: you work, you pay taxes, and eventually, you receive benefits in retirement. But beneath the surface are strategies and decisions that can impact your retirement income.
It is important to understand the often-missed optimization strategies that could unlock substantial value for you and your family.
Survivor Benefits: Planning for Your Loved Ones¹
If you are a surviving spouse, surviving ex-spouse, or even a dependent child, you may be entitled to benefits.
- Spousal Survivor Benefits: Surviving spouses may be eligible to receive benefits as early as age 60 (or age 50 if disabled). The amount can be up to 100% of the deceased spouse’s benefit. Understanding the timing of claiming these benefits and how they interact with your own retirement benefits is crucial for maximizing income.
- Benefits for Divorced Spouses: You may be eligible for survivor benefits (and even retirement benefits based on your ex-spouse’s record) if you were married for at least 10 years and haven’t remarried.
- Benefits for Children: Dependent children of deceased workers may also be eligible for benefits.
Coordination is Key
Social Security benefits are often just one piece of your retirement income puzzle, alongside 401(k)s, pensions, and other investments. Strategically coordinating these income streams can lead to a more tax-efficient overall retirement.
- Taxation of Benefits: Up to 85% of benefits can be subject to federal income tax, depending on other income. Understanding how withdrawals from taxable retirement accounts and pension income impact the taxation of your Social Security is essential.
- Withdrawal Strategies: Coordinating when and how you draw down your various retirement accounts with when you claim Social Security can potentially minimize your tax burden throughout retirement.
Working While Receiving Benefits²
Many individuals plan to continue working, at least part-time, while receiving Social Security benefits. It’s crucial to understand how the earnings test can impact your benefits if you claim before your full retirement age.
- The Rules: In 2025, if you are under your full retirement age for the entire year, Social Security will deduct $1 for every $2 you earn above a certain limit ($23,400 in 2025). In the year you reach full retirement age, the deduction is $1 for every $3 earned above a higher limit ($62,160 in 2025), but only for earnings before the month you reach full retirement age.
- The Long-Term Impact: While benefits may be temporarily withheld due to the earnings test, those withheld amounts are not lost forever. Your benefit will be recalculated at your full retirement age to account for the time when benefits were withheld, potentially increasing your future payments.
We are here to be your locksmith. By looking beyond basic claiming decisions, you can potentially unlock additional value.
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Contact us for a personalized review and strategic planning session.