INSIGHTS

Social Security Planning

by Chad VanDyken, CPA, and Teresa Durbin, CPA

ARTICLE | January 8, 2025

Social Security is a significant part of many people’s retirement plans. Deciding when to draw benefits
will greatly impact the amount of benefits you’ll receive over your lifetime. There are many variables to
consider when making this decision, and we can help you navigate them.

Retirement Benefit Basics

  • You must have 40 credits earned over your lifetime to qualify for retirement benefits. You can earn up to 4 credits per year ($1,730 in earnings = 1 credit).
  • Benefit amounts are based on average earnings over your highest 35 years of earnings, indexed for inflation.
  • Full Retirement Age (FRA) is 65, 66 or 67 (depending on your birth date). You will receive full benefits if you retire after reaching your Full Retirement Age.
  • Age 62 is the minimum age you can receive benefits. Benefits are reduced by up to 30% if taken earlier than Full Retirement Age.
  • If you collect benefits prior to your Full Retirement Age, you will be subject to the earnings limit. Your benefits will be reduced $1 for every $2 earned, about $22,320. ` You can receive higher benefits if you delay benefits until age 70. Each year of delay past your full retirement age will increase your benefit by 8% up to age 70.
  • Your spousal benefits are used if they are higher than your personal worker’s benefits. Spousal benefits are 50% of the other spouse’s Primary Insurance Amount if benefits begin at Full Retirement Age. Spousal benefits are reduced if benefits begin early (35% at age 62).
  • Survivor’s benefits are collected when one spouse dies. The widow/widower can keep his/her own retirement benefit or collect a survivor benefit equal to his/her spouse’s benefit, whichever is higher. If a husband was receiving reduced or increased benefits, his widow’s survivor benefits will be based on those amounts.

Variables to Consider

Health/Family History: If you expect you will live a long life due to your health status or family history, you will experience more gain by delaying your benefits.

Earnings Potential from Age 62 to FRA to Age 70: If you plan to work after you start taking benefits, your benefits may be limited if you are under Full Retirement Age.

Need: Many people haven’t saved enough for retirement, forcing them to collect benefits earlier. If your need for cash flow isn’t as immediate, you may collect more cumulative lifetime benefits by utilizing various planning strategies.

Marital Status: If you are married, there are a few different strategies that can be used in order to maximize the cumulative benefits you can receive as a couple. Consider the following factors in your plan:

  • Age differences of spouses;
  • Work history of each spouse;
  • Spousal benefits; and
  • Survivor benefits.

Other Retirement Savings: If you have flexibility in when you begin taking benefits, you may want to time your benefits to maximize the amount and minimize tax implications.

Everybody is Different

We can take a look at your unique situation and show you specific scenarios to help you assess your options, including graphs that will illustrate your lifetime benefits for each scenario. We will provide you with a custom solution, so you can make an informed decision about how to supplement your retirement with Social Security benefits.

If you’d like to discuss your specific Social Security plans and strategies, please give us a call.