Social Security Tips That Can Make a Big Difference in Your Retirement

Social Security is a big part of any well-balanced retirement plan. At A Better Way Financial, we talk a lot about Social Security. Many people know how the age at which you claim Social Security determines the amount of that monthly check. If you wait past your full retirement age, you can have a higher level of benefits ^[1]. However, is that always the best plan? Following these tips can help you figure it out.

Social Security Tip No. 1 – Go Beyond the Basics

As we mentioned earlier, many people know how the benefits of Social Security can increase the longer you wait to take them. There are many financial advisors out there who will tell you the basics. They’ll talk to you about your full retirement age and how if you wait to take your Social Security until age 70, you can get an 8% increase in benefits each year between your full retirement age and 70.

This information is easy to find. It’s no secret. When presented with this information, many think, “Oh, then I should wait until age 70 to get the biggest benefit from my Social Security.” However, this may not always be the best plan. You need to go beyond this basic rule and look at your situation specifically to figure out what is best for you. We did just this for a couple who sat down with us, and it meant thousands of extra dollars from Social Security throughout their retirement.

Social Security Tip No. 2 – Have a Plan

It is so important to have a plan with regards to Social Security. We talked about how waiting until age 70 to get the highest benefit from your Social Security is a common assumption. Now, that sounds good, but how are you going to replace that missing income during your early retirement years?

You can look to your investments, but if you don’t have the level of investments you need from which to draw income, it’s probably not a good idea to drain a lot of the principle out of your investments. This is where proper planning comes in.

At A Better Way Financial, we know every single case is different. This proved true for the couple mentioned earlier. The gentleman in this case was 62 years old, a couple years older than his wife, who was 60. They were both planning to retire at age 65, turning his Social Security on at age 70 and hers at her full retirement age.

When we dug further into their case, we found that this wasn’t necessarily the best plan for them. This was because her Social Security amount was less than half of his. So, their plan was to have her wait until her full retirement age of 67 and then have her turn hers on as one half of his Social Security. However, what they didn’t realize was that she could turn hers on starting at age 62 and then switch over to utilizing one half of his at age 67. This meant five extra years of collecting Social Security that otherwise would have gone to waste. This meant an extra $70,000 over their lifetime.

Without proper planning, this couple would have left a lot of money on the table. What we found for them may not be the case for everybody. However, sitting down and creating a plan based on when to take Social Security is an important step that should not be overlooked, regardless of the outcome.

Social Security Tip No. 3 – Talk to a Professional

Perhaps the most important thing this couple did was sit down and speak with a professional. The basics of Social Security are easy to learn. However, a dedicated professional, like our fiduciary financial planners here at A Better Way Financial, can look at all the possible scenarios to help find out if there are things that you can do that would put you well ahead of the game.

For the folks we mentioned here, sitting with a professional meant $70,000 of real money that they would have missed out on if they stuck to their original plan. By going beyond the basics, talking to a professional, and creating a proper plan, they were able to truly maximize their Social Security throughout their retirement.

Citations

[1] OCOMM.Press.Office. (n.d.).  Social Security Fact Sheet: Delayed Retirement Credits. Social Security Fact Sheet. Retrieved May 1, 2023, from https://www.ssa.gov/pressoffice/DlyRetCrdtFactSheet.html#:~:text=Social%20Security%20benefits%20are%20increased,continue%20to%20delay%20taking%20benefits.