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. Many financial advisors out there 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 projected from Social Security throughout their retirement.

Social Security Tip No. 2 – Have a Plan

It is so important to have a plan with regard 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 couple in this case were both 61 years old. The wife was already retired when they came to meet with us and the husband planned to retire in one year. They both planned to turn on their Social Security income (SSI) at age 63.

When we dug further into their case, we found that this wasn’t necessarily the best plan for them. We showed them how if she waited to turn on her SSI until age 67 and he waited until age 69 to turn his on, at which point she would then switch over to collecting one-half of his full retirement amount, an option a spouse can choose to take, it would mean an additional $659,000 in income from Social Security throughout their lifetimes.*

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.

*Planning assumed that the husband would live until the age of 90 and the wife would live until the age of 100. Assumptions in this case also showed no reduction in SSI.

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.