Maximize Social Security Benefits to Unlock Your Retirement's Potential

Social Security typically plays an important role in retirement planning, alongside other savings vehicles like pensions, retirement accounts and brokerage accounts. Yet many people overlook a critical step—having a claiming strategy that can help them maximize their Social Security benefits.

Social Security can greatly impact your retirement income and lifestyle, and deciding when to claim it is a big decision. "You've added to this benefit while you've worked, so it makes sense to want to get back what you put into it," says Gregory Wesley-Shanks, financial planner at First Citizens Investor Services, "But a lot of people aren't sure where to start or might get confused by jargon in the language."

Key factors that shape your Social Security strategy

Working with an advisor to craft a comprehensive plan may help you get the most out of your benefits and secure a more fulfilling retirement for yourself and your family. Together, you can explore four important considerations for maximizing Social Security benefits.

1 Your planned retirement age

Wesley-Shanks says clients often ask him what their Social Security benefits start date should be, so he points out that the first step is knowing your full retirement age. According to the US Social Security Administration, this will vary based on when you were born.

If you were born in 1960 or after, your full retirement age is 67. You can take your Social Security benefits starting at age 62, but claiming before your full retirement age will significantly reduce your benefit. For example, if you begin taking Social Security at age 62 in 2024, your monthly benefit would be about 30% lower than it would be if you waited until age 67.

On the other hand, delaying further—until after your full retirement age—will increase your benefit. In fact, you'll see an increase in benefits for each year you wait to claim until you turn 70.

Of course, money and health problems can sometimes force people to claim Social Security early. "But if you can afford it and are in decent health, try to wait beyond your full retirement age to start your benefits," Wesley-Shanks says.

Figuring out the right time to claim may also depend on your spouse's situation, your work plans and the other savings you have to support your retirement.

2 Your marital status

Another factor affecting your Social Security benefits start date is your current, past and even future marital status. If you're married, it's important to develop a joint Social Security strategy with your spouse, Wesley-Shanks advises. "Plan together, because it could mean the difference of being able to maximize what you can," he says.

For married couples, three factors may affect your decision about when to claim.

• Age: If there's a significant age gap between you and your spouse, it may be helpful for the older spouse to delay their Social Security benefits start date as long as possible. Waiting increases the overall benefit and maximizes the survivor benefits available to the younger spouse.
• Income: If there's been a big difference in earnings throughout your careers, the higher earner could consider delaying their benefit because the 8% yearly increase will have a bigger impact.
• Eligibility: If only one spouse is eligible for Social Security benefits, the non-eligible spouse may still be able to receive 50% of the eligible spouse's benefit. To maximize this spousal benefit, the non-eligible spouse should still wait until their full retirement age to start collecting.

If you're single and have never been married, Wesley-Shanks recommends considering your health and your accumulated retirement savings to determine when to take your benefits.

If you're single when you retire but have been married in the past—or if you get remarried during your retirement—there are a few additional considerations, as long as you're at least 62 years old.

• If you've been divorced for at least 2 years but were married for at least 10 years, you may be eligible for benefits based on your ex-spouse's Social Security earnings record.
• If you remarry in retirement, you'll generally lose eligibility for benefits based on your ex-spouse's record, although there are exceptions.

3 Your healthcare coverage

Your overall health and family medical history may greatly influence your choice of an optimal Social Security benefits start date. Wesley-Shanks has seen more clients who want to retire by age 60, making it essential to factor medical expenses into your retirement plan.

"Many people don't think about their healthcare costs when they retire earlier," he warns. "If you take your Social Security before age 65, you're not eligible for Medicare yet. How will you pay for your medical expenses between when you retire and when you turn 65?"

One spouse may still be working and eligible for employment-sponsored insurance, but that could end if their employment situation changes. And taking your Social Security income early may diminish your ability to qualify for subsidies on healthcare exchanges, which you may need if you retire before you're eligible for Medicare.

4 Other income and savings accounts

Some people may continue working full-time past their full retirement age or take on part-time employment. But if you take Social Security before you reach full retirement age and continue to earn income above a specific threshold, your benefits may be reduced. The Social Security Administration typically updates these earnings limits each year—for example, in 2024, you can only earn $22,320 annually before your benefits are affected.

Once you reach your full retirement age, you can work without an income limit or any reduction in your benefits. Plus, your benefit amount will be recalculated to include the additional work history. "When you do stop working, that extra earned income may increase your Social Security," Wesley-Shanks explains.

In addition, one of the key advantages of Social Security is that it provides a steady, reliable income stream. Unlike withdrawals from retirement or brokerage accounts, your Social Security income isn't affected by market volatility, and this stability may provide a buffer against downturns. "If you can rely on predictable income like Social Security, you may avoid having to take a loss on withdrawals from market-based accounts during any rough years," he notes.

When to plan your Social Security benefits start date

According to Wesley-Shanks, many people wait until they're about a year away—or less—from retirement before they look into Social Security. If you're one of those people, this may lead to confusion or stress around how Social Security payments will fit into your overall financial plan, as well as how to access your benefits.

Instead, Wesley-Shanks recommends beginning your Social Security planning at least 5 to 10 years ahead of your expected retirement date. "When you start your homework, even though it involves a lot of moving pieces, at least it won't feel as overwhelming," he says. "You're already transitioning from the workforce and starting a new life. Planning ahead for Social Security can make it easier mentally."

Wesley-Shanks also cautions against the misconception that you'll automatically start receiving your Social Security benefits once you reach full retirement age or stop working. You need to take action to register, which can be done at SSA.gov. You can create an account in advance can help you confirm your eligibility, estimate your benefits and understand the filing process.

Maximize Social Security benefits with the help of an advisor

Planning is key when determining the best Social Security benefits start date. "It's great if you can work with a financial planner or advisor because they can give you a lot of direction and walk you through scenarios of how your benefits might play out," Wesley-Shanks says.

An advisor works with you to understand the best fit for you and your family, putting Social Security benefits into a holistic financial plan that also accounts for factors like long-term care insurance and disability coverage.

"With our planning process, we look at all the options," Wesley-Shanks adds. "I might show people that waiting until a certain age to take Social Security, for example, will be the best for their plan and give it a higher overall probability of success."