Making the decision on when to claim social security (or not) is a pivotal component of planning for your retirement.
And when it comes to social security, you have one chance to take the right approach.
Here at Consolidated Planning, our retirement planning is focused on maximizing your today and tomorrow with a strategy that aligns with your goals.
In what follows, we’ll help you understand how social security works, when you should ideally claim it, and how to make the most of your benefits to maximize your social security throughout your retirement.
How Does Social Security Work For Retirement?
Social Security benefits might be your biggest asset on your retirement balance sheet. But it’s not always obvious because it’s presented as a monthly payment amount in today’s dollars and not a lump sum amount like a bank account or your 401(k) statement might show.
Social Security is the most widely available source of monthly retirement income, it lasts for life, it’s government-backed, and it’s adjusted each year to keep up with the cost of living. It’s a key ingredient to help manage your risks in retirement.
In 2023, the Social Security Administration reported an average annual retirement benefit of around $22k per year. Higher-income workers can expect higher benefits but should also recognize that future benefits are likely to cover a lower percentage of your take-home pay than those with more modest incomes.
Many Americans claim benefits each year before they’ve even reached their highest value, despite the many advantages of delaying to a later age.
Consider this: A retired 67-year-old today who earned the maximum taxable earnings over a career and delayed her benefits until age 70 is entitled to receive over $56,000 per year in benefits. Future retirees are likely to have even higher benefits in the future, which then continue to grow with inflation throughout retirement.
Before you can collect the benefits from all the taxes you paid into the system during your career, there is one BIG question that you need to face: when is the best time to start taking my Social Security benefits?
This choice could impact your retirement living standard more than any other, and getting it wrong could be an expensive, and avoidable, mistake.
When Should You Claim Social Security?
Many newly retired workers immediately file for Social Security, which could cost tens or hundreds of thousands of dollars in lifetime retirement benefits. The decision when to claim Social Security benefits is a separate choice from when to stop working. Social Security representatives cannot advise when to claim and may assume you want your benefits to start immediately if you contact them to inquire.
You can claim your retirement benefits as early as age 62. These benefits continue to grow by approximately 8% each year that you delay all the way until age 70, according to the Social Security Administration (SSA). For singles, it’s primarily about picking the correct start date. The decision is more complex for couples, divorced spouses or widows and involves individual and potential spousal or survivor benefits. Payments may be reduced if you continue to earn income after claiming early until you have reached your full retirement age.
Every situation is unique and should be handled as such.
While claiming early may result in higher lifetime benefits in cases of a shorter retirement, delaying benefits typically increases both monthly payments and overall lifetime value.
This is especially true if you have a younger spouse or are the higher earner in your household. Your decision should consider your entire financial picture, including:
- Potential survivor benefits available to a spouse
- Benefits for dependents who may still live with you
- Benefits from an ex-spouse’s earnings record if you are divorced, and
- How benefits will integrate with other retirement savings
Making the Most of Your Benefits
Social Security benefits are a significant retirement asset, with lifetime benefits potentially worth $1 million or more, according to the SSA. Alongside home equity, they are one of the most important and valuable assets available to retirees. And, yet many people are leaving money on the table by taking benefits too early.
Social Security will likely provide most of the retirement income for lower—and middle-income Americans. Even for higher earners, benefits may be the only source of guaranteed and inflation-adjusted income a household has. Getting the timing and coordination of benefits right could mean adding hundreds of thousands of dollars to your retirement wealth without adding any additional risk. Making the most of these benefits helps you reach the post-retirement income lifestyle you desire.
Strategically Claim Social Security To Maximize Your Retirement
Taking control of your retirement starts with the knowledge that can empower you to make the best decisions for your future living standard.
Because the Social Security Trust Fund is projected to run short and may result in a reduction to future retirement benefits if legislative action is not taken, understanding what is available now will help you prepare for any outcome and ensure you’re not leaving money on the table.
To better understand the right claiming strategy that may lead to the highest lifetime value, talk with a financial professional at Consolidated Planning for an analysis of your situation.
Exp. 3/2027
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Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. The information provided is based on our general understanding of the subject matter discussed and is for informational purposes only.
This material contains the current opinions of James M. Matthews and Consolidated Planning only. These are not the opinions of Park Avenue Securities, Guardian, or its subsidiaries.
