SOCIAL SECURITY MAXIMIZATION

Optimization of Benefits

There are 96 different months you can claim your Social Security Benefits. If you are married, that’s 192 different numbers. It’s not just about the largest number either, because there are five different ways to file for these benefits. Much of the time, individuals only plan to utilize their retired worker benefit. That is the benefit you learn about on your Social Security statement mailed to you starting on your 60th birthday. When you include options, your spouse would have, survivor benefits, and advanced filing options – there are over 20,000 variations about how a married couple could file for benefits. On average, Social Security makes up 64.8 percent of total household income, so we need to manage it like an asset. Strategizing on when and how to file is a critical retirement decision. Optimizing your benefits should take into account all of your other assets and income sources.

Coordination for Estate Planning

Estate planning is a consideration when determining how to optimize your Social Security benefits. The catalyst may be to protect the surviving spouse or to minimize the long term effects of taxation of your benefits. Replacing the reduction to a surviving spouse’s income and aiming to decrease your taxes for the length of your retirement are factors that coordinate the plan for filing your Social Security benefits.

Taxation of Benefits

Income from Social Security is subject to federal income taxes if your combined income reaches a certain level. Combined income consists of your adjusted gross income (income from your wages, dividends, capital gains, business income, retirement distributions, as well as other income), nontaxable income, and half of your Social Security benefits. Based on the current tax laws, if your combined income exceeds $34,000 filing as a single person, or $44,000 filing as a married couple, up to 85% of your Social Security benefits may be taxable. Understanding those implications and the tax implications for your other assets might make you reconsider when to file for Social Security.

The first step toward achieving your retirement goals is having a plan…