So, what’s Social Security really worth? Let’s break down the strategies, pitfalls, and key decisions that could dramatically change your retirement outcome.

The Critical Role of Social Security in Retirement Planning

Social Security was never designed to be your only source of income in retirement—it was meant as a supplement. Yet, for many, it’s the cornerstone of their retirement strategy. This makes understanding its benefits, claiming strategies, and tax implications absolutely critical.

With the right approach, you can significantly increase the value of your benefits over time. Get it wrong, and you could leave tens of thousands—or even hundreds of thousands—on the table.

Types of Social Security Benefits You Need to Know

Social Security is more than just a monthly check:

• Retirement Benefits – The standard benefit based on your 35 highest-earning years.
• Spousal Benefits – Allows you to claim up to 50% of your spouse’s benefit, even if divorced, as long as you were married for at least ten years.
• Survivor Benefits – Provides the higher of two benefits to a surviving spouse, ensuring income continuity.
• Disability Benefits – Available for those who are unable to work due to a disability.
• Supplemental Benefits – For individuals 65 and older with limited income and resources.

Understanding which benefits apply to you—and how to maximize them—can make a massive difference in your long-term income.

How Social Security Is Funded

Social Security is funded through payroll taxes:

• 6.2% for Social Security and 1.45% for Medicare, for a total of 7.5% from both employees and employers.
• Self-employed individuals pay the full 15%, covering both portions.
• Taxes are applied up to an income threshold of $168,600; after that, only Medicare taxes are withheld.

The system is designed to be self-sustaining, but it’s no secret that the long-term solvency of Social Security is often debated.

Understanding Full Retirement Age and Claiming Strategies

Your Full Retirement Age (FRA) depends on your birth year:

• If born before 1937, your FRA is 65.
• If born after 1960, your FRA is 67.

Here’s the catch: claiming benefits before your FRA reduces your monthly payments. Wait until age 70, and you get an 8% boost per year past your FRA. This means your monthly check could be 32% higher than if you claimed at age 67.

This makes the decision to wait—or claim early—one of the biggest financial choices you’ll make.

Taxation of Social Security Benefits

Social Security benefits can be taxed—up to 85% of the benefit—depending on your provisional income, which includes:

• Adjusted Gross Income (AGI)
• Half of your Social Security benefits
• Non-taxable interest

The thresholds are:

• $32,000 for married couples
• $25,000 for singles

One strategy to reduce taxation: Roth IRA distributions are not included in provisional income, making them a powerful tool to manage your tax burden.

Working While Claiming Social Security

You can work while claiming Social Security, but there are earnings limits:

• Before FRA: $1 is deducted for every $2 earned above $22,000.
• In the year you reach FRA: $1 is deducted for every $3 earned above $60,000.
• After FRA: There are no earnings limits.

The good news? Any money withheld gets recalculated and added back after you hit your FRA.

The Case for Suspending Your Benefits

If you reach your FRA and want to boost your benefits, you can suspend them. For every year you wait, your payment increases by 8%. This strategy:

• Boosts future income
• Increases survivor benefits for your spouse
• Potentially adds tens of thousands to your total lifetime payout

However, suspending benefits also suspends payments to anyone claiming on your record, including spousal benefits.

Break-Even Analysis: When Waiting Pays Off

The question many ask: When does it make sense to wait?
The break-even age typically falls between 78 and 82. If you live past this age, you come out ahead by delaying benefits. If you’re in good health and have a family history of longevity, waiting is often the smarter move.

Social Security and Pensions: What You Need to Know

Receiving a pension doesn’t automatically reduce your Social Security—unless you’re subject to the Windfall Elimination Provision (WEP) or the Government Pension Offset (GPO):

• WEP reduces benefits for those with non-Social Security-covered pensions.
• GPO reduces spousal and survivor benefits for those with government pensions.

Knowing how these rules apply can help you avoid surprise reductions.

Medicare Enrollment and Social Security

If you’re already collecting Social Security when you turn 65, you’re automatically enrolled in Medicare Part A and B. If not, you need to sign up manually. Miss the deadline? You’ll face permanent penalties.

The exception: if you have employer-sponsored insurance, you may be able to delay Medicare without penalty.

Maximizing Your Social Security Benefits

To get the most out of Social Security:

• Wait until age 70 if possible.
• Work at least 35 years—any year you don’t work counts as zero in your calculation.
• Use Roth IRA distributions to manage taxable income.
• Strategize around spousal and survivor benefits to maximize household income.

Final Thought: What’s Social Security Really Worth?

For many Americans, Social Security isn’t just part of the plan—it is the plan. Understanding how to maximize it can mean the difference between getting by and living comfortably in retirement. With smart planning, you can unlock the full value of your benefits and ensure you’re not leaving money on the table.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

The post What’s Social Security Really Worth to You? appeared first on ROI TV.

Let’s break it down.

What Are Social Security Spousal Benefits?
Spousal benefits allow you to receive up to 50% of your spouse’s full retirement age (FRA) benefit. That’s right—you can qualify for benefits based on your partner’s work history without reducing their benefit at all.

To be eligible, you must be at least 62 years old, and your spouse must already be receiving either retirement or disability benefits. However, if you claim at 62, you’ll only receive 32.5% of your spouse’s FRA benefit. That’s a permanent reduction, so the timing of your claim matters.

Timing Is Everything
Spousal benefits don’t increase beyond full retirement age like personal benefits do. That means there’s no benefit to delaying past FRA. On the flip side, claiming early permanently locks in a lower amount.

The closer you are to FRA when you claim, the higher the monthly benefit. The sweet spot is reaching FRA—usually between 66 and 67—before applying, so you receive the full 50%.

How Spousal and Personal Benefits Interact
Here’s something that confuses a lot of people: If your personal benefit is higher than your spousal benefit, you’ll get your own benefit. But when you apply, Social Security checks both and automatically gives you the higher amount.

If the spousal benefit is higher, you’ll first receive your personal benefit, then receive a “top-up” to bring you to the spousal level. You can’t claim both in full.

A Real-Life Strategy Example
Let’s talk about Mary and John. Mary claimed her personal benefit early at 62, locking in $700 per month instead of the $1,000 she’d get at FRA. But when John reached FRA at 67 and claimed his benefits, Mary became eligible for spousal benefits. Her monthly income jumped to $1,200.

By claiming early, Mary also collected four extra years of $700/month, totaling $33,600 before switching to the higher spousal amount. That’s a real-world example of how strategic planning can maximize household income.

What If You’re Divorced?
You can still qualify for spousal benefits from an ex-spouse if:

• The marriage lasted at least 10 years.
• You haven’t remarried (unless that marriage ended).
• Your ex is receiving benefits—or it’s been at least two years since the divorce.

This can be a valuable benefit for those who didn’t work long enough to qualify for full Social Security on their own.

Watch Out for the Government Pension Offset
If you worked in a government job and didn’t pay into Social Security but receive a pension, your spousal benefit may be reduced or eliminated. That’s thanks to the Government Pension Offset (GPO).

Also, if you’re still working and haven’t reached full retirement age, your benefits may be reduced based on income. For 2024, the limit is $22,320. Earn over that, and $1 is deducted for every $2 over the limit. After you reach FRA, you can earn as much as you want without affecting your benefits.

What About Survivor Benefits?
Spousal benefits max out at 50% of your partner’s benefit, but survivor benefits can be up to 100%. If your spouse passes away, you may be eligible for their full benefit, depending on your age and circumstances.

This makes survivor benefits a critical piece of planning for married couples.

No More “File and Suspend”—But Smart Strategies Still Exist
One popular loophole—the “file and suspend” strategy—was phased out in 2016. It allowed one spouse to trigger spousal benefits without claiming their own.

While that tactic is gone, strategies like Mary and John’s still exist. You can coordinate when to claim personal and spousal benefits to maximize your payout across your retirement years.

Final Thoughts
Spousal benefits can be a powerful way to increase your Social Security income. The key is understanding the rules, weighing your options, and planning around your household’s unique situation. Don’t leave money on the table.

Whether you’re married now, divorced, or widowed, knowing how these benefits work can make a big difference in your retirement security.

Have questions? Drop them in the comments—I’d love to hear how you’re approaching Social Security planning for your family.

All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.

The post How Social Security Spousal Benefits Work and How to Maximize Your Household Income appeared first on ROI TV.