Social Security Strategies: How to Maximize Your Benefits

The decision of when to claim Social Security is one of the most consequential financial choices in retirement. You're eligible starting at age 62, but claiming early permanently reduces your benefit. At 62, you receive only 70% of your full retirement age (FRA) benefit. At FRA (67 for those born after 1960), you receive 100%. For each year you delay past FRA up to age 70, your benefit increases by 8% through delayed retirement credits. On a $2,500 monthly FRA benefit: claiming at 62 yields $1,750/month, while waiting until 70 yields $3,100/month — a 77% difference that persists for life and grows with annual COLA adjustments. The break-even age — where total lifetime benefits from delaying exceed those from claiming early — is typically around 80-82. If you expect to live past 82 (the average 65-year-old will live to 84-87), delaying is usually mathematically optimal. However, early claiming makes sense if you're in poor health, need the income to avoid high-interest debt, or can invest the benefits at returns exceeding 8% annually.

Spousal benefits allow a lower-earning spouse to receive up to 50% of the higher earner's full retirement age benefit, even if the lower earner's own work record would produce a smaller amount. The spousal benefit is based on the higher earner's FRA benefit regardless of when the higher earner actually claims. However, if the spouse claiming the spousal benefit does so before their own FRA, the spousal benefit is reduced. Survivor benefits are even more impactful for planning purposes. When one spouse dies, the surviving spouse can claim 100% of the deceased spouse's benefit (including any delayed retirement credits). This means the higher earner's claiming decision affects both spouses' lifetime income. If the higher earner delays to 70 and locks in a $3,100 monthly benefit, the surviving spouse inherits that full amount rather than a reduced benefit. For couples with a significant earnings gap, having the higher earner delay to 70 while the lower earner claims earlier can optimize total household income. Divorced individuals who were married for at least 10 years can also claim on their ex-spouse's record without affecting the ex-spouse's benefits.

Many retirees are surprised to learn that Social Security benefits are subject to federal income tax. The IRS uses "combined income" (adjusted gross income + nontaxable interest + half of Social Security benefits) to determine taxability. For individuals with combined income above $25,000, up to 50% of benefits are taxable. Above $34,000, up to 85% become taxable. For married couples filing jointly, thresholds are $32,000 and $44,000. These thresholds have never been adjusted for inflation since 1993, meaning more retirees are caught each year. Strategic tax planning can significantly reduce the taxation of Social Security. Converting Traditional IRA funds to Roth IRA in the years between retirement and claiming Social Security (when income is low) reduces future required minimum distributions, which in turn reduces combined income and the taxation of benefits. Drawing from Roth accounts rather than Traditional accounts in retirement keeps combined income lower. Some retirees even relocate to states that don't tax Social Security benefits — as of 2026, most states exempt Social Security from state income tax, but a handful still tax it partially.

The earnings test confuses many early claimers. If you claim Social Security before reaching your full retirement age and continue to work, the Social Security Administration temporarily withholds benefits based on your earnings. In 2026, for every $2 you earn above $22,320, $1 in benefits is withheld. In the year you reach FRA, the threshold is higher and the reduction is $1 for every $3 earned above the limit. Critically, these withheld benefits are not lost — they are credited back to you in the form of a higher monthly benefit once you reach FRA. Your benefit is recalculated to account for the months benefits were withheld, effectively as if you had claimed later. Additionally, if your current earnings are among your highest 35 years, Social Security recalculates your benefit annually to reflect the higher earnings, potentially increasing your payment. After reaching FRA, there is no earnings test — you can earn unlimited income without any benefit reduction. Understanding this distinction is important because many people unnecessarily stop working or reduce their hours to avoid the earnings test, not realizing the withheld benefits are eventually returned.