When is the best time to claim social security benefits? (The key is Tax and income Planning to keep the most of your benefits!)

Baby Boomers are costing themselves millions in Social Security Benefits as new study finds only 4% have optimized their payouts!

social security benefits

A critical decision in retirement planning is when to start claiming Social Security especially since about half of retirees get most of their income from Social Security. Americans can claim Social Security starting at the age of 62, but the benefits grow 8% each year one defers claiming their benefit until the age of 70. For example, as stated in MSN news, “A person eligible for a $725 monthly check at age 62 could get a $1,280 check if they wait to start at age 70.” There is no right answer as to when to start receiving Social Security. Each person is different depending on a variety of factors such as marital status, health, retirement plans, income, and wealth. Unfortunately, the sad truth is the majority of Americans start claiming Social Security at the wrong time. According to ABC News, “Only 4% of retirees start claiming their Social Security benefits at the most financially optimal time, according to a new study from United Income. That means the remaining 96% of retirees are losing out on a collective $3.4 trillion in potential retirement income, or about $111,000 per household.”

Many Americans are poorly educated about Social Security benefits and do not have a social security retirement plan. On top of that, legislators do little to educate Americans as it would cost the government more money if retirees claimed their Social Security at the optimal time. Some Baby Boomers do not realize that if they start their Social Security early, they are locking in the lower benefits for the rest of their lives. In addition to a lack of education, another problem is that the ideal time to claim can be a psychological difficult decision. You must balance your retirement savings with Social Security benefits to determine how long you will need money and how much each month. By doing this, you are essentially betting on when you are going to die which is difficult to think about or plan. However, as Americans continue to live longer and become more in charge of their retirement planning and wealth management it sometimes makes sense to claim Social Security as late as possible and ensure they know how to optimize their Social Security benefits. The key to keeping the maximum amount of Social Security benefit income is coordinating the tax planning with the Social Security Income planning. Many Boomer’s are taken back when they learn that 50% – 85% of their Social Security income is subject to tax based on taxable formula rules that determine if benefits will be subject to tax. A top retirement savings area is learning how to prevent Social Security benefits from being taxed as we have found the tax savings average per Baby Boomer couple is 6,000 per year or 500.00 month lost if Social Security and other retirement income is not planned properly. Think about your thinking with regards to the crucial importance of Social Security optimization planning if the average Baby Boomer couple derives an average of 40% of their total retirement income from Social Security,

According to CBS News, retirees lose by taking Social Security at the wrong time: “While there is no one optimal age, the researchers found that 92% of retirees would be better off waiting to claim Social Security until at least their 65th birthday.” This would mean that retirees in their early 60’s would need to live off of retirement savings instead of Social Security benefits. Many people do not wait to claim later because a need for increased income, uncertainty in how long they have left to live, and different marriage dynamics. However, just as a general rule of thumb, strategize claiming benefits as late as you financially can with incorporating a Social security maximization plan within a comprehensive retirement income optimization plan. There are proven planning steps that can enable retirees to pay less tax on their IRA income as well as prevent unnecessary tax on social security income. By strategically planning your Social Security, you can make the most out of your retirement income and get what you have earned for your decades of hard work.

The Hidden Wealth Solution offers financial planning, retirement planning and wealth management. We specialize in working with soon to be retired Baby Boomers and retirees looking for direction with safety and security of their 401K or IRA plans as well as their social security and savings with a proven formula to organize and orchestrate a lifetime retirement plan. As a top ranked financial planning firm headquartered in the Lake Mary, Florida area, we have a proven track record of success in wealth creation and wealth preservation. As many Baby Boomers approach retirement age, it is important they consider tax saving strategies to further protect their hard-earned savings. While many people desire early retirement, for some that may not be a very viable option. Our Central Florida financial advisors can help you look at your entire portfolio including your tax bracket and tax deductions and provide you with investment strategies for maximum returns with less tax. We look forward to helping you achieve the best in wealth management! The key is to understand the different dynamics in planning FOR Retirement versus Planning IN Retirement! One would get a second opinion of their health as many are missing the importance of getting a second opinion of their wealth.


Save a seat in Chuck Oliver’s educational wealth protection webinar where you can learn how to optimize your assets and create a tax-advantaged lifetime retirement income along with a tax-free legacy.