Top questions about Social Security
For most Americans, Social Security represents a significant source of retirement income. In fact, the Social Security Administration (SSA) reports that Social Security benefits make up about 30% of retirees' income.*
When to start taking Social Security and when to retire are interconnected decisions, but they have different implications depending on your personal circumstances, timeline, and goals. Being strategic about taking Social Security can help you optimize future payments and obtain greater peace of mind.
Investors also report increased peace of mind regarding their financial future when working with an advisor.** As a ﬁnancial advisor, I help my clients think strategically about Social Security, as well as their overall goals for their retirement plans.
Here are the top questions my clients ask about Social Security:
When can I collect Social Security benefits?
To collect, you need to be 62 or older and have paid into Social Security through your payroll deductions for a minimum of 10 years.
But just because you can collect payments immediately doesn't mean you should. Your personal strategy to get the most out of Social Security should depend on many factors, which we'll discuss more later.
How much are Social Security payments?
Your beneﬁts are based on the payroll taxes you and your employers pay. Those taxes come out of your earnings, so the higher your earnings, the greater your beneﬁts.
Even for top earners, however, the beneﬁts are relatively moderate. The maximum Social Security beneﬁt as of 2023 was about $3,627 a month at "full retirement age"*—more about that below.
I recommend my clients get an estimate of what their beneﬁts will be long before they apply for them so we can start to plan how to maximize them.
Many people think when to start taking Social Security is a straightforward decision—and not surprisingly, a lot of them choose to take it as soon as possible. However, being strategic about taking Social Security can help you optimize future payments and obtain greater peace of mind.
—Ed Campagna, CFP®, Senior Financial Advisor
Factors that can affect your strategy
You should carefully consider the following factors to decide your best Social Security strategy:
Need help with your Social Security strategy? Our advisors are here for you.
How can I increase my Social Security benefits?
The easiest way to increase your monthly payments is to delay collecting. You won't get 100% of your beneﬁts unless you wait until your full retirement age to claim. After your full retirement age, your beneﬁts will keep increasing by 8% a year for each year you wait until you turn 70.
Full retirement age is based on your birth date. If you were born in or after 1960, for example, your full retirement age is 67.
But there are other potential ways to increase your beneﬁts as well.
If you're married. You and your spouse should coordinate your claims to maximize the beneﬁts. Whether you claim at the same time or use a split strategy to claim at diﬀerent ages, it usually makes sense for the higher earner to wait longer to collect. Over time, the higher earner's increases will be worth more.
If you're divorced and haven't remarried. You may be eligible to claim beneﬁts on your ex's earnings record if you were married at least 10 years.
If you're a surviving spouse. You can claim survivor beneﬁts as early as age 60 if your spouse's earnings qualiﬁed them for Social Security. You also have the option to switch to your own beneﬁts when you reach age 62 or older, if that strategy makes sense for you.
If you've started taking Social Security before full retirement age. Maybe you realized you'd be better oﬀ letting the beneﬁt continue to grow. Or perhaps you decided to return to work or don't need the money for another reason. Here are 2 ways you can undo your decision, to some extent:
- Withdraw your application and pay back what you received. You can do this if it's been less than a year since you ﬁled for beneﬁts.
- Suspend your benefits once you've reached full retirement age. This is your option if it's been over a year since you ﬁled. Your beneﬁt amount will increase every year until you turn 70 or start to collect again.
Some of these strategies can be complicated and some—like withdrawing your application—can only be done once, so you want to make sure you get them right. A ﬁnancial advisor can run diﬀerent scenarios to help you understand the potential implications.
What else affects my Social Security payments?
While you're strategizing ways to increase your beneﬁts, keep in mind these things that can decrease them:
How much can I earn while on Social Security?
Once you've reached full retirement age, you can earn as much as you want with no penalties.
Before your full retirement age, you can earn up to $21,240 per year (as of 2023) without having your Social Security payments reduced. Bad news: If you earn over this limit, your beneﬁts will be cut. Good news: When you reach full retirement age, any withheld beneﬁts will be returned to you in the form of higher monthly payments.
If you're within the calendar year when you'll achieve full retirement age but haven't reached your birthday month yet, the earnings limit is much higher: $56,520 for 2023.
You can go to our Retirement section to learn more about maximizing your Social Security beneﬁts.
Ready to set your Social Security strategy?
Working with Vanguard Personal Advisor® gives you anytime access to advisors who are ﬁduciaries—always acting in your best interest. We'll help you put together a Social Security strategy that makes the most of your beneﬁts.
*Source: Social Security Administration.
**Source: Vanguard, Quantifying the Investor's View on the Value of Human and Robo-Advice (Paulo Costa, Ph.D., and Jane E. Henshaw, 2022). Advised investors were asked about their level of peace of mind with the advisor as well as how much peace of mind they imagined having on their own. They could rate peace of mind from 0 ("No peace of mind at all") to 10 ("A great deal of peace of mind") and were considered to have peace of mind if their rating was between 8 and 10. When investing on their own, 24% reported having peace of mind. When investing with an advisor, 80% reported having peace of mind.
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