Social Security Filing Strategies That Adapt To Your Life Circumstances
When it comes to Social Security, there’s no one-size-fits-all strategy. When and how you file for benefits depends on your personal financial situation, health, and family circumstances. Navigating this complex system can feel overwhelming, but having a tailored plan can ensure that you maximize your benefits and align the timing of your filing with your broader life goals. Here are key strategies to consider based on different life circumstances.
Timing Matters: When to Claim Social Security
The most important decision regarding Social Security is when to file for benefits. The earliest you can begin collecting is age 62, but filing early means you’ll receive a reduced monthly amount. If you can afford to wait, postponing your filing until you reach full retirement age (FRA)—which ranges from 66 to 67, depending on when you were born—will allow you to receive your full benefit.
Moreover, for each year you delay claiming past your FRA up to age 70, your benefit will increase by 8% annually due to the delayed retirement credits. This strategy is ideal for individuals in good health with a longer life expectancy, as it maximizes lifetime Social Security benefits. However, if you’re in poor health or face financial pressures, it may be better to file earlier.
Spousal and Survivor Benefits: Maximizing Household Income
If you are married or have been, coordinating your filing with your spouse’s benefits can lead to higher combined payouts. In some cases, spouses can claim benefits based on the other spouse’s work record if it’s more favorable. For example, a spouse who hasn’t worked as much or earned lower wages can file for a spousal benefit, up to 50% of the higher-earning spouse’s full benefit amount. This approach may be beneficial if one spouse is still working and wants to delay their Social Security benefit for growth.
Survivor benefits are another key consideration in a married couple’s filing strategy. If one spouse passes away, the surviving spouse may be able to claim the higher of the two Social Security benefits. A well-timed filing strategy can maximize survivor benefits in the long run, so it’s essential to account for your spouse’s age, health, and earnings when deciding when to file.
Impact of Working While Receiving Social Security
You must know the earnings limit if you plan to continue working while receiving Social Security benefits before reaching your FRA. For 2025, individuals under FRA can earn up to $21,240 annually without any reduction in benefits. However, if you exceed this limit, $1 will be deducted from your monthly benefits for every $2 you earn above the threshold.
Once you reach your FRA, the earnings limit no longer applies, and you can continue working without affecting your Social Security benefits. For people who can afford to delay claiming Social Security, continuing to work can increase their eventual monthly benefit and grow their savings for retirement.
Divorce and Social Security Benefits: What You Need to Know
If you are divorced but were married for at least 10 years, you may still be eligible for Social Security benefits based on your ex-spouse’s work record. You do not need to be remarried to claim these benefits, and you can receive them even if your ex-spouse has remarried. However, to qualify, you must be 62, and your ex-spouse must be eligible for Social Security benefits (though they don’t have to receive them).
It’s important to note that claiming benefits based on your ex-spouse’s record does not affect their benefits, and if you remarry, you will lose the right to claim Social Security benefits based on your ex-spouse’s record. If you’re unsure which option will provide the most significant advantage, it might be worth consulting with a financial advisor specializing in Social Security planning.
Social Security Strategies for Self-Employed Individuals
Self-employed individuals face unique challenges when it comes to Social Security planning. Since they pay both the employer and employee portion of the payroll taxes, their contributions to Social Security are often higher than those of employees. However, the same rules regarding claiming Social Security benefits apply to self-employed workers, including the ability to delay benefits, claim spousal or survivor benefits, and the impact of continued earnings on your Social Security payout.
For self-employed individuals, it’s essential to factor in their business income and expenses when considering how to plan for retirement. Contributions to retirement savings accounts like a SEP IRA, Solo 401(k), or a SIMPLE IRA can help reduce current taxable income, freeing up funds to delay Social Security benefits and allow for a larger payout later. If self-employed individuals expect to continue working well into their 60s or 70s, they may benefit from waiting longer to claim benefits, as this can maximize their future monthly payouts.
Each person’s financial situation is unique, and the best strategy for claiming Social Security benefits varies depending on factors like marital status, health, work plans, and retirement goals. By evaluating your circumstances, including your spouse’s benefits and health outlook, you can devise a strategy to maximize your Social Security income. Whether you claim early, wait for delayed retirement credits, or coordinate with a spouse or ex-spouse, understanding the options available can significantly impact your financial well-being during retirement. Consulting a financial planner or using Social Security calculators can help you make informed choices and align your filing strategy with your broader retirement plan.