Maximizing Social Security Benefits: Thinking Beyond Your Nest Egg
Key Points – Maximizing Social Security Benefits: Thinking Beyond Your Nest Egg
- Thinking of Your Retirement Income Strategy Like a Carton of Eggs
- What Goes into the Decision of When to Claim Social Security
- The Three Types of Benefits
- Addressing the Future of Social Security
- 8-Minute Read | 54-Minute Watch
Maximizing Social Security Benefits: The Decision of When to Claim Social Security Isn’t an Isolated One
As you’re planning for retirement, how confident are you about Social Security being a reliable source of income? The concerns surrounding the potential solvency of Social Security could lead some people to claim reduced benefits as early as age 62 rather than waiting until their Full Retirement Age or as late as age 70 to receive the highest possible benefit amount.1
However, there is much more that goes into the decision of when to claim Social Security. The timing of when to claim your benefits shouldn’t be an isolated decision. We want to help you better understand how to maximize your Social Security benefits so you can enjoy today with confidence for tomorrow. That’s why we welcomed Covisum® Founder and President Joe Elsasser on our Modern Wealth Management Speaker Series to present, Social Security Income Strategies.
Thinking of Your Retirement Income Strategy Like a Carton of Eggs
During the webinar, Joe encouraged attendees to think of their retirement income strategy like having a carton of eggs. Your Social Security benefits are one of those eggs, but you need to consider all the other eggs (income sources) that will be funding your retirement. Here are a few examples:
- 401(k)s, 403(b)s, or other retirement plans; IRAs
- Roth accounts
- Brokerage accounts
- Pensions (if available)
- Life insurance or annuities
- Social Security
Each of those income sources has different characteristics and tax and timing considerations. So, when should you crack open the Social Security egg in relation to your other eggs so you can maximize your retirement income? That will depend on your other eggs and many other factors, but let’s take a deeper dive into why Social Security is a unique retirement income source.
What Makes Social Security a Unique Retirement Income Source?
Social Security is unlike any other asset in a retirement income portfolio. Social Security is:
- Longevity protected
- Inflation adjusted (Annual Cost-of-Living Adjustments)
- Less expensive than commercially available annuities
- Tax-advantaged
- Government-backed
We’ll touch on a few more of these points in greater detail, but according to Joe, Social Security is the only asset that has all five of these characteristics.
Maximizing Social Security Benefits: What Is Your Full Retirement Age?
If you haven’t claimed your Social Security benefits yet, have you thought about when you (and your spouse, if you’re married) should do so? One key factor in that decision will be your Full Retirement Age.
FIGURE 1 – Full Retirement Age – Social Security Administration2
As you can see in Figure 1, the FRA for anyone born in 1960 or later is 67. If your FRA is 67, but you choose to claim your benefits at 62, your monthly benefit amount will be reduced by 30%. However, Joe points out that if you have an FRA of 67 and delay claiming, your monthly benefit will increase by 8% per year up until age 70.3
Maximizing Social Security Benefits: Should You Claim Social Security Benefits Early or Delay?
So, should you just claim Social Security at your FRA, or should you claim early or delay? How can you thread the needle to maximize your Social Security benefits? There are many reasons why people may want to claim their benefits early instead of delaying and vice versa. For example, if you’re single and in poor health, claiming early may make the most sense for you.
But what if you do live longer than you expect? According to the Allianz Center for the Future of Retirement’s 2026 Annual Retirement Study, 67% of people worry more about running out of money than death.4 Running out of money before running out of life is a very real fear and is a reason to consider delaying when you claim your Social Security benefits.
Maximizing Social Security Benefits: If You’re Married, When You Claim Social Security Isn’t About You … It’s About Your Spouse
Using the American Academy of Actuaries’ Longevity Illustrator, Joe found that for a 65-year-old heterosexual couple, the husband would have a 50% chance of living until 86, while the wife would have a 50% of living until 88.5 And there’s a 92% chance that one spouse would live until 92. While life expectancy is a big unknown, it may be worth considering having at least one spouse delay claiming benefits.
FIGURE 2 – How Long Will Benefits Be Paid? – American Academy of Actuaries’ Longevity Illustrator
Maximizing Social Security Benefits: The Social Security “Break-Even” Analysis
Many people use a “break-even” analysis to try to get their answer for how to maximize their Social Security benefits. The thought behind this is that if you claim early, you’ll get more checks, but they’ll be smaller. And if you delay claiming, you’ll get a larger check, but get fewer of them.
Your break-even age is determined by dividing the number of missed benefits from delaying when you claim by the difference in your monthly check amounts. However, Joe shares that using the break-even analysis is too simplistic due to several factors, including but not limited to:
- Taxes
- Longevity
- Spousal benefits
- Overall portfolio strategy
Maximizing Social Security Benefits: Three Types of Benefits
For couples, the Social Security decision becomes significantly more complex and important. There are three types of benefits to consider.
- Retirement benefits (based on your own work record)
- Spousal benefits (up to 50% of a spouse’s benefit)
- Survivor benefits (the higher of the two benefits after one spouse passes)
To maximize your Social Security benefits, try to make the most of all three benefits.
Planning for the Survivor Is Critical
One of the most common mistakes that Joe has seen from people claiming Social Security has been when a higher-earning spouse claims early. Doing so not only reduces their own benefit, but the future survivor benefit for their spouse if their spouse outlives them. Keep in mind that 98% of survivor benefits are paid to women and 80% of women survive their husbands on average for 14 years.6, 7 That’s a long time to have to live on a dramatically reduced benefit.
How Do You Qualify for Spousal Benefits?
Social Security was created during a time when many wives stayed at home to raise children. Hence, the Social Security system was built to avoid penalizing a stay-at-home spouse.8 As a result, a spouse is entitled to the higher of the benefit on their own earnings record, or 50% of the benefit on the higher earner’s record, if electing at FRA.
While this benefit was initially intended for wives, Social Security is completely gender neutral. It can be used by either spouse. To qualify for spousal benefits, the following criteria must be met:
- Married for at least one year
- The primary worker must have filed
- Generally, must not qualify for a benefit of your own that is equal to or greater than half of the primary worker’s Primary Insurance Amount
- Up to 50% of your spouse’s PIA (not benefit amount)
There are also some substantial differences between spousal benefits and benefits on your own record. Spousal benefits are reduced on a faster schedule than benefits on your own earning record if you elect early.
For example, if your FRA is 67, and you claim at age 63, you will receive 75% of your full benefit. If you take a spousal benefit at age 63, you only receive 70% of the spousal benefit.
FIGURE 3 – Filing for Spousal Benefits Early/Late – SSA.tools9
Spousal benefits also don’t get delayed credits. Remember, on your own record, you get an additional 8% for each year of delay past full retirement age. That doesn’t happen with a spousal benefit.
Maximizing Social Security Benefits: Understanding How Social Security Benefits Are Taxed
Social Security benefits were received as a tax-free source of income many years ago, but that changed in the 1980s.10 Now, at least a portion of your Social Security benefits will be subject to ordinary income tax. The percentage of your Social Security benefits that will be taxable is based on something called provisional income.
What Is Provisional Income and How Is It Calculated?
If you’re already receiving your Social Security benefits, you can use IRS Publication 915 to determine your provisional income amount.
FIGURE 4 – IRS Publication 915 – IRS11
If you haven’t claimed Social Security yet, you can still estimate your annual benefit using IRS Publication 915. This is done by taking 50% of your Social Security benefits and adding it to your other taxable income. That may include pensions, IRA withdrawals, and investment income. Additionally, you’ll need to add any tax-exempt interest income. The sum of these numbers is your provisional income.
Provisional Income for Single Filers
If you are a single filer and your provisional income is between $25,000 and $34,000, you may have to pay income tax on up to 50% of your Social Security benefits. Those limits aren’t indexed for inflation. Thus, inflation alone may lead to more of your Social Security benefits being taxed each year.
But what if your provisional income is greater than $34,000? If that’s the case, you may have to pay income tax on up to 85% of your Social Security benefits.
Provisional Income for Joint Filers
If you’re married and filing jointly, the same formula applies, but the thresholds are $32,000 and $44,000. The IRS worksheet below can help you calculate exactly how much of your benefits will be subject to tax.
FIGURE 5 – Figuring Your Taxable Benefits – IRS12
Forward-Looking Tax Planning and Social Security Timing
The unique tax treatment of your Social Security benefits may create significant tax planning opportunities. Tax planning is one of our Modern Wealth Advantage Offerings. The CPAs and other tax professionals on our team work alongside our advisors and other subject matter specialists. One area of focus is developing proactive tax planning strategies for clients. A forward-looking tax planning approach can help evaluate how future income sources, including Social Security benefits and IRA withdrawals, may affect a client’s tax situation. Coordinating IRA withdrawal strategies with Social Security claiming decisions may create opportunities for tax efficiency.
Maximizing Social Security Benefits: What About Social Security’s Future?
As we begin to wrap up this article on maximizing Social Security benefits, we want to address the Social Security solvency concerns that we mentioned at the beginning of the article. Joe noted during our Speaker Series event that many Baby Boomers were paying in more to the Social Security system during their working years than was being paid out in Social Security benefits, but that changed around 2009.
Since then, the Social Security Trust Fund has been spent down. If there are no changes to the Social Security system, a 23% cut in benefits is projected beginning in 2033.13 If Social Security benefits for retirees continue to be combined with disability income, a 19% cut in benefits is projected starting in 2033.
FIGURE 6 – Trustees Report 2025 – 2025 OASDI Trustees Report14
What’s important to take away from that, though, is that if there are no changes to the Social Security system, it doesn’t mean that Social Security benefits would just stop. It means that there would be an across-the-board cut to benefits in that 19% to 23% range.
“What you may hear in the headlines this year, though, is that the Social Security Trust funds are only six years away from depletion. That could be an alarming headline. I don’t want you to let it alarm you. I want you to evaluate, if Social Security benefits are cut, what’s the impact on my plan in particular?” – Joe Elsasser
Joe expects some combination of benefit cuts in the form of the following to be phased in over time:
- Changes to benefit formulas
- Increase in FRA
- Changes to COLAs
- Increased taxes, particularly on higher-wage earners
- Means testing
He also anticipates some kind of subsidy from general revenue.
Maximizing Social Security Benefits – The Main Takeaway
During the Speaker Series event, Joe highlighted the potential impact of potential cuts in Social Security benefits by walking through how it might affect a sample married couple. Importantly, even when factoring in potential cuts, he explained that optimized claiming strategies can still provide substantial value over claiming early.
Social Security is one of the most valuable and complex decisions in retirement planning. Treating it as a standalone choice can lead to missed opportunities. The decision of when to claim Social Security should be fully integrated into a comprehensive retirement income strategy.
For many people, especially married couples, the right strategy can mean the difference between simply getting by during retirement and enjoying long-term financial confidence. It’s important to us at Modern Wealth that you’re able to do the latter. We want you to enjoy today with confidence for tomorrow.
We look forward to answering any questions you have about how to maximize your Social Security benefits. But to do that, we need to understand how confident you are in your finances. To assess your confidence level across all areas of your financial life, including taxes, investments, estate, and insurance, complete your Modern Confidence Score today.
Get Your Modern Confidence Score
Resources Mentioned in This Article
[1] https://www.ssa.gov/oact/trsum/
[2] https://www.ssa.gov/benefits/retirement/planner/agereduction.html
[3] https://www.cnbc.com/2026/05/11/social-security-break-even-analysis.html
[5] https://www.longevityillustrator.org/
[6] http://www.marketwatch.com/story/ten-ways-husbands-can-help-their-wives-survive-widowhood
[7] http://www.socialsecurity.gov/policy/docs/ssb/v70n3/v70n3p89.html
[8] https://www.ssa.gov/policy/docs/ssb/v67n4/v67n4p1.html
[9] https://ssa.tools/guides/pia
[10] https://www.ssa.gov/history/taxationofbenefits.html
[11, 12] https://www.irs.gov/pub/irs-pdf/p915.pdf
[13] https://www.ssa.gov/OACT/TR/2025/
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