Transcript:

Do you know the optimal age to claim your social security benefit, and how about for your spouse? In this video, we’re going to review most of the big factors that go into creating a social security claiming strategy and not just claiming it at the same age your friend did. Hi, I’m Hunter Brockway, founder of Boer Retirement Strategies, here to help set you up for a successful retirement while spending more money and avoiding being killed in taxes. First, don’t forget to check out our other video highlighting Social Security myths.

Next, how does Social Security work? You pay income taxes into Social Security at 12.4%, which is split evenly between you and your employer. Social Security taxes are capped at $168,600 of income per year in 2024, meaning someone who makes that amount pays the same in Social Security tax as someone who earns $200,000. That is because Social Security has a cap to the benefit amount you can receive back. The max benefit is currently $455 gross if waiting until age 70 to claim, and that’s before any future cost of living adjustments. Social security income is based on your 35 highest years of income.

Now, first on the evaluation list: avoid claiming Social Security while working if you are below full retirement age and claiming while working, your social security benefit may be reduced. In 2024, if you claim Social Security and earn over $22,300, then your benefit will be reduced by $1 for every two you earn over that limit. Social Security benefits are always subject to income tax, no matter your age. They have a special tax calculation to go behind your taxable income, non-taxable income, half your social security benefit, and then if taxes apply, up to 85% of your benefit is taxable. Again, benefit earnings test penalties do go away with age, but not the tax. Pro tip: be sure your Finance professional reviews your form W4V for proper Social Security tax withholdings.

Next strategy: work for the full 35 years, even if it’s part-time. Part-time income counts toward your benefit, otherwise zeros will be entered into your calculation. Now, you are eligible to claim Social Security benefit at age 62 but with a permanent reduction in your benefit. Age 67 is full retirement age, and waiting past age 67 up to age 70 gets you roughly an 8% increase per year. Social Security also offers cost of living adjustments to help try to keep pace with inflation. These raises are percentage-based, so that means if you wait for a higher baseline benefit, that grants you raises on top of raises, if you will.

Now, there’s more to claiming than just dollars, but the purpose of this video is maximizing your benefit. So if waiting until age 67 to claim, the key break-even age is 77. If waiting until age 70, the key age is 81. Another great strategy too is to diversify your social security income by claiming at a different time than your spouse. Perhaps you have a need for the money or a desire to claim. Claim the lower of the two benefits earlier and let the larger grow. That larger benefit grows even larger while waiting, plus lifetime COLA increases are larger, as mentioned a moment ago.

A couple of other strategies for certain individuals to consider before we go: If you’re divorced or widowed, you are eligible in certain instances to claim on your past spouse’s behalf if that benefit may be more than your own social security benefit. Surviving widows can also claim survivor benefits early or on behalf of their dependents without impacting their own benefit.

I’m Hunter Brockway, founder of Boer Retirement Strategies. If you’d like an individualized Social Security claiming strategy, you can book a no-cost, no-obligation call on our website at BoerRetirement.com or email us at contact@BoerRetirement.com. We are based in South Florida, Western Massachusetts, and work with clients scattered throughout the US. Enjoy your successful retirement, and thanks for watching. Bye!

One last thing, we are also slowly setting up a retirement mastermind group I am calling Retire Mentality. If you don’t know what a mastermind group is, it’s a group of like-minded individuals getting together to help each other solve common problems. We plan to run this group in a roundtable format so peers can help each other. We might talk about things like finance, healthcare, travel, local events. If you are interested in joining this group, you can send me an email at contact@BoerRetirement.com. This will be a complete anti-sales group designed purely and helping you help others retire.