I Asked ChatGPT What Social Security Strategies Middle-Class Retirees Should Use
Written by
Peter Burns
Edited by
Molly Sullivan
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When you work and pay taxes, you earn Social Security credits. Once you retire, you’re eligible to claim these benefits and receive monthly support payments. However, you can choose when to begin receiving payments, which will change the amount you receive.
Because of this, there are a lot of things to take into consideration when it comes to Social Security. I asked ChatGPT about Social Security tips for middle-class retirees, and here’s what it had to say.
Early vs. Delayed Claiming
The first thing to understand about claiming Social Security is how your age affects your benefits. Full retirement age is the period between the ages of 66 and 67 when you’ll receive 100% of your retirement benefit payment. However, you can begin receiving benefits as early as age 62 for a reduced amount and as late as 70 for an increased benefit. The amount you’ll receive (if full retirement age is 67) breaks down as:
- Age 62: 70%
- Age 63: 75%
- Age 64: 80%
- Age 65: 86.7%
- Age 66: 93.33%
- Age 67: 100%
- Age 68: 108%
- Age 69: 116%
- Age 70: 124%
ChatGPT said, “If you have other income sources (like pensions, savings, or investments) that can support you early on, delaying Social Security can result in higher monthly payouts later in life.”
This advice is especially important for those with good genes and excellent health who expect to live a long life. Taking benefits too early can mean receiving 30% less than your full benefits. The longer you live, the bigger the disparity will get.
Taxes
You’ll likely have to pay federal income tax on the Social Security benefits you receive. If you have other income, it will be combined with any nontaxable interest you’ve earned and half of your Social Security benefits to determine how much you owe in taxes.
Here’s how much you’ll pay if you’re married and filing jointly:
- $32,000 or less: No taxes
- $32,000 to $44,000: Up to 50% is taxable
- $44,000+: Up to 85% is taxable
If you’re filing individually:
- $25,000 or less: No taxes
- $25,000 to $34,000: Up to 50% is taxable
- $34,000+: Up to 85% is taxable
Regarding taxes, ChatGPT advised: “Be mindful of your other income sources and consider tax-efficient withdrawal strategies. You may want to draw down tax-deferred accounts like IRAs or 401(k)s early on to lower your taxable income when you start taking Social Security.”
This is good advice because it helps you minimize the taxes you’ll pay on your Social Security benefits. Taking less income from tax-deferred accounts can reduce what you owe and leave you with more money overall.
Spousal Benefits
If you’re married, your spouse may also be eligible for Social Security benefits. In this case, you’ll have more decisions to make to maximize the overall amount you’ll both receive each month.
ChatGPT said: “Consider the timing of when each spouse begins collecting Social Security. Sometimes, it makes sense for one spouse to delay while the other claims earlier, especially if it allows you to maximize benefits, reduce taxes, and ensure the surviving spouse receives a higher income later in life.”
If you’re able to live off of one person’s Social Security benefits, the other can delay theirs to receive a larger amount later. Another important note is that your spouse can receive up to 50% of your benefits if you’re a high earner. If half of your benefits are higher than your spouse’s total benefits, it’s an excellent choice for increasing how much you’ll get each month.
Be Careful When Using AI Chatbots
ChatGPT and other artificial intelligence bots work by processing large amounts of text and using patterns in the language to generate responses to questions asked. While AI bots can help you gain a basic understanding of new concepts or brainstorm ideas, they may make mistakes and provide misinformation. This can have serious negative effects on your finances.
Don’t depend on AI bots alone when making important financial decisions. If you have important questions, it’s better to ask a qualified financial adviser to protect your financial future.
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