How To Factor Social Security Into Retirement Planning

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The Social Security Administration (SSA) will pay more than $1 trillion in benefits to nearly 67 million recipients in 2023. The program was never meant to support your retirement fully, but few people would want to try to get by without it after they stop collecting a paycheck.

If you’re planning your retirement, here’s how to factor in Social Security to get the most out of the benefits that you’ve been paying into for all these years.

Find Out How Much You’ll Receive

The first step is to estimate your payments so you’ll know how much you can count on to subsidize your nest egg and other income.

“It’s important to understand how Social Security fits into the broader picture of retirement,” said Dennis Shirshikov, professor of finance, economics and accounting at the City University of New York and the head of growth at Awning, a site that helps people support their retirement through real estate investing. “Considering it in conjunction with other retirement income sources like pensions, retirement accounts, investments, and savings can help retirees ensure a steady stream of income throughout retirement.”

Are You Retirement Ready?

If you haven’t already, sign up for a free mySocialSecurity account at to learn if you’re eligible, how many credits you need if you’re not, your full retirement age and how much you’ll receive depending on when you claim — which brings up the next point.

Determine the Age That You’ll Claim Benefits

You’re eligible to collect Social Security at 62, but the SSA will reduce your benefits for every month you claim early before your full retirement age, which is 67 for those born in 1960 or later. Instead of collecting smaller checks for longer, you can also choose to increase your payments by delaying them.

“One of the most vital decisions retirees have to make is when to start collecting Social Security benefits,” Shirshikov said. “The longer you delay, up to age 70, the higher your monthly benefit will be.”

The difference can be immense. According to the SSA, your maximum benefit is $2,572 if you retire at age 62 in 2023. But if you retire at age 70 in 2023, your maximum benefit jumps to $4,555.

Consider How Other Income Will Impact Your Payments

If you do claim benefits early, it’s essential to account for any other income and how it might lower your monthly entitlement. “If you are younger than full retirement age and earn above certain thresholds, your benefits may be reduced,” Shirshikov said.

Are You Retirement Ready?

For 2023, the SSA will deduct $1 for every $2 you earn over $21,240. If you will reach full retirement age in 2023, you’ll forfeit $1 for every $3 you earn over $56,520. “But, these aren’t truly lost as your benefits will increase at full retirement age to account for benefits withheld due to earlier earnings,” Shirshikov said. Once you reach full retirement age, you collect your full benefit no matter how much you earn.

Find Out If Anyone Qualifies for Spousal and Survivor Benefits

Another consideration that can impact your retirement plan is whether your work history entitles family members to receive payments.

“Social Security also provides benefits to your spouse, ex-spouse, or dependents, which is another factor to consider,” Shirshikov said. “For example, a lower-earning spouse may receive up to half of the higher-earning spouse’s full retirement benefit.”

Determine Your Tax Obligations

If you earn more than $25,000 in combined income — $32,000 for joint filers — the IRS might take a cut of your benefits.

“Social Security benefits may be taxable, depending on your total income in retirement,” Shirshikov said. “In some cases, it might make sense to delay Social Security benefits to avoid pushing total income into a higher tax bracket.”

Are You Retirement Ready?

Some states tax Social Security benefits, too.

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