When to begin Social Security is one of the biggest decisions of your life.
Social Security claiming is a strategy that requires a plan tailored to your portfolio, health, and the legacy you wish to leave behind.
Are you five years or less from retirement? You need to sort through your options and the myths now.
Myth #1: You should claim Social Security as early as possible.
Many people file for Social Security at age 62 because it's the earliest age they're allowed to collect benefits.
Some say:
"I've paid into the system my whole life."
"I want to get my money back."
"Social Security might not be around if I wait."
Those concerns are understandable, but claiming early comes with a permanent reduction in your monthly benefit.
What Delaying Your Benefits Can Mean
For every year you delay claiming after your Full Retirement Age (FRA), your benefit generally increases by about 8% per year until age 70.
For someone whose FRA is 67:
Claiming at 67 provides your full benefit.
Waiting until 70 could increase your monthly benefit by approximately 24%.
Claiming at 62 could reduce your benefit by roughly 30%, making the benefit at age 70 approximately 77% higher than the amount received at 62.
Consider this example:
If your FRA benefit is $2,000 per month:
Claim at 62: approximately $1,400/month
Claim at 70: approximately $2,480/month
Over a 20-year retirement, that difference can amount to well over $250,000 in lifetime income.
Is Claiming Early Ever the Right Choice?
If you have health concerns, need the income to meet your living expenses, or have other personal circumstances, claiming earlier may be appropriate.
The important thing is making an informed decision based on your financial situation, not claiming early because you've heard it's what everyone should do.
Myth #2: Social Security isn't taxable.
One of the biggest surprises retirees experience comes during tax season.
Many people assume their Social Security benefits are completely tax-free.
Unfortunately, that's not always the case.
How Social Security Is Taxed
Depending on your income, up to 85% of your Social Security benefit may be subject to federal income tax.
The IRS determines this using what's called your combined income, which includes:
Your Adjusted Gross Income (AGI)
Any tax-exempt interest
Plus half of your Social Security benefits
If your combined income exceeds:
$34,000 for single filers
$44,000 for married couples filing jointly
… up to 85% of your Social Security benefit may become taxable.
Why Withdrawal Strategy Matters
The order in which you withdraw money from your retirement accounts can have a significant impact on your taxes.
For example, taking a large distribution from a traditional IRA in one year could increase your taxable income enough to cause more of your Social Security benefits to become taxable.
A thoughtful retirement income strategy may help coordinate withdrawals from taxable, tax-deferred, and tax-free accounts to manage taxes more effectively over time.
Myth #3: Social Security claiming is simple.
Many people think claiming Social Security is as easy as choosing an age and filing online.
In reality, Social Security contains more than 2,700 rules governing benefits.
Depending on your circumstances, several factors can affect your decision, including:
Spousal benefits
Survivor benefits
The earnings test if you're still working
Pensions from employers that did not participate in Social Security
Coordination between spouses
Lifetime income projections
These rules often interact in ways that aren't immediately obvious.
Married Couples Often Have Additional Planning Opportunities
For married couples, coordinating when each spouse claims benefits can significantly affect lifetime household income.
In many cases:
The higher-earning spouse delays benefits until age 70.
The lower-earning spouse claims earlier.
Why?
When one spouse passes away, the surviving spouse generally receives the higher of the two Social Security benefits. Delaying the higher earner's benefit may increase the survivor benefit available later, depending on the family's circumstances.
Because every household is different, it's important to evaluate how various claiming strategies fit your overall retirement plan.
Don't Leave a Lifetime Decision to Chance
Social Security represents decades of work, and for many retirees, benefits may provide income for 20, 25, or even 30 years.
That's why claiming decisions deserve more than a quick online calculator or advice from a friend.
Taking time to understand your options and how Social Security fits into your broader retirement income and tax strategy can help you make a more informed decision.
If you're uncertain about the best claiming age or how Social Security fits into your retirement income plan, working with a financial professional can provide personalized guidance based on your unique situation.
Ready to Discuss Your Social Security Strategy?
At Fontaine Retirement Group, we help individuals and families evaluate retirement income strategies, including Social Security claiming decisions and tax-efficient withdrawal plan. Contact us today: BOOK HERE
Frequently Asked Questions
1. Is waiting until age 70 always the best choice for Social Security?
Not necessarily. Delaying can increase your monthly benefit, but claiming earlier may make sense if you have health concerns, need income for living expenses, or have other personal circumstances. The right timing depends on your broader retirement plan, not a one-size-fits-all rule.
2. Will I owe taxes on my Social Security benefits?
Possibly. Depending on your combined income, up to 85% of your Social Security benefits may be subject to federal income tax. Large withdrawals from traditional retirement accounts can also increase how much of your benefit becomes taxable.
3. How should married couples coordinate their Social Security benefits?
Couples may benefit from evaluating both spouses’ claiming ages together. In some cases, the higher-earning spouse delays benefits while the lower-earning spouse claims earlier. This can affect lifetime household income and the benefit available to the surviving spouse.
About David
David Fontaine, CFP®, is the founder of Fontaine Retirement Group in Miami, specializing in a coordinated, long-term approach to retirement income, tax-aware planning, and estate coordination. A veteran financial educator and author, he focuses on simplifying complexity and guiding pre-retirees through the transition into retirement with a client-first philosophy. Outside of his direct advisory work, David leads educational workshops in South Florida to empower clients with the clarity needed for confident, thoughtful decision-making.
5730 SW 74th Street, Suite 800, South Miami, FL 33143 | 305.386.7667 | www.fontaine-retirement.com | david@frgemail.com
Securities and investment advisory services offered through Osaic Wealth, Inc. member FINRA/SIPC. Osaic Wealth is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth.