January 15, 2023

The 4-Step Social Security Claiming Checklist

Whether you’ve already claimed Social Security benefits or are just starting to think about it, this checklist is your go-to guide! Let’s walk through these steps together, and I’ll share a few personal insights along the way.

The Benefits Associated with Each Claiming Age

Let’s start with the basics—when can you claim Social Security, and what does that mean for your benefits?

  • Age 62: This is the earliest age you can start collecting Social Security. I remember helping my Aunt June navigate her options when she turned 62. She was eager to retire but had to weigh the pros and cons of taking a reduced benefit early.
  • Age 65-67: Depending on when you were born, this is your full retirement age. My neighbor, Tom, who was born in 1956, hit his full retirement age at 66 and 4 months. He decided to wait until then to get his full benefits.
  • Age 70: Waiting until this age means you get the maximum benefit. My dad held out until 70, and now he enjoys the highest possible monthly payment. It was a tough wait, but he says it was worth every penny.

How Your Social Security Benefits Are Evaluated

Understanding how your benefits are calculated can feel like decoding a secret message. Let’s break it down together:

  • The time you retire: Retiring earlier means smaller monthly payments, while waiting gives you a larger check each month. My friend Lisa retired at 62, but sometimes she wonders if waiting would have been the better choice.
  • The highest-earning 35 years of your life: Your benefits are based on your top 35 earning years. My cousin Joe worked two jobs in his 30s, which really boosted his Social Security calculation.
  • Inflation: Social Security benefits are adjusted for inflation, which helps maintain your purchasing power. I often remind my clients that these adjustments, while modest, are crucial for long-term financial health.
  • Medicare: Remember, Medicare kicks in at 65, regardless of when you claim Social Security. Planning around healthcare costs is a vital part of your strategy.

Your Supplementary Income

Before diving into Social Security, consider what other income sources you have:

  • Part-time work: Continuing to work part-time can supplement your income and delay the need to tap into Social Security. My neighbor, Betty, enjoys her part-time job at the local library, which also gives her some extra cash.
  • Retirement investing accounts: Using funds from your 401(k) or IRA before claiming Social Security can be a smart move. My client, Sarah, tapped into her 401(k) in her early 60s, giving her the flexibility to delay Social Security.
  • Annuities and other savings: Diversifying income sources helps create a more stable financial future. My uncle, who invested in an annuity, appreciates the steady income stream it provides alongside his Social Security.

Spousal Situation

Deciding when and how both spouses should claim Social Security can be complex:

  • Claiming on the same spouse’s earnings record: Sometimes it makes sense for both spouses to claim based on one person’s earnings. This was the case for my friends, Jim and Nancy. They coordinated to maximize their benefits.
  • Split strategy: Other couples might benefit from claiming at different times. For example, my clients, Dan and Karen, decided Dan would claim early while Karen waits until 70. This strategy balances immediate needs with long-term benefits.
  • Higher earner waiting longer: Often, the higher earner should wait to maximize benefits. This approach ensures a larger survivor benefit if needed. My dad, being the higher earner, waited until 70, ensuring my mom has the highest possible survivor benefit.

Social Security Strategy

Navigating Social Security can feel daunting, but with a clear strategy, you can make informed decisions that benefit your financial future. Remember, every situation is unique, and sometimes the best decisions come from discussing your options with a financial advisor who understands your personal story. Have questions or need further guidance? Feel free to reach out!

Sandusky Office

1325 Hull Road,

Sandusky, OH 44870

(419) 626-3900

Elyria Office

347 Midway Blvd #109,

Elyria, OH 44035

(440) 934-3141

Medeira Beach Office

150 153rd Ave, Unit 302

Madeira Beach, FL 33708

(727) 455-9388

GREAT LAKES BENEFITS, INC. owns this website and provides SEC-registered investment advisory services. Registration does not imply SEC endorsement. This site offers general information, not personalized advice. Opinions are current as of posting and may change. Accuracy or timeliness of the content is not guaranteed. Past performance is not a predictor of future results. Consult your own legal or tax advisors before making decisions. Investing involves risks, including potential loss. No strategy ensures profit or prevents loss.

© Great Lakes Benefits Inc. ALL RIGHTS RESERVED. 2024. Privacy Policy | Disclosure. Powered by DevQ