Maximize Social Security: Life Expectancy, Marital Status, and Taxes Matter
Planning your social security strategy involves weighing several factors, including life expectancy, financial needs, and marital status. A new report from the National Academy of Social Insurance highlights the importance of these considerations, as benefits can be taxed and spouses may receive 'boosts'.
The website socialsecurityreport.org, operated by the National Academy of Social Insurance, offers a life expectancy calculator to aid in decision-making. It's crucial to consider life expectancy, as delaying social security until age 70 can increase monthly benefits by about 24% compared to claiming at full retirement age (FRA). For those born in 1958, like our writer, FRA is 66 years and 8 months.
Married couples should also consider the 'spousal boost'. If one spouse's benefit is less than 50% of the other's FRA entitlement, the lower-earning spouse may receive a boost. Additionally, a surviving spouse can receive the higher of their own benefit or the deceased spouse's benefit. However, it's important to note that social security benefits may be taxable by the IRS, and current tax rates could be higher than post-retirement rates.
In conclusion, deciding when to claim social security involves careful consideration of life expectancy, financial needs, and marital status. Delaying until age 70 can increase benefits significantly, but it may take around 12 years to break even financially. Married couples should also consider the 'spousal boost' and potential tax implications. This article is for informational purposes only and does not constitute legal or financial guidance.
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