When you say “Social Security” what does it make you think of?

For some, it brings up thoughts of retirement, deductions from your pay stub, or a monthly check your grandparents talked about. But for most, Social Security is just a mystery.

According to the Social Security Administration, 3.3% of people aged 60 or older never take advantage of their Social Security benefits.¹ Whether you’re still working, a retiree, or a high-net-worth individual, let’s unravel some of the big questions about Social Security.

What is Social Security?
It is a federal program providing income for retirees, survivors of deceased workers, and those with disabilities that is funded primarily through taxes deducted from your paycheck. The more you earn and the longer you contribute, the higher your benefit.

What is the maximum benefit today?
The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2024, your maximum benefit would be $3,822. However, if you retire at age 62 in 2024, your maximum benefit would be $2,710. If you retire at age 70 in 2024, your maximum benefit would be $4,873.²

How much will you get?
You can estimate future benefits by creating a My Social Security account online. This free tool provides personalized estimates based on your earnings history.

When can you claim benefits?
You can start claiming benefits as early as 62, but by waiting (up to age 70), you can increase your benefit for a higher monthly payout. Consider your expected lifespan, financial needs, and other retirement income sources when making your decision to begin claiming benefits.

How do you claim?
Apply online, by phone, or in person at a local Social Security office. To get started, you will need basic information like your Social Security Number and employment history.

Will it cover all of your expenses?
Social Security is designed to replace a portion of your pre-retirement income, typically around 40%. It's crucial to plan for additional income sources from pensions, retirement savings, or part-time work to help create a comfortable retirement.

Remember: Your expenses will change after you retire, potentially including medical costs. As you plan for retirement, it is important to reassess your budget to make sure the time is right.

What about taxes?
Up to 85% of your Social Security benefits may be taxable depending on your total income. Be sure to factor that into your budget.

Should affluent individuals apply for Social Security?
Even if you have accumulated substantial wealth, Social Security can be a valuable source of income. (Remember: You put the money in. It’s yours to take out!) That said, it is important to keep in mind that, depending on your income level, a larger portion of your benefits may be taxable.

How can you maximize your benefits?
It is all about being strategic. For example, if your spouse has a lower income, consider delaying your claim and allowing theirs to grow. There are Social Security optimization tools available to help explore different claiming strategies.

Should you invest your benefits?
Social Security provides a guaranteed income stream, which can free up investment dollars in other accounts for potentially higher growth opportunities. That said, many factors need to be considered when investing during retirement. Together, we can review, alter, or develop a personalized strategy that balances growth (investing) with your income needs.

Social Security is an important piece of the retirement puzzle, but it's not the only one. By aligning these benefits with your savings, income needs, and expected medical expenses, we can develop and implement a retirement strategy for you and your family.

Planning and comprehension are everything. The earlier you understand Social Security, the better equipped you will be to make informed decisions.

The good news?
You aren’t in this alone. Social Security doesn’t have to be a mystery. Simply click reply to this email and we’ll provide guidance to help you better understand how Social Security fits into your retirement journey.