Making the Most of Your Social Security Benefits in Retirement

We spend much of our lives working, from our first job in our teens through major life milestones, until we are ready for retirement. Whether you plan to continue working in some capacity or officially trade in your work laptop for good, you can count on at least one source of guaranteed income: Social Security.

Social Security benefits are the most common income stream for retirees and represent a significant portion of your retirement income plan. Most Americans will have access to Social Security benefits once they hit a certain age, but how much money you can expect from Uncle Sam depends on when you claim your monthly benefits and your past earnings.

Most basic online retirement calculators don’t factor in Social Security benefits, which makes budgeting for retirement harder. It’s important to understand your Social Security benefits — and how to maximize them — to ensure you plan for retirement accordingly.

Below, we’ll explain how Social Security fits into your retirement plan, how benefits are determined, and strategies for claiming benefits to make the most of your sixth decade and beyond. It’s a dry topic, but we’ve filtered out as much of the jargon as possible, leaving only concrete information and actionable advice for you to consider.

Social Security benefits help older Americans, workers with disabilities, and families that experience the loss of a spouse or parent supplement their incomes. The benefit is largely funded by payroll taxes from employees and employers as well as taxes paid by self-employed individuals. 

There are also two Social Security trust funds that support the program, although they are generally expected to run out in the next decade. Social Security began using the combined trust fund reserves in 2021 to help pay beneficiaries. Without congressional action, the trust fund reserves will likely deplete around 2035, and retirees will only receive 83% of their full benefits. 

Who knows what could happen in the next decade, though.  

For eligible retirees, Social Security replaces a percentage of your pre-retirement income based on your lifetime earnings. When paired with other retirement investments, monthly Social Security benefits help fund your lifestyle.

Who Qualifies for Social Security Benefits?

Per Social Security Administration (SSA) requirements, you must earn at least 40 Social Security credits to be eligible for Social Security retirement benefits, which you earn by working and paying Social Security taxes.1 These work credits are based on your total annual income and wages. 

In 2025, you must earn $1,810 each year to get one Social Security and Medicare credit, and $7,240 to get the maximum four credits for the year. Once you earn at least 40 credits (or about 10 years of work) and reach age 62, you are eligible to receive Social Security retirement benefits.

How much you receive from the SSA depends on several factors, which we’ll discuss below.

When budgeting for retirement, you may wonder how to calculate Social Security benefits. The SSA uses several calculation methods to determine your Social Security payments — admittedly, they are a bit complicated. 

To put it simply, the size of your monthly benefit checks depends on (1) your average indexed monthly earnings over your 35 highest-earning years and (2) when you begin taking your benefits. 

To find out how much Social Security you can get, you’ll need to create an account on the Social Security website. With an account, you can: 

1. Use the Social Security calculator to get a current monthly benefits estimate, including one that accounts for inflation.
2. Download your latest Social Security statement, which details your lifetime earnings and progress toward eligibility for Social Security retirement benefits and Medicare.

The SSA offers several planning tools to support your retirement journey, such as a calculator to learn your full retirement age (FRA), an age-based benefit adjuster, and a tool to determine the impact on spousal benefits based on when you decide to retire. Use these free online resources and bookmark them to make the planning process feel less overwhelming.

The average monthly Social Security benefit for retired workers in January 2025 is just over $1,975.2 Those who wait until age 70 to retire can earn thousands more per month, up to $5,108, which is the maximum Social Security retirement benefit for 2025. This number will vary based on certain factors — such as whether you’re an aged widow or disabled worker, for example — but averages can at least help you forecast potential income and plan for the future.

Other Factors That Affect Your Social Security Benefits

Beyond your age and income history, additional factors could impact how much you receive from Social Security. Here are a few common taxes and deductions on Social Security benefits:

• • Available pensions: If you received a government pension and did not pay Social Security taxes during employment, your benefit amount will be reduced. This might pertain to public school employees, unionized workers, or those employed by foreign companies.
  • Social Security taxes: Up to 50% of Social Security income is taxable if your total gross income, including Social Security, wages, self-employment wages, and required minimum distributions (RMDs), among other income sources, is $25,000 or more ($32,000 for couples filing jointly).3 Up to 85% of benefits are taxable if your combined gross income is $34,000 or more ($44,000 for a couple filing jointly). The IRS has a questionnaire you can complete to determine your taxable Social Security benefits.

• Medicare deductions: If you’re enrolled in Medicare, Part B premiums — monthly fees you pay for medical care — are automatically deducted from your monthly benefit based on your income. Most will pay the standard Medicare premium of $185 per month, but higher-income earners could have several hundred dollars deducted from their checks.4

• Overpayments: Those with Supplemental Security Income benefits are most at risk for receiving more benefits than they are entitled to. This additional benefit is given to people with disabilities and older adults who have limited income or resources. If your Social Security and Supplemental Security Income exceed annual limits, the SSA may withhold 10% of your monthly benefit to recoup the cost.
• Excess earnings: Working while claiming Social Security before your full retirement age will trigger a temporary holding of $1 for every $2 earned above a certain annual limit.5 In 2025, the limit is $23,400.

Every year, the SSA makes a cost-of-living adjustment (COLA) to Social Security benefits to help the benefits keep pace with inflation. This is not a deduction or tax but rather an increase worth considering when calculating your potential income streams in retirement. The Social Security COLA was 3.2% for 2024, and it is 2.5% in 2025. 

While you can start claiming benefits as early as age 62, we recommend waiting until you reach your full retirement age (at least) to start collecting. This is because Social Security benefit amounts change based on the age at which you choose to begin collecting.

If you were born between 1943 and 1954, the SSA deems you “full retirement age” once you reach age 66. For those born between 1955 and 1959, your full retirement age will fall somewhere between 66 and 67. For anyone born in 1960 or later, full retirement age is 67.

Once you reach your full retirement age, you can claim your standard benefit (i.e., 100% of your calculated monthly check). Claiming benefits before your full retirement age can reduce your checks by as much as 30%; waiting to take your benefits beyond your full retirement age up to age 70 will increase your checks.6

*Depending on the year you were born

You can use the SSA retirement age calculator and benefit adjuster to find your full retirement age and estimate monthly benefits amount by age. It’s also wise to discuss the best age to claim benefits with your wealth advisor to help define a claiming strategy that works with your overall retirement goals. 

For example, you might be tempted to leave the workforce as soon as possible, but this could have long-term impacts on your future retirement earnings. 

Think about it: A worker who is entitled to a monthly benefit of $2,000 at full retirement age will earn only $1,400 per month if they retire at 62 instead of 67. If this same worker delays retirement until 70, they could earn up to $2,480 per month — a significant chunk of change they could use to level up their lifestyle, considering they will receive Social Security benefits for the rest of their lives.

Married couples have some advantages when deciding how and when to claim Social Security to boost their retirement income. That’s because each spouse can choose to claim their own work-related benefits or up to 50% of their spouse’s benefit at full retirement age, commonly known as a spousal benefit.

You and your better half can leverage spousal benefits to maximize your retirement income by collecting half of what a higher-earning spouse qualifies for — in some cases, this can entitle your family to more earnings than if you both were to collect your individual standard benefits. 

To make the most of this strategy, consider the following factors: 

• Age differences: You have the option of “switching” to spousal benefits at a later date, which could benefit couples who claim one regular Social Security benefit before the higher-earning spouse does (e.g., the higher-earning spouse is younger).

• Career earnings: When deciding who will collect first and who should wait, compare estimates for both earners. In some cases, it may make sense for the lower earner to collect first to allow the higher earner’s benefits to increase at a faster rate.  

• • Your full retirement age: The longer you defer your benefits, the larger your monthly check. Like with individuals, married couples can maximize their benefit by delaying their application up to age 70. A spouse can only claim spousal benefits once the higher-earning spouse claims their own.

• Amount of savings: Your claiming strategy might differ if you have a modest reserve versus a more substantial nest egg. Your desired retirement lifestyle might require you to claim later for more income or earlier if you feel you’ve saved enough to live comfortably.

Health status: Couples with shorter life expectancies or higher medical expenses may want to claim benefits earlier to ensure they have enough money to fund their needs.

Though unpleasant to think about, it’s important to plan for how the death of a spouse might affect your Social Security and overall retirement plan. Just like you’d outline your wishes in a trust or will for peace of mind, you should consider your potential income streams as a solo recipient. 

The SSA allocates survivor benefits for family members of deceased workers who qualified for Social Security. The amount of the survivor’s benefit depends on the deceased’s average income and the survivor’s relationship with the deceased. This benefit can provide a significant source of income in retirement, especially if you’re the surviving spouse.

Surviving spouses who are 60 or older (50 or older if disabled) may claim survivor benefits. Surviving spouses caring for the deceased worker’s child who is under 16 or disabled can claim benefits at any age. 

However, Social Security will only pay one benefit — you cannot claim your spouse’s benefits and your own. If you qualify for both, you’ll receive whichever benefit amount is higher. 

Again, it’s worth discussing your survivor’s benefits eligibility and potential income scenarios with your wealth advisor. In certain situations, it may be more financially responsible to delay claiming benefits to allow the amount to grow. 

Social Security can seem like a simple financial concept at a high level, but it’s actually a complex program with a lot of opportunities for those who take the time to strategize a proper plan. By carefully considering your age, earnings history, and marital status, you can optimize your Social Security benefits in retirement. 

If you’re ready to build a retirement budget and spending plan, we can help. Schedule a free consultation with one of our wealth advisors today to build a personalized plan that helps you live your ideal retirement.

Sources

1. Social Security Administration, “Social Security Credits”
2. Social Security Administration, “What is the average monthly benefit for a retired worker?”
3. Social Security Administration, “Income Taxes and Your Social Security Benefit”
4. Social Security Administration, “Premiums: Rules for Higher-Income Beneficiaries”
5. Social Security Administration, “Receiving Benefits While Working”

Social Security Administration, “Early or Late Retirement?”