Securing Your Foundation and Weathering the Storms: A Look at Social Security

When we build your retirement plan together, I like to think of it as constructing a sturdy financial house. You want a strong foundation that can support you for a lifetime, but you also need a solid roof and reinforced walls to protect you when unexpected storms roll in. Today, I want to talk about both: strengthening your foundation through Social Security, and navigating the recent geopolitical storms causing waves in the market.

Strengthening the Foundation: Navigating Social Security

Social Security is a remarkable safety net. In fact, it keeps nearly 29 million Americans from sliding into poverty each year. But while it provides a vital, basic level of income, we must be mindful that Social Security by itself is rarely enough to ensure a comfortable retirement. It is meant to be one pillar of your financial house, working alongside your personal savings and investments.

One of the most common questions I hear is, "When should I claim my benefits?" You can claim retirement benefits as early as age 62, but doing so means your benefit will be permanently reduced. For those born in 1960 or later, your Full Retirement Age (FRA) is 67. If you wait until age 70, you reach your maximum benefit.

Let's look at a hypothetical scenario to see how this works in practice.

• Based on his earnings history, Tom is entitled to $1,000 per month at his FRA of 67.

• If he claims early at age 62, his benefit drops to $700 per month.

• If he waits until age 70, his benefit rises to $1,240 per month.

People often ask me about the "breakeven" point—the age where waiting to claim a higher benefit catches up to claiming a smaller benefit earlier. If you weigh claiming at 62 versus waiting until 67, the breakeven age is roughly 79 years old. If you compare claiming at 67 versus 70, the breakeven is around 82 years of age.

Why claim early? Sometimes you simply need the income today because you've retired or experienced a layoff. Health concerns or family history might also suggest a shorter life expectancy. On the flip side, you might delay if you are in good health, continue to enjoy working, or have other reliable sources of income like a pension or rental properties. Just remember, once you reach 70, there is no reason to delay further, as your benefit is maxed out.

Working While Claiming: The Earnings Test

Many people don't realize that you can receive Social Security retirement benefits and work at the same time. However, if you are under your Full Retirement Age, an earnings limit applies. For 2026, that limit is $24,480. If you earn more than that, Social Security withholds $1 in benefits for every $2 you earn above the limit. Starting the month you reach FRA, there is no earnings limit and no reduction in benefits.

Here is the most misunderstood part of this rule: benefits withheld due to working are not lost forever. When you reach your full retirement age, Social Security actually recalculates your benefit to give you credit for those withheld months. You don't get a lump sum, but your monthly benefit increases, allowing you to recover the withheld amount over roughly 12 to 15 years.

A Quick Note on Spousal Benefits

If you are married, a lower-earning spouse can claim a spousal benefit that equals up to 50% of the higher-earning spouse's benefit at FRA. Importantly, if the higher earner decides to delay claiming until 70 to earn delayed retirement credits, those credits do not increase the spousal benefit. It is always capped at 50% of the FRA amount.

If you have questions, concerns, or simply want to talk through what this means for your personal financial goals, please don't hesitate to reach out. I am here to provide clarity, perspective, and guidance.