The Ideal Social Security Strategy for Millionaires in Retirement
Let me ask you...
Do you have over $1 million saved for retirement?
If so, you may be wondering if collecting Social Security is even worthwhile.
Here’s the deal ...
Even for high savers, Social Security can play a crucial role in your retirement strategy.
But when is the ideal time to begin collecting those benefits?
That’s what we’ll cover today.
You’ll learn:
How Social Security benefits are calculated
Key factors that influence when to collect
Pros and cons of taking benefits early, at full retirement age, or delaying
Strategies for high savers to maximize lifetime benefits
Understanding Social Security Basics
To start, let’s cover how Social Security calculates your monthly benefit amount.
It’s based on your 35 highest-earning working years. The higher your lifetime earnings, the fatter those checks will be.
But here’s the kicker ...
Your full retirement age (FRA) also plays a major role.
If you claim benefits before FRA (ranging from 66 to 67 for most people today), your payments will be permanently reduced.
However, if you delay past FRA up until age 70, you’ll score an 8% annual increase.
Factors Influencing When to Collect
Several personal factors can sway the “right” time to take Social Security.
Life expectancy is huge.
If you anticipate longevity based on family history and health conditions, delaying benefits could net you higher lifetime income.
But if funds are tight, an immediate income stream from Social Security may be necessary. Weigh that against your other income sources like:
Pensions
Rental properties
Dividend stocks
Tax implications are another wrinkle.
Up to 85% of your Social Security could be subject to federal tax, depending on your combined income.
The Upside of Delaying Benefits
By delaying Social Security past FRA until 70, your monthly check gets an 8% raise each year you wait.
Let’s crunch the numbers ...
If your FRA benefit was $2,000 per month, taking it at 70 would increase that to $2,640. An extra $640 every month!
Over a 25-year retirement, that’s an additional $192,000.
For married couples, the higher benefit amount is also paid to the surviving spouse. Powerful stuff.
Scenarios for High Savers
Scenario 1: Collecting at 62
The earliest you can claim Social Security is age 62.
The downside? Taking benefits over four years before FRA results in a 25%-plus reduction. Ouch.
But this could make sense if:
Poor health makes a longer life expectancy unlikely
You need income immediately and lack alternative funds
Social Security was heavily underfunded and benefits were slashed
Scenario 2: Taking Benefits at FRA
For most higher earners, filing at FRA (66-67) is the Goldilocks option.
You avoid benefit reductions and still have the flexibility to work and earn income without reductions.
This balances current income needs with preserving future benefit growth.
Scenario 3: Delaying Until Age 70
By waiting until 70 to claim, your monthly checks max out at 132% of your primary insurance amount.
I mentioned earlier how this strategy can pay off big for longer life expectancies.
But it requires having enough assets to cover expenses during that eight-plus-year delay period.
For savvy high earners able to self-fund during those delay years, this may be an ideal way to lock in higher lifetime income.
Strategic Considerations
To bridge the gap until 70, you could:
Draw down taxable brokerage accounts
Do Roth conversions while in lower tax brackets
Prepare for required minimum distributions (RMDs) from pre-tax accounts
Savvy retirees also coordinate spousal claiming strategies.
For instance, the higher earner could delay while the other spouse claims a spousal benefit. This is one of our favorite strategies for millionaires.
These are complex decisions where professional guidance is wise.
Wrapping Up
As you can see, determining when to take Social Security involves weighing many personal factors.
For high savers, delaying until 70 can often maximize lifetime benefits.
But current income needs, tax situations, and life expectancy could make an earlier claiming age preferable.
The key? Run the numbers and think through various scenarios based on your unique circumstances.
I’d suggest meeting with a CERTIFIED FINANCIAL PLANNER™ professional to model out an optimal Social Security claiming strategy.
It’s one of the few reliable income streams you’ll have in retirement. So you want to get it right!
Want to discuss the optimal Social Security claiming strategy for your situation?
Book a free 30-minute phone consultation. We’ll analyze your specific circumstances and provide personalized advice on when to file for maximum lifetime benefits.
This material was generated using artificial intelligence (Claude AI) and edited by Evermont Wealth and Kaleido Inc. from information derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.