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Approaching retirement? Here’s how to plan for your Social Security benefits

One of the most important decisions is when to start drawing benefits

Updated:

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By:
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Mark Huffman
Reporter

Mark Huffman has covered consumer issues since 2004, with a special focus on protecting and empowering older adults. A former news correspondent for the Associated Press Radio Network, Westwood One, and ConsumerAffairs, Mark brings decades of journalistic experience to RetirementLiving.com. He is passionate about giving consumers a voice and helping them make informed decisions. Mark has also created educational content, including Senior Scam Alert, a video resource designed to help seniors recognize and avoid fraud. He holds a B.A. from the University of Kentucky and lives with his family in Richmond, Virginia.

As retirement approaches, making informed decisions about your Social Security benefits can significantly impact your financial stability and healthcare coverage for years to come. The Social Security Administration (SSA) has offered tools and guidelines to help future retirees make the most of their benefits. Whether you’re considering when to apply, how healthcare will factor in, or what taxes to expect, thoughtful planning is essential.

Here are three key areas to focus on as you prepare for retirement:

  • You can begin collecting Social Security retirement benefits anytime between ages 62 and 70. However, the amount you receive monthly depends on when you start.
  • Early application (as soon as age 62) results in smaller monthly payments.
  • Delaying until age 70 means your benefit amount will be at its highest.
  • Your decision should reflect your personal needs, health, income, and family situation.

Knowing your Full Retirement Age (FRA), which ranges from 66 to 67 depending on your birth year, is crucial. For example, if you apply before your FRA and are still working, your benefits could be temporarily reduced if your earnings exceed a certain limit.

Understand the financial impacts

Use your Social Security online account to see how your benefit amount changes depending on when you apply. This helps you decide on the best time based on your income needs and life expectancy.

If your combined income exceeds $25,000 (single) or $32,000 (married filing jointly), you may owe federal income taxes on your benefits. You can opt to have taxes withheld from your payments to avoid a surprise tax bill.

Working before your Full Retirement Age may reduce your Social Security payments if your income surpasses annual limits. After reaching your FRA, however, you can earn as much as you want without affecting your benefits.

Plan for healthcare coverage

At age 65, you become eligible for Medicare. Signing up for Part B (medical insurance) will result in a monthly premium deduction from your Social Security check. To avoid any disruption in coverage or surprises in your benefit amount, it’s wise to plan for this expense well in advance.

Also, your benefit may be affected by whether you’re eligible for spouse or survivor benefits—these have unique rules and timelines. For example, spouse benefits max out at your Full Retirement Age and don’t increase if delayed beyond that.

Final tip

To avoid a gap in income, apply for your benefits up to four months in advance of when you want your first payment. For instance, if you want your first check in April, you can apply as early as November of the previous year.

By reviewing your benefit estimates, planning for healthcare costs, and understanding tax and earnings implications, you can set yourself up for a more secure and predictable retirement. Start planning today to make the most of the benefits you’ve earned.

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