Top 10 Social-Security Questions and Answers

I get a lot of questions about Social Security. They come from people of all different ages and stages of their career, including folks already in retirement and taking Social Security, those that are quickly approaching retirement age and considering when to claim, as well as mid-career professionals who wonder if they’ll even benefit from the program to begin with.

For many retirees, Social Security is the most important retirement income decision they will ever make.

It’s inflation-adjusted, backed by the federal government, and, once you claim, it’s largely permanent. Despite its importance, Social Security is also one of the most misunderstood areas of retirement planning.

If you’re approaching retirement or already retired, the decisions you make around Social Security can meaningfully impact:

• Your lifetime income

• Your ongoing taxes

• Your surviving spouse’s financial security

• How portfolio longevity

Below are the ten most common Social Security questions I hear, along with answers to help you think about your own Social-Security benefits.

1. When should I start taking Social Security to maximize my lifetime benefits?

This is the most common Social Security question and for good reason.

You can begin claiming Social Security as early as age 62 or as late as age 70. The timing of your claim has a permanent impact on your monthly benefit.

Here’s the breakdown:

• Age 62: You receive a permanently reduced benefit

• Full Retirement Age (FRA): You receive your full, unreduced benefit

• Age 70: You receive the maximum possible benefit due to delayed retirement credits

For each year you delay past Full Retirement Age, your benefit increases by 8% per year, plus inflation adjustments.

Keep in mind that the Full Retirement Age is 66 for those born in 1943-1954 and 67 for anyone born in 1960 or later.

The key trade-off:

• Claim earlier: lower monthly income, but benefits start sooner

• Delay longer: higher guaranteed income for life, but benefits obviously start later

Your optimal age to claim Social-Security benefits largely depends on:

• Your life expectancy

• Your marital status

• Your portfolio size

• Whether Social Security is a core income source or a supplemental one

For individuals with substantial savings, delaying Social Security often functions as longevity insurance or a way to increase guaranteed income later in life when portfolio risk matters most.

I help folks analyze their “breakeven age,” or the age at which waiting to claim until age 70 becomes advantageous.

In effect, this translates into the age at which you must live to in order to make delaying your claim worthwhile.

2. Should I delay Social Security if I already have significant savings or investments?

For high-net-worth retirees, this is a crucial question.

If you have a few million dollars or more in your retirement portfolio, you may not need Social Security early to cover basic expenses. In this case, delaying can be especially powerful, especially if you expect to live for a while.

Why delaying often makes sense for affluent retirees:

• Social Security offers risk-free, inflation-adjusted growth

• The increase from delaying is not correlated with markets

• A higher benefit reduces pressure on your portfolio later in life

Many retirees intentionally:

• Spend from investment accounts in their 60s

• Delay Social Security until 70

• Lock in a higher lifetime benefit once required minimum distributions (RMDs) and healthcare costs rise

This strategy isn’t about “beating the system.” It’s about coordinating guaranteed income with investment risk and longevity.

3. How is my Social Security benefit actually calculated?

Social Security benefits are based on your 35 highest earning years, adjusted for wage inflation.

Here’s how it works:

• The Social Security Administration indexes your historical earnings

• It selects your top 35 years

• If you worked fewer than 35 years, zeros are included

• Your average indexed monthly earnings (AIME) are calculated

• A formula produces your Primary Insurance Amount (PIA)

Below are important nuances that retirees miss:

• Working longer can replace low-earning years, increasing benefits

• High earners may see diminishing returns due to benefit caps

• Online estimates often assume you keep earning at current levels

Understanding how your benefit is calculated allows you to make informed tradeoffs, especially if you’re considering working longer or changing roles late in your career.

4. How does Social Security fit into a broader retirement-income strategy?

Social Security should never be viewed in isolation.

Instead, it should be coordinated with:

• Portfolio withdrawals

• Required Minimum Distributions (RMDs) and Qualified Charitable Distributions (QCDs)

• Pension income (if you have a pension)

• Tax-planning strategies

From a planning perspective, Social Security often plays the role of:

• Base income covering essential expenses

• A hedge against longevity and inflation

• A stabilizer during market downturns

A well-designed retirement-income plan considers:

• Which accounts to withdraw from and in what order

• How Social Security timing affects long-term taxes

• How guaranteed income reduces portfolio volatility

This is where comprehensive financial planning adds far more value than a claiming calculator alone.

5. How are Social-Security benefits taxed?

Many retirees are surprised to learn that Social Security can be taxable.

The taxation depends on your provisional income, which includes:

• Adjusted gross income

• Tax-exempt interest

• 50% of your Social Security benefits

Based on this formula, up to 85% of your benefits may be taxable. In other words, up to 85% of your Social-Security income could be added to your taxable income each year.

Why this matters for affluent retirees:

• IRA withdrawals can trigger benefit taxation

• Capital gains can increase provisional income

• Poor sequencing can unintentionally raise taxes

Strategic planning, especially involving Roth IRAs and Roth 401(k)s and timing withdrawals, can significantly reduce the lifetime tax impact of Social Security.

6. What happens if I keep working while collecting Social Security?

If you claim Social Security before full retirement age and continue working, the earnings test applies.

In simple terms:

• Benefits may be temporarily withheld if earnings exceed annual limits

• This is not a permanent loss

• Your benefit is recalculated later to account for withheld amounts

Once you reach full retirement age:

• There is no earnings limit

• You can work and earn unlimited income without benefit reductions

This rule often causes unnecessary fear. With proper planning, many retirees continue working confidently while coordinating benefits in an optimal way.

7. How do spousal Social Security benefits work?

Spousal benefits allow one spouse to claim benefits based on the other spouse’s earnings record.

Key rules:

• A spouse can receive up to 50% of the other spouse’s benefit at full retirement age

• Claiming earlier reduces the spousal benefit

• You must be married for at least one year

Spousal benefits are especially relevant when:

• One spouse earned significantly more

• One spouse took time out of the workforce

• Couples are coordinating claiming ages

Spousal planning is less flexible than it used to be, but it remains an essential part of married couples’ retirement strategies.

8. What happens to Social Security benefits when one spouse dies?

This is one of the most emotionally important and financially significant questions married retirees face.

When one spouse dies:

• The surviving spouse keeps the higher of the two benefits

• The lower benefit goes away

This makes the higher earner’s claiming decision critical. Delaying the higher benefit usually:

• Increases income for both spouses while alive

• Protects the surviving spouse later in life

For married couples, Social Security planning is often less about breakeven analysis and more about survivor security.

9. Can Social Security run out of money?

Social Security is often described as “running out,” but that framing is misleading.

Here’s what’s actually projected:

• The Social-Security trust fund may be depleted in the mid-2030s

• Payroll taxes would still fund about 75–80% of benefits

Future changes are likely but unknown. Historically, Social-Security adjustments have occurred without eliminating benefits, and retirees and near-retirees are usually protected.

Conservative assumptions and flexible income strategies matter more than headlines.

10. Should I make Social-Security decisions on my own or with a financial planner?

Social Security decisions are complex, permanent, and interconnected with taxes, investments, and estate planning.

While calculators are helpful, they don’t:

• Coordinate spousal strategies

• Account for tax efficiency

• Integrate portfolio risk

• Adjust for real-world spending behavior

As a fee-only, fiduciary financial planner, I evaluate Social Security as part of a complete retirement plan, ensuring decisions support long-term financial security, spousal considerations, health assumptions, inflation risks, etc., and not just a fixed monthly income source.

Do you have additional questions about Social Security? Reach out to me at Ben@coveplanning.com or schedule a free consultation call.

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Ben Smith is a fee-only financial advisor and CERTIFIED FINANCIAL PLANNER™ (CFP®) Professional with offices in Milwaukee, WI, Evanston, IL and Wayzata, MN, serving clients virtually across the country. Cove Financial Planning provides comprehensive financial planning and investment management services to individuals and families, regardless of location, with a focus on Socially Responsible Investing (SRI).

Ben acts as a fiduciary for his clients. He does not sell financial products or take commissions. Simply put, he sits on your side of the table and always works in your best interest. Learn more how we can help you Do Well While Doing Good!

Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Ben Smith, and all rights are reserved. Read the full Disclaimer.