What’s your strategy?

Options that help maximize your Social Security payout

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When you retire you want a steady stream of guaranteed income coming your way so you can pay your bills and live comfortably throughout your retirement.

Social Security, since being signed into law in 1935, is one of the best ways to achieve that income.

According to government data, for 48 percent of married couples, Social Security benefits account for at least half of their income. For roughly 1 in 5 couples, Social Security makes up 90 percent of income in retirement.

As you digest those numbers, you might be wondering: Will the benefits be around when my retirement finally arrives, and, if so, how do I maximize my pot of gold?

During the past Presidential election, there was a lot of chatter about the threat of Social Security going away. According to the Social Security Board of Trustees’ June 2016 annual report, “Social Security is fully funded until 2034, and after that it is about three-quarters financed.”

While that 75 percent coverage could cause concern, the Social Security Board is confident the shortfall can be fixed by lawmakers who can make that happen in a variety of ways, such as increasing contribution rates, lifting the cap on earnings subject to contribution, drawing on other revenue sources or lowering benefit amounts.

But that part of the system is out of your hands. What you can do is maximize the options that are available to you.

Waiting for bigger payments

You can begin to receive Social Security benefits at age 62, but you leave money on the table if you take it right away.

According to government data, more than 40 percent of workers opt to begin receiving their benefits at age 62. If you do claim at 62, your payout will be 25 percent less than if you waited until your full retirement age (66 or 67, depending on the year you were born).

In short, the longer you can wait to claim benefits, the more money you’ll receive each month.

And the money keeps growing until you reach maximum retirement age (70). According to Social Security data, payments increase at an annual rate of 8 percent each year, so delaying benefits can mean tens of thousands of dollars added to your bottom line.

If you’re married, the benefit can be even more lucrative.

For example, if one spouse is the bread winner in the family, he or she can delay receiving benefits until age 70 and lock in a maximum benefit for life, while also locking in the highest possible survivor benefit should the other spouse outlive him or her. So, for couples, delaying the benefit for the higher earner, can truly be a win-win.

Cashing in early 

Delaying benefits isn’t the best choice for everyone. For many, Social Security payments are a major source of income.

If you’re among those who have no other income or just a small amount of savings, then it could be beneficial to you to draw on your claims right away. Also, if you’re suffering from serious health issues, it might not make sense to wait for a bigger check later, when you need the income to pay for your health-care needs immediately.

Depending on whether you’re in or near retirement, one thing to know is Social Security isn’t a one-size-fits-all solution. It’s very specific to you and your personal situation. That’s why it’s always best to consult with a financial professional and find the strategy that works best for your needs.


Skip Johnson is an advisor and partner at Great Waters Financial, a financial-planning firm and insurance agency with locations in Minneapolis, Richfield, Plymouth, White Bear Lake and Duluth. Johnson appears regularly on FOX 9’s morning news show. Learn more at mygreatwaters.com.