Middle-Class Retirees Are Glad They Didn’t Ignore This Social Security Advice

Seniors hear a lot of advice about retirement, but it can be hard to tell what is helpful from what does more harm than good. Some decisions, like claiming Social Security benefits at 62, may seem good at the time, but can substantially reduce your retirement income.

Some middle-class retirees are genuinely glad they learned what really works so they could make the right moves with their money. Learn more about the Social Security decisions that paid off and why those moves worked.

Delaying claiming led to bigger, more reliable monthly checks

One of the most common decisions retirees are glad they made was delaying Social Security beyond age 62. Claiming benefits early can be tempting, but retirees who waited often ended up with significantly higher lifetime income.

Under Social Security rules, you'll lose up to 30% of your full retirement age benefit if you claim Social Security at 62. On the flip side, your monthly income actually increases by about 8% per year for each year you delay filing for Social Security past full retirement age, up to age 70. For middle-class retirees who expect to live into their 80s or beyond, those higher monthly checks provide a more comfortable retirement and better inflation protection.

Many retirees who delayed retirement didn't do so because they were wealthy. Instead, they bridged the gap through part-time work, personal savings, real estate investments, or a spouse's income. By tapping other sources of income during the early years of retirement, these seniors found that the larger guaranteed benefit reduced stress and reliance on investments later in retirement.

Understanding how Social Security benefits are taxed prevented nasty surprises

Another decision retirees are glad they made was learning how Social Security benefits are taxed before claiming. Up to 85% of Social Security benefits can be subject to federal income tax, depending on your combined income. Combined income includes adjusted gross income, non-taxable interest, and half of your Social Security benefits. This total determines how much of your Social Security income is taxable, ranging from zero to 85%.

• Up to 50% taxable: Single taxpayer with income of $25,000 to $34,000 or married filing jointly with income of $32,000 to $44,000.
• Up to 85% taxable: Single taxpayer with income of more than $34,000 or married filing jointly with income of more than $44,000.

Even if you don't have a part- or full-time job, other sources of income could cause you to pay taxes on your Social Security benefits.

For example, many retirees are surprised to learn that withdrawals from IRAs or 401(k)s can push them into taxable territory. However, you can plan ahead to avoid unexpected tax bills. Strategies include spreading withdrawals over time, bunching tax deductions, and strategically withdrawing from Roth, Traditional, and taxable brokerage accounts. Understanding these Social Security tax thresholds helps determine when and how much of their benefits are taxable.

Understanding how the earnings test impacts benefits

Some retirees learned the hard way that working after claiming early Social Security can temporarily reduce benefits thanks to the earnings test.

Early retirees have their benefits reduced by $1 for every $2 they make over the 2026 limit of $24,480. This rule applies from age 62 through the year before reaching full retirement age. In the year you reach full retirement age, your benefits are reduced by $1 for every $3 you make over the earnings limit of $65,160. Once you reach full retirement age, these deductions stop, and your benefit is recalculated to account for your withheld benefits.

Retirees who delayed claiming until they stopped working or until they reached full retirement age avoided this issue entirely.

Coordinating retirement income reduced overall tax exposure

Middle-class retirees who coordinated Social Security with other income sources often paid less in taxes over time.

Rather than turning on Social Security and retirement accounts all at once, many retirees staged their income. Some drew from savings first, allowing Social Security benefits to grow. Retirees split withdrawals among Roth, Traditional, and brokerage accounts to keep their income within lower tax brackets. Others used low-income years to perform Roth conversions, reducing future required minimum distributions that could later increase Social Security taxation.

This may seem like these retirees used loopholes to avoid paying taxes. However, they were simply following well-established tax rules and retirement planning strategies to minimize taxes while getting the income they needed to cover retirement expenses. The result was a steadier income and a more comfortable retirement in later years.

Bottom line

Retirement advice can be tricky. But when you stick with tried and true strategies, you can build a solid retirement plan that matches your goals. Middle-class retirees who delayed claiming Social Security benefits, understood benefit taxation, avoided earnings penalties, and coordinated income sources were able to maximize retirement income while avoiding surprising retirement mistakes.

Learning from these positive examples won't guarantee identical results, but they offer solid retirement advice that's available to all seniors. By understanding the rules, you can avoid irreversible decisions and create peace of mind in retirement.

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