Navigating Social Security can feel like running through an airport for a connecting flight—one wrong move could cost you thousands. Ready to make sure you don’t miss out on the benefits you’ve worked for all your life?
In this episode, April Schoen breaks down the crucial Social Security decisions every retiree faces—and reveals the game-changing strategies to maximize your benefits.
You’ll discover…
Why your Social Security “full retirement age” is more important than you think
The surprising trade-offs between claiming benefits at 62, 67, and 70
How working in retirement could shrink—or boost—your Social Security checks
Overlooked spousal and survivor benefits that could change your income story
What looming Social Security changes in 2034 could mean for your retirement
April Schoen: I'm glad that you're here today. We're going to be talking all about Social Security. And if you're like many people, you worked hard for decades, and now you're thinking about this next chapter called retirement. And one of the biggest questions that I get is, when should I take Social Security, and how do I make the most of it? Because here's the challenge.
The rules are complicated, the headlines are confusing, and one wrong decision can mean leaving 1000s of dollars on the table. And so that's why we're here today, because this isn't actually just about Social Security in general, it's about your retirement and making sure that you feel confident about the choices ahead. And just like any big journey, it helps to have a guide.
That's where I come in today, to help walk you through Social Security and what are going to be the most impactful pieces. So we're going to dig in today. And if you don't have it already, you may want to grab a piece of paper or a notepad, a pen, just so that you can jot down any specific questions that you may have as well as, some things that you feel like, hey, I want to talk to April about this. Or I want to talk to someone about this specific question that I've got.
And as I said before, any sort of big journey when we're thinking about Social Security and retirement, it helps to have a guide. And in fact, this actually reminds me of a trip that I took with my boys a few years ago. So my boys are now ages nine and 12, but this was a few years back, and this is when they went on their very first flight. And they were so excited, but they were also nervous, because it was something that they had never experienced before.
And with our first flight, it actually got delayed. You may not believe this. It got delayed for a paperwork issue of all things, and was delayed like 45 minutes. And I knew that that meant we might miss our connection. And by the time we landed in Atlanta, we only had five minutes to make it to our next gate. You guys know how daunting that can be.
So I grabbed their hands, and we ran through the airport together, backpacks flying, and we made it just in time to our next gate. But here's what stood out to me about that is that the boys weren't worried at all. So then it was a really fun adventure, because they trusted that I knew what to do, and they could just enjoy the experience, because I had the bigger picture in mind.
And that's a lot like retirement planning and Social Security, especially. It's new, it's uncertain. There are high deadlines, maybe paperwork issues, you know, decisions that can be stressful, but with the right guide, you don't have to carry all that stress alone. You can move forward with confidence, knowing that you're going to get where you need to go. So today, as we're going to be talking about Social Security, here's what we're going to walk through together.
How does social security actually work? You're going to know how you can read your own statement if you've never looked at that before. We're going to talk about claiming benefits at 62, your full retirement age, waiting to age 70. We're going to talk about the impacts of taxes, working in retirement, and spousal benefit. Why survivor benefits are often overlooked, but can be critical to a plan.
And then what happens if changes come in 2034, and how to prepare for them. So after we go through all of this, I'm going to share how you can take the next step, which would be to schedule a retirement focus session with me. So you may be asking, okay, April, well, what's a retirement focus session? Well, it's a complimentary call. There's no charge for it. It's a 30-minute one-on-one call where we're going to take a look at, hey, what we learned today, but then we're going to apply it to your situation.
Because as much as what we're going to cover today together, your decision about when to take Social Security and how it fits in with your pension, if you have it, your retirement accounts, investments, savings, taxes, working in retirement, this all really depends on your numbers and your goals. So think of today as just an overview, and then a detailed overview at that, and then the retirement focus session is where we make it personal to you.
So let's get started today, going through everything. And I want to make sure that you guys can see my screen. Perfect. I had a slight technical issue when I first jumped on the GoTo webinar my audio, my computer audio wasn't connecting. So I had to dial in on the phone. So it took me just a few extra minutes there to get in. And then, of course, that makes me start worrying that, like none of it's working.
So here we go. We're gonna roll up our sleeves and dive into today. So how does Social Security work? Well, Social Security has been around since 1935, and it's seen many changes throughout the years, but the basis of how it works has remained relatively the same. Social Security's trust fund is primarily funded through the taxation of wages earned by the current workforce.
Current workers are paying into Social Security, and that is what is paying current beneficiaries. So those funds are used to pay out current benefits to the current beneficiaries. And as of January 2025, the average monthly benefit for Social Security was $1976 a month. So $1,976 a month. Now we're going to talk about this later, but how Social Security is funded is actually going to be in one of the issues with the program, because back in 1945, there were 40 workers to one beneficiary.
I'm going to say that again, in 1945, there were 40 workers to one beneficiary. And today, excuse me, now, the Social Security Administration they think that by 2035, there's only going to be two workers for one beneficiary, two workers to one beneficiary. I want you to think about that for a second, especially if the average monthly benefit today is $1976 that means two people have to be paying enough in taxes to cover that.
You can see how this is putting more stress and pressure on the system. We're going to talk about that later. So when you are in your working years, you're going to earn credit, and so as you're working, you're paying into the system, earning credits, and if you've been working for 10 years or more, then both you and your spouse now qualify for Social Security and for Medicare. And then how does Social Security actually calculate what you're going to get?
Well, what they do is the government looks at your highest 35 years of work history. And if you don't have 35 years of work history, they fill in those missing years with zeros, which can really pull down your average. Then they adjust those past earnings to today's dollars by factoring in inflation. That way, what you made 20 or 30 years ago is compared fairly to income today.
And then once they get that adjusted average, that's what your Social Security benefit is based on. And the calculation to Social Security is actually pretty complex, so it's really best for you to review the amounts given on your own Social Security statement. Now, if you go to the Social Security website, there are some calculators. You can even Google and find other calculators as well.
But I always, always, always recommend that you create a login on Social Security's website and you use that to look at your benefit so you can see your specific amounts, because I've done calculations for clients before. And sometimes I get in the ballpark, and sometimes it's off, because you're not going to have all that information about what your earlier earnings history was to accurately be able to project that.
So just know you need to go onto Social Security's website, create a login if you haven't done it already, and go and view your statement. I actually just got an email. Oh, this is funny. I just got an email like two weeks ago from Social Security to go log in and look at my statement. I thought that was funny, considering I was doing the webinar today. So what are some things that you need to know about the program and about your Social Security benefit?
Well, one of the most important concepts to understand about Social Security is what is your full retirement age? Sometimes you might hear that called your FRA. This is simply the age at which you're entitled to 100% of your benefits. So why does that matter? Because your FRA, your full retirement age, sets the benchmark for everything else. If you take Social Security before your FRA, now, your benefit is going to be permanently reduced.
If you wait beyond your FRA, now, your benefit grows each year, it actually grows every month that you delay up until age 70. And once you reach this FRA, your full retirement age, you can work and earn as much as you want. There are no penalties from Social Security. And knowing your FRA is really foundational to deciding when are you going to claim, how much you're going to get, and then how working in retirement may affect you.
So let's take a look at an example. And we're going to look at an example of someone who was born in 1960 or later. So that means their full retirement age would be age 67. So now, once we know what that full retirement age is, we know that's when you're going to get a 100% of your benefit. But let's look at what happens if you claim earlier or later.
So again, if you are born in 1960 or later, then your full retirement age is 67, and if you decide to claim at age 6,2 which is the earliest possible age you can start your benefit, your benefit is going to be permanently reduced to about 70% of what you would have received at your full retirement age. And that's a permanent reduction.
Some people think I get a reduced amount before my full retirement age, and then at full retirement age, I'm going to get this higher amount. And that's not accurate. It is a permanent reduction. And then you can also delay Social Security up until age 70. 70 is the latest that you can defer to getting your Social Security benefit. And if you wait past your full retirement age, your benefit grows by about 8% per year for each year that you are past your full retirement age.
So let me give you some examples. We've got some maximum monthly benefits here. So at full retirement age today, maximum monthly benefits around $4000, and then if that person waited until age 70, they would receive about $5108 per month for their benefit. But if they had taken it at age 62, then it would be about $2800. So you can see there's a big difference between claiming at 62 and waiting till 70, and that's why this decision is so important.
So you may be asking yourself right now, well, when should I take Social Security? Should I take it at 62 should I take it at my full retirement age? Should I take it at age 70? And what I'll tell you is, this is a very personal decision, because it's gonna really depend on a lot of other factors in your financial world.
So again, on your on your statement, this is where you're going to see your personal benefit amounts listed. So it's going to actually going to give you, it's going to show you all the age ranges. So it's going to show you, if you take your benefit at 62, and it's actually going to break it down by year, all the way to age 70. Okay, but here's the thing: there's no perfect retirement age that works for everyone.
That right time to start your benefits is going to depend on your unique situation. It's going to depend on your health, your income needs, your spouse's benefits, your tax situation. And this is where most people feel stuck, because they see the numbers, but they're not quite sure, what does this really mean for your retirement, for their retirement? And that's why we offer that retirement focus session.
So in that 30-minute call, we take your statement, and we're going to talk about some other things, too, like pensions, or, if you have it, investments, retirement accounts. And we're going to talk about how do you actually start putting all that together? And we can run scenarios so you can see clearly, hey, if I claim at 62 here's what this looks like. And if I wait, here's the difference. And if I wait, how am I going to fill that gap? And here's how this is going to fit in with everything else that I've worked so hard for.
So today I'm going to walk you through these general rules, and when you're ready, that retirement focus session is where we make it personal to you, so you don't have to guess and you can move forward with confidence. Now let's talk about a cost-of-living adjustment or a COLA. So Social Security does include a COLA most years, but here is the important thing for you to know is, if not guaranteed. In fact, we've had plenty of years where the COLA had been zero or next to zero. Look at 2017, .3% increase. It's almost like adding insult to injury.
And even these years, when we do get an increase, it often doesn't actually keep up with the real costs of things like groceries, housing, health care, and so this means, if you don't plan ahead, Social Security alone will not be enough to protect your lifestyle from rising costs. Because we all know you're going to need more income tomorrow than you need today. And this COLA it does help.
So it helps. I'm not going to discredit it. It helps, but it's not a complete solution. This is why you have to have other income sources, and why a clear plan is so important about how you're going to have increasing income in retirement. Another thing to know about Social Security is that the benefits can be taxable depending on your overall income, and the IRS looks at something called your combined income, which includes Social Security plus other income sources like pensions, withdrawals from retirement accounts, or even part-time work.
And the higher that combined income is, the more of your Social Security that may be subject to taxes. In fact, up to 85% of your benefit can be considered taxable income. Now that doesn't mean that you're paying 85% of taxes. It's just that 85% of your benefit is considered taxable income, and here's when this matters. If you don't plan ahead, you might owe more than you expect, but with a plan, you can actually control how taxes affect your income in retirement.
This is exactly the kind of thing that we model in a retirement focus session, so you can see how Social Security, pensions, other accounts, all work together, and so you can know what to expect come tax time. Now I'm going to plug my next webinar, which is on October 30th. I'm going to do a webinar all about taxes in retirement.
Now, I know that doesn't sound fun, right? Like, who wants to be on a webinar about taxes in retirement? But it's not just about taxes. It's about what we call tax diversification. So how do you actually do that? How you have more control over your taxes in retirement. So that's what we're going to talk about in October.
So stay tuned for that webinar. Again, that's October 30th, at noon Eastern if you want to put that on your calendar. Now let's talk about working in your Social Security benefit. So if you start your benefits before your full retirement age and you're still working, Social Security is going to reduce your benefit if your income is over certain limits. And they are not high limits. In 2025, that income limit is $23,400.
So if you make more than $23,400 in earned income, so earned income is income from a job. This is not a pension. This is not taking money out of retirement accounts, investments, things like that. This is earned income, then Social Security is going to reduce your benefit. Now the good news is is once you reach your full retirement age, those limits go away, you can earn as much as you want and still receive your full Social Security benefit. And if some of your benefits were withheld before you hit your full retirement age, Social Security is going to adjust your payments upward at that point to account for it.
So you do kind of get it back on the back end, but they do penalize you for starting it earlier. So the key takeaway is this, the closer you are to your full retirement age, the easier it is to keep working without impacting your Social Security benefit. And in a retirement focus session, we can run these numbers so you can see exactly how working part-time or delaying retirement is going to impact your benefit.
Let's talk about some different payment scenarios and how those work. So first, let's talk about spousal benefit. As I said earlier, when you qualify for Social Security, your spouse qualifies too, even if they didn't work as many years or didn't have as high as income as you do. The Social Security Administration is first going to look at your spouse's own benefit record based on their salary history, and if that amount is less than 50% of your benefit, then Social Security is going to increase your spouse's benefit so they receive an amount equal to half of yours.
Now I feel like that's a mouthful. So let me try to summarize that for a second. The spousal benefit is equal to half of the higher-earning spouse. So let's say that my benefit was $3000 a month, then my husband is eligible to receive his benefit if it's higher or half of mine, which would be $1500. So he's going to get one of one of the two. So if his monthly benefit was $1,000 a month, they're going to increase his to $1500 in that example.
If his benefit was $2000 a month, then he's going to get $2000. Social Security has something called deeming rules, and they're deemed to pay you the highest amount available to you. So style benefits are great benefits, but they're going to look at both. They'll look at your own record, and then they're going to look at the spouse's benefit as well. Social Security also provides a benefit for widows and widowers, and if the surviving spouse's benefit is less than the deceased spouse's benefit, then the surviving spouse can receive the higher amount, actually up to 100% of the deceased spouse's benefit once they've reached full retirement age.
Let me give you an example. So let's say Brian, my husband, Brian, I are, you know, obviously we're married and we're both into retirement, and we're both collecting Social Security. And let's just make the math easy. Let's use those same numbers. Let's say that I'm getting $3000 a month and Social Security, and he's getting $1500. If I passed away first, what would happen is Brian would now get $3000. He would get the higher of the two. He doesn't get both, but he's going to get the higher of the two. And in that case, that would be $3000 a month.
On the other hand, if he passed away first, then I lose his benefit, right? So again, mine was higher in that situation, so I would get the 3000, and then the $1500 would go away. And one thing to note is, if you remarry at age 60 or older, you can still continue to receive that widow or widower's benefit. And there's actually a very important planning opportunity here that many people don't know about.
So if you are under age 70 and you qualify for a widow or widower benefit, you don't necessarily have to take your own benefit right away. You can choose to start that widow or widower benefit first and then allow your own benefit to keep growing all the way up to age 70. This is a very important strategy that we use a lot with our clients to help them maximize those. And that's why we want to look at these options that give you and your family the most lifetime income.
There are also benefits for divorced spouses. So if you're divorced, there may still be a Social Security benefit available to you. And if your marriage lasted 10 years or longer, and you're currently unmarried, then you may be eligible for a benefit on your ex-spouse's record starting as early as age 62. And it works just like the spousal benefit. If your benefit is less than half of your ex-spouse's, then Social Security is going to increase your benefit so you receive an amount equal to 50% of theirs.
And you know, here's what some people don't realize, is that your benefit as an ex-spouse doesn't reduce or affect what a current spouse may receive, or, you know your ex-spouse. So I've heard clients before say, oh, worried that their ex-husband got remarried and they're not eligible for his benefits anymore. And that's not true. It has no effect on you if they remarry. It's only if you're again, your marriage lasted 10 years or longer, and you're currently unmarried, then you're eligible for a spouse's benefit on their record.
So that can be a really big, important planning opportunity. So let's shift gears a little bit, and let's talk about some issues around the program, and then what do you do about it? So as we talked about earlier, one of the main issues with the program is how many workers there are today to beneficiaries. Let's walk through the system-level risks that are part of planning for Social Security. If you go onto the Social Security's website, you can read their trustee report. They are very open and honest about what their projections are.
And right now, depending on the year, they believe that the current trust fund will be depleted in either 2033 or 2034. That's really not that far away. And at that point, they believe they're only going to be able to pay out about 80% of scheduled benefits unless there are changes made. Let me walk you through that. Right now, if no changes are made between now and 2033 they believe that there would be a 20% reduction in Social Security benefit.
And that's not just for future benefits, that's for current beneficiaries. That's for people who are already on Social Security. And that's unless Congress makes changes. And one of the reasons this is happening is the worker-to-beneficiary ratio. So in 2023, there were about 2.7 workers for each beneficiary. But if you remember we talked about earlier that back in 1945, there were about 41 workers per beneficiary.
That's an extreme shift that showed how demographics are changing. People are living longer. Based off of 1935, our life expectancy in 1935 was a lot shorter than it is today. Like, when they created Social Security, they didn't anticipate people living into their 80s and 90s. Like it wasn't actually designed for that. And so this is creating these shifts that are creating stress and putting stress on the system. And we talk about this when we use these projections, it's not to scare people. I'm not a fear monger.
But it's to emphasize why having a personal retirement plan is so important, because the system isn't going to take care of all these risks. Now, I personally believe that there will not be a reduction in Social Security benefit. I do not believe there will be. I believe that Congress will make changes to Social Security between now and then. Now, they might wait till the 11th hour and do it at the very last minute, but I do believe they're going to make changes.
So what are some of those changes they could do? Well, first, they could increase taxes. Because it's an issue of receiving enough revenue in to pay current beneficiaries. So they could increase Social Security taxes on current workers. They can change when you could start taking benefits. Right now, the earliest you can start Social Security is 62. They get to, hey, we're going to increase that to, I'm just going to pick a number, I have no idea, 65 to make it more aligned with Medicare.
That's an option. They could increase that full retirement age. They've actually done that before. So, full retirement age used to be 66, and then they pushed it out to 67. So there are some changes and some things that they can do to help the longevity of Social Security, and I do believe they're going to make those changes and that we won't see a reduction. But it's important for us to understand what's happening, and I would rather you prepare for that reduction.
Let's prepare for worst-case scenario, because if that doesn't happen, then it's just icing on the cake. So let's plan, let's plan around that. So we want to make sure that we're planning appropriately for this. So one thing to remember also about Social Security is it was never meant to be your only source of income in retirement. It's just meant to be like a part of it. A foundation. And this chart, this is actually data all put out by Social Security.
This is from 2024 data, but it talks about how much of your pre-retirement income Social Security is going to replace. And Social Security looks at like different categories. They look at what they call low earners, high earners, and mass earners. So let's look in this like middle, they call them high earners, but this is someone that would have had like a pre-retirement income about $106,000 a year.
And if you fall into that category, then Social Security is gonna only replace about 32% of your pre-retirement income, 31.7 to be exact. And the more money you make, the less it covers. So this means the higher the income during your working years, the more you're going to need to rely on other income sources, like pensions, retirement accounts, investments, and savings, to maintain your lifestyle in retirement.
And if you're in that higher earning group, this is where planning becomes critical. We may want to actually look at strategies to increase your Social Security, like delaying benefits, but we also want to make sure that the other income sources that you have are structured in the best way possible. So this is what, again, we walk through in this retirement focus session, not just what Social Security is going to give you, but how all of your income sources fit together to cover your needs for life?
I had a call yesterday with a potential new client, and she is retiring in about two and a half years. She's actually retiring from the state of Florida, and we talked about her pension and Social Security, and she's going to have DROP and deferred comp, and, like, how does she put all of those pieces together? When does she take Social Security, how long can she let her DROP or deferred comp grow until she's 73, and what's that going to look like?
And is she going to need to bridge the gap for retirement? So all that can be done in part of that retirement focus session. I just met with a client yesterday. He's an attorney. He's 51, he's planning to probably slow down and retire, maybe at like 62. So we're talking about this 10 to 11-year time frame. And actually, one ofthe things we talked about was Social Security. And we looked at what happens if he took his benefit at 62 or if he'd waited to age 70.
But he wants to retire at 62. So then we went back to his balance sheet and said okay, well, what other assets could he tap into for those years to bridge the gap for income? And he, we actually looked at, okay, you know, investments, retirement accounts. He's got cash value in his whole life insurance policy. So we actually looked at some projections for him to use that cash from 62 to 70 to increase his income.
Then his benefit, his Social Security benefit, would increase, and then he could stop doing that and start taking Social Security. So it's a lot of pieces. There are a lot of pieces, financial pieces on the table. And the question really becomes like, how do you put all of those together in the best way possible to make your retirement the best? And not just for like, hey, day one, stepping off into retirement, but planning on you living a very long time. So how do we plan for retirement that's going to be 20 to 30 plus years?
That's what we want to take a look at as well. So sheer, bottom line is that Social Security is too important to just leave to guesswork. The rules are complex. The timing decisions are permanent. It has an impact on your lifetime income, on your spouse's lifetime income, and that's why this next step is simple. And that would be just a schedule a retirement-focused session. It's complimentary.
There's no charge for it. This is a 30-minute call where we're going to talk about your Social Security benefits. We'll talk a little bit about your pension, savings, other investments, and so we can talk about what does this look like for you to claim at 62 at 67, at 7,0 and how do you start to maximize that retirement income with confidence? You've spent your career, working hard, and now you deserve to step into retirement knowing that you've made the right decisions.
So one of the easiest ways to schedule a call is to go to our website. That's curryschoenfinancial.com. So, curryschoenfinancial.com, and you're going to see a button that says, schedule a call. That's going to take you to my calendar link, and you can select the 30-minute call and pick a day and time that works for you. The other option would be to call our office.
You can call our office at 850-562-3000, and just let Shannon or Brian know that, hey, you heard my talk on Social Security, and you'd like to schedule your complimentary call to go through your numbers. So we call that our retirement focus session. But if you just tell them, he,y you heard my talk on Social Security, and you like to schedule a call, they'll know, know exactly what you need to do. So yeah, the two best ways to do that. You can go directly to the website. You can also call to office, 850-562-3000.
I just want to take a second and just commend you for being here today. I know Social Security isn't the most exciting topic either, but it's a really important one to learn about, and I just want to commend you for taking time out of your day to be here and learn about this. It shows a lot. Shows you're taking it very seriously. I hope you found today impactful. I know there can be a ton of questions about Social Security.
Feel free to drop me an email and say, hey, April, you know, I heard you talk, and I had a question about this then, and I do my best to kind of get back to those as soon as I can. But feel free to shoot me an email with some specific questions that you've got. Again, I hope you found today helpful, and I look forward to seeing you on our next one. So just as a reminder, our next webinar is going to be on October 30th, all about taxes in retirement and how to make the most of it. Hope you enjoy the rest of your day, and we'll talk to you soon. Bye now.
Voiceover: The Social Security Administration has not approved, endorsed or authorized this material. Contact the Social Security Administration for complete details regarding eligibility for benefits.
This material is intended for general public use. By providing this content, Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, visit our website at curryschoenfinancial.com or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial, and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address: 1700 Summit Lake Drive, Suite 200, Tallahassee, Florida, 32317. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America, New York, New York. Park Avenue Securities is a wholly owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.
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