Is Social Security secure?

Iget many questions about Social Security benefits, including “Do you think it will still be there?” (My answer to that is “yes”, by the way.) Social Security benefits, when combined with savings from retirement accounts and/or pensions, can help you retire the way you want. Contrary to the way many people live (and fail to save) in their pre-retirement years, however, Social Security was never meant to PROVIDE for retirement income; only supplement. And not everyone earns the same amount from Uncle Sam. What follows are ten strategies I peeled from a Smartasset piece by financial professional Rebecca Lake.

1. Understand how the government calculates Social Security.

Many Americans assume that Social Security benefit amounts are based on your entire working career. In reality, your payments are based on your earnings from the 35 highest income years. If you have not worked for 35 years, every year you didn't work will place a whopping zero in that 35-year average, thus reducing your benefits. Want to avoid those zeros? Think about working a few extra years to raise your lifetime income average. In addition to helping fill your savings account, this should boost your Social Security benefit.

2. Know your full retirement age.

Another big factor that determines your Social Security benefit is age. Normal or full retirement age (FRA) is the age at which you can claim the full Social Security retirement benefit for which you're eligible. Drawing benefits before that age permanently reduces your benefit. The Social Security Administration (SSA) determines your full retirement age based on the year you were born. For most people now, the magic number falls somewhere between 65 and 67. When you know your full retirement age, you can make a betterinformed decision about when to start claiming Social Security. (Anyone born 1960 or later has an FRA of 67.)

3. Get the timing right.

While you CAN start collecting Social Security payments at age 62, you would only receive 75 percent of the benefit for which you've worked all those 35 years. And you've locked in that benefit reduction permanently. Instead, to receive your full benefit, you must wait to draw SS benefits until your FRA.

Drawing your benefit at FRA, however, is not always what I recommend. Uncle Sam adds to your benefit if you wait even longer. For every year you delay benefits until age 70, you receive an 8-percent increase in benefits when you do draw. This can add up to a 32-percent increase by age 70. Sometimes that is the wise thing for a person to do for his/her household.

Already started collecting and regretting it? No need to panic. Social Security beneficiaries between full retirement age and age 70 can voluntarily suspend payments to maximize earnings down the road. If you started collecting within the last 12 months, you can even withdraw your claim by repaying the benefits you have already received. Note that this is not an offer extended to those who began drawing before FRA.

4. Be smart with spousal benefits.

Getting married may add a wrinkle to your Social Security strategy. Spouses (and exspouses) that were married for at least ten years are eligible to claim not only their own benefits, but spousal benefits, too. And that's no small matter. Claiming spousal benefits means reaping 50 percent of your current or former partner's annual payout.

To make the most of these payments, first determine which spouse will earn a larger benefit. The lower-earning spouse can start claiming Social Security at an earlier age, while the higher-earning spouse's benefit amount continues to grow. Once the higher-earning spouse reaches 70, the couple can switch to filing against that person's earnings history.

5. Read your Social Security statements.

Every year, the SSA mails personalized Social Security statements to retirees and those approaching retirement age. Though it may be tempting to toss these papers out if retirement still feels far away, this information can help you plan for your future. The statement includes:

Your estimated monthly retirement benefit;

How much your child or spouse could receive in benefits if you pass away before retirement;

The amount of spousal benefit your spouse would be entitled to at retirement; and Your yearly earnings record. That last part is especially important because if your employer underreports your income or you fail to claim all of your income while you're selfemployed for any reason, your Social Security payments would be inaccurate. Fortunately, you can reach out to the SSA and notify them of any incorrect earnings history you spot. (There is a time limit on errors, however, so reading that statement when it comes is critical!)

For those too far away from retirement to get the statements by mail, I STRONGLY encourage registration on the Ssa.gov website. Once you're registered, you will receive an annual email reminding you to check your records. My husband and I have been registered for more than ten years.

6. Increase your income through outside sources.

If your estimated benefits are not as much as you were hoping for, try earning more money. An income boost will improve the average of your 35-year earnings record, which could give your benefits a much-needed bump too.

It may seem easier said than done, but there are several ways you can increase your income. If you are happy with your current employer, think about asking for a raise, working toward a promotion, increasing your education or your billable hours. You could also change jobs, take on a part-time job in addition to your full-time gig or start a side hustle. Just be sure that any additional income you're earning is reported properly on your taxes so it is counted toward your Social Security earnings.

7. Consider working in retirement.

There's no rule that says you can't work and claim Social Security at the same time. There are, however, restrictions on the amount of benefits you can receive if you continue working before reaching FRA.

Specifically, the SSA deducts $1 from your benefit payments for every $2 you earn above the annual earnings limit allowed if you're under full retirement age. The limit for 2024 is $22,320. In the year you reach FRA, the deduction goes to $1 for every $3 you earn over $59,520. But after that point, no earnings amount impacts your Social Security benefit.

So if you plan to claim benefits while working, be mindful of earnings to avoid reducing your retirement income.

Better yet… I often suggest delaying drawing Social Security benefits to create a larger benefit for the household.

8. Manage your tax liability.

Think your Social Security benefits will not be taxed? Think again. You may pay taxes on up to 85 percent of your Social Security benefits, depending on your tax filing status and income level. And remember: the government considers Social Security benefits, employment earnings and interest from investments as income.to avoid a hefty tax bill, be sure you are evaluating all your forms of income as you plan your future.

9. Collect survivor’s benefits, if eligible.

Survivor's benefits are Social Security payments designed to help replace lost retirement income if your spouse passes away. As a widow or widower, you can elect to receive ongoing benefits beginning at age 60. However, claiming survivor's benefits before you reach full retirement age will reduce the benefit amount, so you may want to wait it out. If you do have to draw at 60, you can switch at age 62 (or later) to claiming on your own record, if doing so brings a higher payout.

10. Don’t follow the crowd.

Social Security can be confusing. It's certainly easier to go along with what your relative, colleague or neighbor is doing. Yet because everyone has a different situation and there are many claiming strategies out there, you should determine what's best for you based on your age, life expectancy, income needs and other retirement assets. After all, a few small mistakes can take a big hit on your golden year goals. As you know if you read my column, I encourage a visit to a financial professional who can help you think through the options and (hopefully) point out things you might not have considered.

Developing smart Social Security strategies is just one aspect of savvy financial planning. A professional who's well-versed in Social Security can offer guidance to help you make the most of your benefits. It's never too early to start planning for retirement.

Barbara Runnels Coats, MBA, FICF, RICP, FSSC, Modern Woodmen of America Financial Representative. Securities offered through MWA Financial Services Inc., a wholly owned subsidiary of Modern Woodmen of America. Member: FINRA, SIPC.