The Ultimate Social Security Playbook for 2025

Personal Finance

Social Security Card with cash money dollar bills - living on a fixed income, benefits SSN

Published: January 30, 2025 1:52 pm

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive
compensation for actions taken through them.

As we look towards 2025, navigating the complexities of Social Security becomes increasingly essential for those nearing retirement. With roughly 10,000 Americans passing the threshold into retirement age each and every day, this demographic shift has significant implications for an entire generation of folks, and requires much more in the way of in-depth thought. Indeed, my view is that those who are still a decade or two away from retirement can benefit from having a playbook put together.

So, let’s do just that. Here are a few key pieces of advice I’ve gathered from a plethora of personal finance experts around some of the key areas of focus for retirees around how they may want to think about structuring their retirement, and specifically how social security will play a role in shaping a fulfilling retirement.

Of course, every household’s situation is different, so this playbook can really be thought of as a starting point for discussion with one’s team of experts. But without further ado, here are a few of the top considerations I think are important for those looking to put together a retirement strategy in 2025.

Key Points About This Article:

Those looking to put together a retirement strategy in 2025 have plenty to consider, with a wide range of factors poised to impact their decision making process.
Here are some of the top factors those nearing retirement may want to consider discussing with a certified financial planner.
4 million Americans are set to retire this year. If you want to join them, click here now to see if you’re behind, or ahead. It only takes a minute. ^(Sponsor)

Timing of When to Take Benefits

Man hand holding a conceptual clock with the words yesterday, now and tomorrow. Concept of time management or living in the present moment. Composite image between a photography and a 3D background. — A clock showing the words “Now,” “yesterday” and “tomorrow”

There are plenty of resources retirees, and those nearing retirement, can utilize to determine how much they’re likely to receive in retirement via the social security they’ve paid into over their lifetime.

However, deciding when to claim Social Security benefits is a pivotal choice for retirees. This decision can be influenced by various personal factors, such as health and expectations of longevity. That’s because individuals can begin receiving benefits as early as age 62, but doing so results in a permanent reduction of monthly payments. Retirees may receive up to 30% less if benefits are claimed at 62 compared to full retirement age (FRA).

Conversely, delaying benefits until FRA or even up to age 70 can significantly enhance monthly payouts, with an increase of about 8% for each year after FRA. This strategy is particularly advantageous for those who expect to live longer, as it maximizes lifetime benefits. As mentioned, an individual’s health status, financial needs, and employment plans also play critical roles in this decision.

For instance, if a retiree requires immediate income or has health concerns that may shorten life expectancy, claiming early might be prudent. However, if one can afford to wait and is in good health, delaying benefits can serve as a form of insurance against longevity risk.

Utilizing My Social Security Account

Social Security letters carried on freight ship in stormy seas as concept for issues around funding of USA pensions to seniors — Social Security letters carried on freight ship in stormy seas

An effective tool for retirees is the My Social Security online account, which serves as a pivotal resource for managing, planning, and estimating future Social Security benefits. This platform allows users to access their earnings history and perform calculations for various future benefit scenarios, helping them make informed decisions about when to retire and how much they can expect to receive.

Accurate earnings records are crucial as discrepancies can lead to reductions in calculated benefits. Regularly checking and updating your account ensures that you receive the correct benefit amount based on your earnings record.

Additionally, this tool aids in the strategic planning of retirement, allowing future retirees to adjust their plans based on the estimated income from Social Security, ensuring that their retirement planning is as accurate and effective as possible.

Understanding Spousal Benefits

Several Social Security Cards on a US United States one hundred dollar bill $100 system of benefits for retired elderly people — Social Security cards in front of a $100 bill

Understanding and leveraging spousal benefits can significantly enhance your retirement strategy. Eligibility for spousal benefits includes those who are divorced, provided the marriage lasted at least ten years.

Claiming spousal benefits allows one to receive benefits based on an ex-spouse’s earnings record, which can be advantageous if their record is higher than one’s own. Strategic claiming can optimize household income, where one spouse claims earlier benefits while the other delays their claims to increase their individual benefits.

Additionally, for retirees with dependent children, spousal benefits strategies also extend to dependents, providing further financial support and increasing overall household income during retirement years. This complex interplay of benefits requires a thorough understanding to ensure that all potential income avenues are explored and utilized effectively.

Monitor Earnings and Benefits Interaction

Social Security Card, benefits statement and 100 dollar bills. Social security funding, payment, retirement and federal government benefits concept — Social security card with three $100 bills atop a statement

For retirees who choose to continue working while receiving Social Security, it is vital to monitor how earnings interact with benefit limits. The earnings threshold for 2025 stands at $23,400, and surpassing this can lead to reductions in Social Security payments. It is therefore essential to strategically plan the timing of your benefit claims in relation to ongoing employment.

Moreover, working longer can positively impact the calculation of your benefits. Social Security benefits are calculated based on your highest 35 years of earnings. Thus, for those who expect to continue to work and possibly earn more in their older age, it may be possible to replace lower-earning years. Such a move could potentially increasing your benefit amount.

This strategy is particularly beneficial for those who have experienced fluctuations in income throughout their careers and can lead to a significant increase in Social Security benefits.