Social Security Retirement: What You Need to Know

Social Security is one of the most important—and misunderstood—parts of retirement planning. 

In this episode of the Retirement Income School™, I’m joined by Social Security expert Martha Shedden, co-founder and president of NARSSA, the National Association of Registered Social Security Analysts.

As someone who earned my RSSA® designation through NARSSA, I’m excited to share this conversation about claiming strategies, spousal and survivor benefits, taxes, and the future of Social Security.

The goal is simple: help you understand your options so you can make informed decisions and retire financially relaxed.

Why Social Security Was Created

Social Security began with the Social Security Act of 1935. It was designed to provide financial protection for older Americans during a time when many people had little or no reliable retirement income.

Over the years, the program evolved to provide benefits for:

• Retired workers
• Spouses and former spouses
• Widows and widowers
• Children and other eligible family members
• People with qualifying disabilities

Today, Social Security remains a critical part of retirement income for millions of Americans.

But it was never intended to be your entire retirement plan.

It works best when it is coordinated with your savings, investments, pensions, annuities, and other income sources.

Social Security Is the Foundation of Your Income Floor

Your retirement income floor is the amount of predictable monthly income you can count on to cover essential expenses.

These expenses may include:

• Housing and utilities
• Food and groceries
• Healthcare and insurance
• Transportation
• Taxes
• Other recurring necessities

Social Security can become an important part of this foundation because it provides monthly income for life and includes cost-of-living adjustments when applicable.

When you know that a meaningful portion of your basic expenses will be covered every month, you may feel less pressure to withdraw money from investments during a market downturn.

That creates more than income.

It creates peace of mind.

When Should You Claim Social Security?

One of the biggest Social Security decisions you will make is when to begin receiving your retirement benefit.

You can generally claim retirement benefits as early as age 62. However, claiming before your full retirement age permanently reduces your monthly benefit.

Waiting beyond full retirement age can increase your benefit through delayed retirement credits until age 70. There is no additional increase for waiting past age 70.

That does not automatically mean everyone should wait.

Your decision should consider:

• Your health and life expectancy
• Your current income needs
• Whether you plan to continue working
• Your spouse’s benefit
• The age difference between you and your spouse
• Other retirement income sources
• Your tax situation
• The survivor benefit your spouse may eventually receive

The best claiming age is not simply the age that produces the largest check today. It is the age that works best within your complete retirement income plan.

Why Couples Need a Coordinated Strategy

Married couples should not evaluate their Social Security benefits independently.

In many cases, the higher earner’s claiming decision affects both spouses.

For example, delaying the higher earner’s benefit may produce a larger monthly retirement benefit while both spouses are living. It may also increase the survivor benefit available to the remaining spouse after the higher earner dies.

That can be especially important because the surviving spouse generally does not continue receiving both full benefit checks. Instead, the survivor typically receives the higher benefit for which they qualify.

A thoughtful strategy should consider:

1. The income both spouses need today
2. The benefits available on each earnings record
3. Each spouse’s health and longevity
4. The financial needs of the surviving spouse
5. How claiming decisions affect taxes and other assets

Social Security planning for couples is not only about maximizing benefits.

It is also about protecting the spouse who may live the longest.

Understanding Spousal Benefits

A spouse may qualify for a benefit based on their husband’s or wife’s earnings record.

At full retirement age, the maximum spousal benefit may be as much as 50% of the worker’s full retirement age benefit—not necessarily 50% of the amount the worker receives after delaying.

Claiming a spousal benefit before full retirement age can reduce the amount.

It is also important to understand that Social Security does not usually pay your retirement benefit and then add a full spousal benefit on top of it.

If you qualify for both, Social Security generally pays your own retirement benefit first and then adds only enough spousal benefit to bring your total payment to the higher eligible amount.

Under current deemed-filing rules, most people who apply for either their retirement or spousal benefit are considered to have applied for both. The old strategy of collecting only a spousal benefit while allowing your own retirement benefit to grow is no longer available to most retirees.

Spousal and Survivor Benefits Are Not the Same

Spousal benefits apply while both spouses are living.

Survivor benefits may become available after a spouse or qualifying former spouse dies.

This distinction matters because the rules and claiming opportunities are different.

A surviving spouse may be able to receive a survivor benefit independently from their own retirement benefit. Depending on their circumstances, they might claim one benefit first and switch to the other later.

For example, someone could potentially begin with a survivor benefit and allow their own retirement benefit to grow until age 70. In another situation, it may make sense to claim their own benefit first and switch to a larger survivor benefit later.

The right order depends on the benefit amounts, claiming ages, work history, and personal circumstances.

This is why survivor planning should happen before a crisis—not after one.

Benefits for Divorced Spouses

Divorce does not necessarily eliminate eligibility for Social Security benefits based on a former spouse’s work record.

You may qualify for a divorced-spouse benefit if:

• Your marriage lasted at least 10 years
• You are currently unmarried
• You meet Social Security’s age requirements
• Your former spouse qualifies for retirement or disability benefits
• The benefit available on your former spouse’s record is higher than the benefit available on your record

If you have been divorced for at least two continuous years, you may be able to claim a divorced-spouse benefit even if your former spouse has not yet filed, provided both of you meet the eligibility requirements.

A former spouse’s claim does not reduce the worker’s benefit or the benefit paid to their current spouse.

Eligible divorced spouses may also qualify for survivor benefits after a former spouse dies. Remarriage and the age at which it occurs can affect eligibility, so it is important to review the rules before making decisions.

Why Social Security Benefits May Be Taxable

Many retirees are surprised to discover that Social Security benefits can be subject to federal income tax.

Before 1984, Social Security benefits were generally not taxed. Today, depending on your combined income and filing status, up to 85% of your benefits may be included in taxable income.

That does not mean you pay an 85% tax rate on your Social Security.

It means that as much as 85% of your benefit may be included when calculating your taxable income.

Social Security uses a combined-income formula that generally includes:

• Adjusted gross income
• Tax-exempt interest
• One-half of your Social Security benefits

The current base thresholds begin at $25,000 for an individual filer and $32,000 for a married couple filing jointly. Higher thresholds—$34,000 for individuals and $44,000 for joint filers—determine when up to 85% of benefits may be included in taxable income.

These thresholds are not indexed for inflation, which means more retirees may be affected over time.

Strategic planning around Roth conversions, retirement-account withdrawals, capital gains, and other income can help you understand and potentially manage the tax impact.

What the “One Big Beautiful Bill” Did—and Did Not Do

One source of recent confusion is the One Big Beautiful Bill Act.

Some people heard that the law eliminated taxes on Social Security benefits. It did not directly repeal the federal rules that determine whether Social Security is taxable.

The law created a temporary additional federal deduction for certain taxpayers age 65 and older, subject to income limits and other requirements. That deduction may reduce the overall federal tax bill for some retirees.

But it is not the same as making Social Security benefits tax-free.

Your results will depend on your age, income, filing status, deductions, and other factors. Work with a qualified tax professional before making decisions based on headlines alone.

Is Social Security Going Away?

This is one of the biggest fears I hear from retirees and pre-retirees.

Social Security faces a real funding challenge—but “Social Security is going bankrupt” is an oversimplification.

According to the 2026 Social Security Trustees Report, the Old-Age and Survivors Insurance Trust Fund is projected to pay full scheduled benefits until the fourth quarter of 2032. If Congress makes no changes, continuing income would be sufficient to pay approximately 78% of scheduled benefits at that time.

Considering the retirement and disability trust funds together, reserves are projected to be depleted in the third quarter of 2034, when ongoing income would cover approximately 83% of scheduled benefits. The two funds are legally separate and cannot be combined without a change in the law.

In plain language:

Social Security is not projected to disappear.

However, legislative action will be needed to prevent benefit reductions and strengthen the program for future generations.

Congress has several possible options, including changes to payroll taxes, benefit formulas, retirement ages, or the amount of earnings subject to Social Security taxes.

No one can know exactly what lawmakers will do. That is why your retirement plan should be flexible and should not rely on Social Security as your only source of income.

How to Prepare for Social Security Decisions

Here are five steps you can take now:

1. Review Your Earnings Record

Create or sign in to your my Social Security account and verify that your earnings history is accurate.

2. Compare Multiple Claiming Ages

Review your estimated benefit at age 62, full retirement age, and age 70.

3. Evaluate Benefits as a Household

If you are married, look at spousal and survivor benefits—not just two individual retirement checks.

4. Estimate the Tax Impact

Consider how Social Security will interact with retirement-account withdrawals, pensions, investment income, and Roth conversions.

5. Build a Complete Income Plan

Coordinate Social Security with your other predictable income sources and retirement assets.

Do not make your claiming decision based on fear, a break-even calculation alone, or what worked for someone else.

Your Social Security strategy should be personal to you.

What to Do Next

Social Security may be one of the most valuable income streams you receive in retirement.

The claiming decision you make can affect your income for the rest of your life—and potentially the income available to your surviving spouse.

Want help understanding how Social Security fits into your retirement income plan? Schedule a Retirement Income Q&A Call to explore your options.

DISCLAIMER:
The information in this lesson is provided for general educational purposes only and does not constitute financial, legal, or tax advice. Retirement Income School™ and Dr. Amanda Barrientez do not provide individual investment recommendations. Always consult with a licensed advisor or tax professional before implementing any strategy discussed.