Social Security Planning Workshop: Claim at 62, 67, or 70? | The Limitless Retirement Podcast

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In this conversation, Danny Gudorf, a financial planner, discusses the complexities of Social Security and the importance of strategic planning for retirement. He emphasizes that Social Security is not just a simple benefit but a complex system with various claiming strategies that can significantly impact retirement income. Gudorf highlights the necessity of coordinated financial planning, including tax implications, spousal and survivor benefits, and the timing of claims. He also addresses common pitfalls retirees face, such as the widow's tax trap and the importance of gap years for tax planning. Overall, the conversation provides valuable insights into optimizing retirement income through informed decision-making.

The Social Security Decision That Could Be Worth Nearly $300,000 in Retirement

Most people spend decades paying into Social Security.

Then, when it's finally time to claim, they make one of the biggest financial decisions of retirement in less time than it takes to finish a cup of coffee.

That single decision can permanently reduce monthly income, increase lifetime taxes, affect a surviving spouse, and even change how much wealth is ultimately passed to the next generation.

Yet millions of retirees assume there's only one question to answer:

"Should I claim at 62, 67, or 70?"

The reality is far more complicated.

Social Security isn't simply about choosing an age. It's about coordinating your benefits with taxes, investments, Medicare, and your long-term retirement income plan. Done correctly, that coordination can produce hundreds of thousands of dollars in additional lifetime value. Done poorly, the consequences can last for decades.

Why Most People Leave Money Behind

Nearly three out of four Americans claim Social Security before reaching full retirement age.

That doesn't automatically make early claiming wrong.

The problem is that many people don't arrive at the decision through planning. They simply reach a certain birthday, hear advice from friends, or call Social Security and begin collecting.

The Social Security Administration isn't designed to tell you which strategy is best for your situation. Their responsibility is to administer the program—not optimize your retirement plan.

That's where many retirees unknowingly leave substantial money on the table.

Social Security Isn't What Most People Think It Is

One of the biggest misconceptions is believing Social Security works like a retirement account.

It doesn't.

Social Security is officially called the Federal Old-Age, Survivors, and Disability Insurance Program.

That one word—insurance—changes how you should think about every claiming decision.

Unlike an investment account with money set aside in your name, Social Security is built around insurance principles that include:

  • Retirement benefits
  • Spousal benefits
  • Survivor benefits
  • Disability protection

Understanding those rules helps explain why your claiming strategy affects much more than your own monthly check.

Your Benefit Starts Long Before Retirement

Your monthly benefit is based on your highest 35 years of earnings after inflation adjustments.

That means every missing year effectively counts as a zero.

Many people don't realize that continuing to work—even for just a few additional years—can replace lower earning years and increase future benefits.

Another often-overlooked step is reviewing your Social Security earnings record.

Errors happen.

An incorrect earnings history could reduce your lifetime benefit without you ever realizing it.

Taking a few minutes to review your record today could pay dividends for the rest of retirement.

The Permanent Decision Few People Fully Understand

Perhaps the most important concept in Social Security planning is this:

Your claiming decision is largely permanent.

Claiming early doesn't simply reduce your benefit until full retirement age arrives.

It reduces your monthly payment for life.

For someone whose full retirement age is 67:

  • Claiming at 62 can reduce benefits by roughly 30%.
  • Waiting until full retirement age restores the full benefit.
  • Delaying until age 70 increases benefits through delayed retirement credits of approximately 8% annually after full retirement age.

That higher benefit also becomes the foundation for future cost-of-living adjustments.

In other words, delaying doesn't just create a larger starting benefit.

It can produce larger inflation adjustments every year for decades.

The Break-Even Question Isn't the Whole Story

Many retirees search online for a break-even calculator.

Those tools can be useful—but they're incomplete.

A typical comparison asks:

Would you rather collect smaller checks beginning at 62, or larger checks beginning at 70?

Depending on life expectancy, the delayed strategy can eventually produce significantly more lifetime income.

In the example discussed, waiting until age 70 resulted in nearly $289,000 more lifetime Social Security income by age 95 before cost-of-living adjustments.

That's an impressive difference.

But focusing only on break-even calculations ignores a much larger issue.

The Hidden Risk of Waiting

Delaying Social Security isn't free.

If you retire before claiming benefits, your spending often comes directly from your investment portfolio.

Those early retirement years are often when retirees travel more, spend more time with family, and enjoy the healthiest years of retirement.

If markets decline during that period, withdrawing heavily from investments can increase sequence-of-returns risk—one of retirement's greatest financial threats.

That's why many retirement plans don't rely on rigid rules.

Instead, they adapt to changing market conditions.

Sometimes flexibility creates better outcomes than following a single claiming strategy regardless of what's happening in the markets.

Married Couples Face an Even Bigger Decision

When you're married, Social Security planning becomes significantly more complex.

Now you're coordinating:

  • His retirement benefit
  • Her retirement benefit
  • Possible spousal benefits
  • Future survivor benefits

Every claiming decision affects both spouses.

One of the most important considerations is the survivor benefit.

When one spouse dies, the surviving spouse generally keeps the larger monthly benefit while the smaller benefit disappears.

That means delaying benefits for the higher-earning spouse may not simply increase retirement income today.

It may also provide greater financial security for the surviving spouse years—or even decades—later.

One Decision Can Affect Generations

Many retirees focus entirely on their own retirement income.

But Social Security decisions can also influence taxes throughout retirement and even what beneficiaries eventually inherit.

For example:

Higher Social Security income may reduce future withdrawals from retirement accounts.

Lower withdrawals may preserve more assets.

Strategic tax planning may reduce the overall tax burden paid over multiple generations.

These connections often aren't obvious until someone looks at the entire retirement picture instead of viewing Social Security in isolation.

The Tax Surprise Waiting for Many Retirees

Many Americans spend their careers faithfully contributing to 401(k)s and traditional IRAs.

Those contributions create valuable tax deferral.

But tax-deferred doesn't mean tax-free.

Eventually, required minimum distributions (RMDs) begin, forcing withdrawals that count as taxable income.

Those withdrawals can trigger several unintended consequences:

  • More of your Social Security benefits become taxable.
  • Medicare premiums may increase because of higher income.
  • Larger IRA balances can produce larger required withdrawals later in retirement.

What looked like disciplined saving during your working years can unexpectedly create higher taxes during retirement if no long-term planning occurs.

The Retirement Window Many People Miss

One of the biggest planning opportunities often occurs after retirement but before required minimum distributions begin.

During these years, retirees may temporarily find themselves in lower tax brackets.

That creates an opportunity to evaluate strategies that could reduce future tax exposure.

Every situation is different.

What works for one household may be completely inappropriate for another.

But understanding this planning window before it's gone can make a meaningful difference over a long retirement.

Retirement Isn't About One Decision

It's tempting to think of Social Security as a standalone choice.

It's not.

Your claiming decision interacts with:

  • Tax planning
  • Investment withdrawals
  • Medicare premiums
  • Estate planning
  • Retirement income
  • Survivor protection

Changing one piece often changes everything else.

That's why comprehensive retirement planning goes far beyond selecting a claiming age.

It coordinates every moving part into one integrated strategy designed around your specific goals—not generic rules of thumb.

The Bottom Line

You've spent decades building your retirement.

Social Security is one of the largest guaranteed income sources most retirees will ever receive, yet it's also one of the most misunderstood.

The difference between an average claiming decision and a carefully coordinated retirement strategy isn't measured in a few dollars each month.

For some families, it can mean hundreds of thousands of dollars over the course of retirement.

More importantly, it can provide greater confidence, greater flexibility, and greater financial security for both spouses throughout retirement.

Watch the Full Presentation

Social Security is only one piece of the retirement puzzle—but it's one you can't afford to overlook.

In the full presentation, Danny Gudorf explains how Social Security interacts with taxes, Medicare, retirement income, Roth conversions, spousal benefits, survivor planning, and long-term legacy planning, while walking through real-world examples that illustrate the financial impact of different claiming strategies.

If you're approaching retirement or already receiving benefits, watch the full video to better understand the opportunities—and the costly mistakes—that could shape your retirement for decades to come.

Transcript: Prefer to Read — Click to Open


Danny (02:46.827)

Most people think Social Security is simple. You work, you pay in, you pick an age, and then you collect your benefits. What most people do not realize is that there are hundreds of different strategies around Social Security claiming. And the difference between a good one and a default one can be hundreds of thousands of dollars over the course of your retirement. Today I’m gonna walk you through how this actually works.

Because you have been paying into the system for decades and you deserve to get it right. Hello everyone, and thank you for joining us today. My name is Danny Gudorf, and I’m a financial planner and owner of Gudorf Financial Group in Dayton, Ohio. We help people over 50 reduce taxes and invest smarter and prepare for retirement through our limitless retirement system. At our firm, we take a little bit of a different approach. We operate as a multi-client family office.

And what that means is that your tax planning, investment strategy, and estate planning are all coordinated in one place under one roof. In the past, this type of planning was usually only available to families with $50 million or more. But we built our firm for families with between $1 and $10 million in net worth. People who worked hard, saved consistently, and built real wealth. Here’s what most people don’t.

Expect. In retirement, you often end up acting as the translator or project manager between your advisors. You have a financial advisor, a CPA, and an estate planning attorney, but they rarely coordinate. The problem is your taxes, your social security benefits, and your estate plan are all interconnected. When one part changes, it affects the others. If they are not working together, you can miss tax planning opportunities, take on extra risk, or leave major gaps in your plans.

We build our firm to solve that problem, bringing our three companies together. Gudorf Financial Group, which leads retirement planning, investment strategy, and tax planning. Gudorf Tax Group prepares and files your taxes, and Gudorf Law Group handles the estate planning and outer law piece. All three teams working together around your full retirement. We have offices in Dayton and Centerville and in the Troy area. And we also work with clients around the country.

Danny (05:35.276)

Before we dive in, a quick disclosure statement. Just remember that today’s presentation is for general information purposes only and educational in nature. It is not personal financial tax or legal advice, and your situation is unique, so please talk to your own CPA, attorney, or financial planner before making any decisions, and don’t treat anything you hear today as legal or tax advice. Now let me show you how this coordinated approach works in real life.

Danny (06:15.329)

Let’s start at the beginning, because this matters more than most people realize. The full name of Social Security is the Federal Old Age Survivors and Disability Insurance Program. The key word is insurance. Social Security is not a savings account or an investment account or a bucket of money with your name on it. It’s an insurance program. Once you understand that, the rules start to make much more sense.

The eligibility rules, the spousal benefits, survivor benefits, and claiming decisions all fit together better when you understand what Social Security actually is. Social Security is funded through FICA payroll taxes. If you are a W-2 employee, 6.2% of your wages goes towards Social Security, and your employer pays another 6.2%. That is 12.4% in total. If you’re self-employed,

You pay both sides yourself. The point is, most people have paid into the system for decades, and that deserves more than a rushed 15-minute claiming decision. Your benefit is based on your best 35 years of earnings. So security adjusts those years for inflation and runs them through its formula and calculates what we call your primary insurance amount or PIA.

Your PIA is the amount you receive if you claim at your full retirement age. It is the anchor number for every claiming decision that we make. To qualify for your own retirement benefit, you generally need at least 10 years of work history where you paid into Social Security. But 10 years only gets you in the door. Since the formula uses your best 35 years, any missing years count as zeros. If you work 30 years,

You have five zeros in your calculation. Working longer can replace those zeros or replace lower earning years with higher earnings, which can increase your benefit.

Danny (08:42.295)

This is why I want you to do one simple thing. Go to SSA.gov and create an account if you do not already have one. That does not mean you’re claiming your benefits, it simply lets you see your earnings history, estimated benefits, and your social security statement. Check your earnings record carefully. Make sure there are no zeros in years where you have worked. Mistakes can happen and correcting them can increase your benefit.

Your statement will also show you your estimated benefit at 62, at full retirement age, and at 70. Those numbers are the foundation for the rest of this conversation. Now, let’s talk about full retirement age because this is a number people mix up all the time. Your full retirement age, which you’ll will hear as FRA, is determined by your date of birth. If you were born in 1960 or later,

Your full retirement age is sixty-seven. If you were born in nineteen fifty-nine, it is sixty-six and ten months. And if you’re born in nineteen fifty-eight, it is sixty-six and eight months. You just won’t

Danny (10:02.753)

You just want to know where you land because full retirement age is the reference point for everything. It is the age at which you receive your full PIA with no reduction and no bonus. Everything earlier than FRA is reduced, and everything later than full retirement age up to age 70 earns you an increase. We will talk through exactly how that works in a moment. So back to that 74% number, because it’s worth sitting with for a minute.

Three out of four people collecting Social Security are receiving less than what they were eligible for. And when you ask why, the answer is almost the same.

Danny (11:19.937)

So, when we think about claiming Social Security, there’s one statistic that really sticks out and we need to sit with for a minute. That is that 74% of people claim Social Security early. Three out of four people collecting Social Security are receiving less than what they were eligible for. And when you ask why, the answer is almost always the same. They did not really plan for it.

They reached 62 or 65 or heard a rumor about some deadline, called Social Security, and turned it on. The Social Security Administration is not going to stop them. They are not planners. They are the administrators. Their job is to process your claim, not to run the math on your situation and tell you whether this is the best year for you to file. That part is on you. There are three ways to claim in a local office, over the phone.

Or online. The Social Security Administration used to say on their website that they could get you to claim in 15 minutes. I would caution you on that. You worked for decades paying into the system, and you are going to rely on that income for potentially 30 or 40 years. It needs more of a discussion. And here’s what makes this genuinely complicated: there are hundreds of different Social Security claiming strategies depending upon your age, work history.

Marital status, health, other income, and your overall tax situation. Most people do not see that. They see one or two decisions and make them without understanding some of the downstream effects. I’m not saying to worry anyone, but I’m sort

Danny (13:10.017)

I’m not saying that to worry anyone. I’m saying that because clarity is the point today. Once you understand the variables and the decisions, get a lot easier. One more thing to plant in your mind before we move on to the claiming decision is that Social Security does not exist in a vacuum. It sits on top of everything else you have going on financially. Your pension, your IRA distributions, your rental income, and your investment accounts. They all stack together.

And that stack has real tax consequences. The age you claim affects how much you pull from your portfolio in the early years, it affects your Medicare premiums, and it affects your tax return when you get to age 73 or 75 versus today at 65. And if one of you passes away, the survivor benefit affects what your spouse lives on for the rest of their life. That coordination across all of those pieces.

Is where the real planning happens. And that’s what we’re building towards throughout the rest of today’s presentation. So now you have the foundation, you know how to get your benefits.

Danny (14:54.625)

So now you have the foundation, you know how your benefit gets built, what your full retirement age means, and why most people end up collecting less than they should. Now comes the decision that drives all of it. When do you turn it on? Because that one choice and the age you pick has a permanent effect on your every payment you’ll receive for the rest of your life. So let’s talk about the claiming decision because this is where most people either leave money on the table.

Or make a choice they cannot undo. You have three windows. You can claim as early as 62, you can claim at your full retirement age, or you can delay all the way till 70. Those are the major boundaries. There is no benefit to waiting past 60, so there’s a hard stop. And everything between 62 and 70 is a choice. And every month you wait or do not wait has a permanent effect on your benefit that you receive.

Here’s what that looks like in real numbers. If your full retirement age is 67 and you claim at 62, claiming at 62 reduces your benefit by roughly 30%. That reduction is permanent. It does not go away when you hit age 67. It stays with you for the rest of your life. If you claim at 63, the reduction is about 25%. And at 64, it’s around 20%. At 65, it’s around 13%.

At 66, it’s about 7%. And then you get to age 67, where you receive your full primary insurance amount with no reduction at all. Now, if you go past your full retirement age, something good happens. For every year you delay between full retirement age and age 70, you earn what’s called delayed retirement credits. Those credits add roughly 8% per year to your benefit.

So if your full retirement age is 67 and you wait till 70, your monthly benefit is going to be about 24% higher than it would have been at 67. There are very few places in financial planning where you can get an 8% rate of return on anything. So that number is definitely worth understanding.

Danny (17:25.451)

Now, let me show you what this actually looks like when you run the math on a real couple. Let’s call them Mike and Mary. Mike’s primary insurance amount is $2,537 at his full retirement age of 67. Mary did not qualify for her own Social Security benefit, so she is going to receive the spousal benefit based upon Mike’s record. At her full retirement age, that spousal benefit is about $1,300.

two hundred and sixty eight dollars, which is half of his benefit.

Danny (18:06.507)

Later on, we’ll get into how spousal benefits work in more detail, but for right now, I want to use their combined numbers to show you what the claiming decision actually costs or gains over time. If Mike and Mary both claim at 62, their combined monthly income is going to be around $2,616. That is lower than their full retirement age amount because they’re both claiming early.

If Mike waits till age 70, his own benefit grows because of delayed retirement credits with a PIA amount of $2,537 from waiting till 67 to 70. That increases his benefit by about 24%, bringing his benefit to roughly $3,146 per month. Mary’s spousal benefit does not earn a delayed requirement credit.

So her maximum spousal benefit remains at the $1,268 per month amount. That means their combined monthly income benefit at age 70 would be about $4,415 before any cost of living adjustments. Now, the natural question is well, if I claim early, at least I’m getting money during those early years, I would have had nothing. And yes, that is true.

If they claim at 62 and receive 2,116 per month, by the time they reach age 70, they would have received about $251,000 in combined benefits before any cost of living adjustments. That is real money, and I understand why a lot of people take it. But here is where the delayed strategy starts to take over. If they claim at 70, they receive

Nothing between 62 and 70. So at age 70, the early claimers are ahead by about 251,000. The question is, how long does that head start last? Using these numbers, the break-even point is somewhere around 81 and 8 months before adjusting for living increases. After that point, because of the delay benefits, is a larger amount every single month.

Danny (20:27.041)

The gap starts to open up in the other direction. At age 85, the couple who waited until 70 has received about $795,000 in total. And the couple who claimed at $62 have received about $722,000. That is about a $73,000 difference in favor of waiting. By age 95, the couple who waited receives about $1.32 million.

While the couple who claimed early has received about one four

Danny (21:25.015)

By age 95, the couple who waited has received about 1.32 million, while the couple who claimed early has received about $1.04 million. That’s about a $289,000 difference before cost of a living adjustments. So the longer you live, the more the delayed strategy pays off. And if you’re sitting there thinking, well, I do not know if I will make it to $81, that is a fair question.

Danny (22:05.517)

But here’s where I would push back on that. If you’re in your mid 60s and you are in generally good health, your life expectancy is not the same as the national average calculated from birth. The national average includes people who passed away young. And if you’re already in your 60s and healthy, your average life expectancy may be well into your 80s. And if you’re a married couple, you have to think about the survivor. It’s not just about how long you’ll live, but it’s about how long the person

Who outlives you is going to be living on that benefit. Now, there is one more compounding benefit of the delayed strategy that most people do not think about. So, security includes an annual cost of living adjustment, what’s called cola. That adjustment has averaged about 3.5% per year going back to 1975. Some years it was zero, like in 09 or 2010 and 2015 when inflation was flat.

In some years, like in the 1970s and 80s, it ran double digits. Here’s why it matters in this conversation. Your cola gets applied to whatever base benefit you lock in. So if you lock in a higher base amount by delaying, every future cola adds more dollars to that larger starting number. That difference compounds over 20 or 30 years. It’s not a dramatic jump in any single year.

But over a long retirement period, it adds up to real money. Now, the break-even analysis is useful, but it’s not the whole story, and this is one of the biggest mistakes that I see.

Ha ha ha.

Danny (23:59.384)

So, what happens is clients run the break-even analysis, they download a calculator online or some other software, and they decide to delay. And then do they not think about what that actually means for the first eight years of their retirement? If you delay Social Security to 70, all of your retirement spending during your 60s has to come out of your portfolio. And your 60s are your prime retirement years.

You’re healthy, you want to travel, you want to do things, you want to visit the grandkids. You do not want to be watching your portfolio for every drop in the market every month, second guessing yourself because you made the decision to delay. Sequence of returns risk is real and it hits hardest in those early years of retirement when your portfolio is fully exposed. So what do a lot of our clients do? Well, we call it our hybrid strategy, and here’s how it works.

As long as your portfolio is flat or growing, you keep delaying your Social Security benefit. You let that benefit keep building. But if we get a meaningful market downturn, we do not put your retirement on pause for two or three years waiting for things to recover. We just claim Social Security so you’re not drawing down as much of the portfolio during a down market. And you protect your investments and you bring the Social Security income in.

And you give your portfolio time to recover without being damaged. That approach gives you a little bit of the best of both worlds. It allows for one of the reasons why Social Security cannot be made in isolation, and it has to be connected to your overall retirement and investment plan. There’s also one more part of claiming decision that I want to cover before we move on to the Social Security Earnings Limit. And this comes up all the time.

Someone says, I’m not retiring at 62, but I might just claim Social Security early and invest the money. I understand the logic, but here’s the issue. If you claim Social Security before full retirement age and you’re still working, there’s an earnings limit. In 2026, that limit is $24,480 that you can earn up to that amount with no issue. But once you earn it above it, Social Security withholds.

Danny (26:21.171)

One dollar for every benefits.

Danny (26:40.407)

But once you earn above it, Social Security withholds $1 of benefits for every $2 you earn over the limit. In the year you reach full retirement age, the limit increases to $65,160 in 2026, and the penalty drops to $1 withheld for every $3 earned above that limit. Once you reach full retirement age, the earnings limit goes away completely, and you can work as much as you want and start to collect your full benefit.

The earnings limit only counts W two wages and not

Danny (27:31.512)

The earnings limit only counts W 2 wages and net self employment income. It does not count dividends, interests, pensions, IRA or 401k distributions, capital gains, or any annuity income. It’s also calculated individually, not by household. So if one spouse is working and the other is not, only the working spouse benefit is at risk. And this does not apply to your own retirement benefit. It can also apply to spousal survivor.

or ex-spouse benefits. So if you’re thinking about claiming any type of social security benefit early while still working, make sure you run the numbers first and make sure that it’s still there. Now I want to address one common concern that I get. Will Social Security still be there for me? 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. After that, if Congress makes no changes, incoming revenue would still cover about 78% of scheduled benefits. That’s not an elimination, but it is a possible reduction if Congress does nothing. Personally, I do not think that is the likely outcome. So Security is too important and too popular. Congress may make changes, such as raising the wage cap.

Changing benefit formulas or making small tax changes.

Danny (29:21.975)

But I would not let the solvency issue alone drive your claiming decision. The bigger risk may not be that Social Security disappears. The bigger risk is that taxes are higher when you start drawing it. That is where retirees can lose real money, and that’s what we’re gonna talk about next. But first, everything we just covered was for one person. If you’re not

Danny (29:50.74)

If you are married, the decision gets more complex. Your claiming decision is not just about you, it’s about both spouses. The order you claim in, how those choices affect your income over a long retirement. So let’s talk about what happens when there are two people in the picture. Most people think of Social Security as a personal benefit. You worked, you paid, and you collect. And yes, that is true.

But Social Security also has rules for spouses and survivors, and those rules are some of the most misunderstood parts of the program. The spousal benefit is sometimes called the dependent benefit. If you are married to someone who qualifies for Social Security and your own benefit is smaller than what you could receive as a spouse, you may be eligible for spousal benefits. The maximum spousal benefit is 50% of your spouse’s primary insurance amount.

At your full retirement age. So if your spouse’s PIA is $2,000, the maximum spousal benefit would be $1,000 per month, assuming you claimed it at full retirement age. This is one important rule many people miss. Your spouse must have already filed for their own benefit before you can collect your spousal benefits on their record. So the timing.

of the higher earners claim matters as well.

Danny (31:32.384)

Another key point is that spousal benefits do not earn that delayed retirement credit. That 8% per year increase past full retirement age only applies to your own benefit. A spousal benefit maxes out at 50% of the working spouse’s PIA at full retirement age. Waiting longer does not increase it. Claiming early, though, can still reduce it. If your full spousal benefit at full retirement age would

Be a thousand dollars and you claim at 62, it may drop to around $650, and that reduction is permanent. Now, what if both spouses worked and both qualify for their own benefit? That is where the spousal top-off comes into play. If your own benefit is higher than 50% of your spouse’s primary insurance amount, you collect your own benefit. But if your own benefit is lower,

Social Security may add a spousal boost to bring you up to that 50% amount. For example, let’s say the wife’s own benefit at full retirement age is $800, and the husband’s primary insurance amount is $2,000. Half of his PIA is $1,000. Since her own benefit is lower, Social Security adds a $200 spousal boost, bringing her total benefit up to $1,000. She does not get $800 plus the thousand.

She gets the higher amount with a boost if needed.

Danny (33:13.761)

Now let’s talk about what happens when one spouse passes away, because this is where the stakes get high. When one spouse passes away, the smaller of the two benefits usually goes away. And the survivor keeps the larger of the two monthly benefits. That becomes the survivor benefit. If the higher earning spouse delay till 70 and the buildup of a larger benefit, the survivor may be able to receive that larger number.

If the higher earning spouse claimed early and locked in a reduced benefit, the survivor benefit may be lower with that reduced number. The decision can follow the survivor for decades. So when married couples decide when the higher earner should claim, the survivor benefit has to be part of the discussion. Survivor benefits work differently than spousal benefits, and you can claim a survivor benefit as early as age 60. If you’re disabled and the

disability started within seven years of your spouse’s death, you may be able to claim as early as age 50. And if you’re caring for a qualified dependent like a minor child, there may be no age requirement at all. A surviving spouse may be able to claim one benefit first and switch to the other later. But here is the rule to remember a survivor benefit does not keep growing with delayed retirement credits.

After the survivor reached full retirement age. Your own retirement benefit can grow if you delay it past full retirement age to 70. A survivor benefit generally does not grow just because the surviving spouse waits past his full retirement age. Let me show you how this works. Let’s call her Laura. She’s 60 years old. Her husband recently passed away. His survivor benefit amount at Laura’s full retirement age.

Would be $2,500 per month. And Laura has her own Social Security record, and her estimated full retirement benefit is $1,500 per month at her full retirement age. She plans to keep working until 65. Option one is simple. She claims the survivor benefit now at age 60. Because she’s claiming early, the survivor benefit is reduced to about $1,788 per month.

Danny (35:36.191)

And the income starts now. But she is locking in a reduced survivor benefit. Option two is a little bit more strategic. She waits until for retirement age and claims the full survivor benefit of $2,500 per month, and she gives up income in those early years but avoids the claiming reduction. Option three is where planning matters. Depending on her income, cash flow, and tax picture, Laura may claim one benefit first.

And then switch to the enter benefit later. For example, she may claim a reduced survivor benefit first and let her own benefit grow past age 70. If her own retirement benefit at full retirement age is 1500, then delaying to 70 could increase that to about 1860 per month. In this example, that is still lower than the $2,500 survivor benefit. She would likely

Want to stay with the survivor benefit if she can receive the full amount. In other cases where the surviving spouse has a stronger earnings record, it may make sense to use the survivor benefit first to let the own benefit grow past 70. Which option is right for Laura? It really depends upon her health, earnings, and other income and her tax situation. There’s no single right answer, and that’s the point. A decision this important deserves.

More than a fifteen minute phone call with the Social Security Administration.

Danny (37:19.648)

The survivor benefit may be one of the largest financial assets a widow or widower has, and it can be income they live on for 20 or 30 years. The decision made by spouses before either one passes away can have a direct impact and permanent effect on what the survivor is left with. So when I sit down with married couples, we’re not just looking at one benefit. We are looking at four potential benefits: his own benefit, her own benefit.

The spousal benefit, and eventually the survivor benefit. We’re looking at how all those benefits interact with the portfolio, taxes, Medicare, and their own life expectancy. The claiming decision for a single person is complicated enough. For a married couple, it gets even more complicated. Getting the timing right and connecting it to the rest of your retirement picture can mean the difference between hundreds of thousands of dollars over a long retirement.

Here is what I want you to understand about every decision we just covered. When to claim, which benefit to take, and how to coordinate retirement, spousal, and survivor benefits. None of those benefits live on their own. Every one of these has a tax consequence, and most people never see it coming until it’s too late. So let’s talk about that now. Let’s talk about taxes. This is where a lot of retirees get surprised and where money can slip through.

The cracks quietly.

Danny (38:55.818)

Most people did the right thing during their working years. They contributed to 401ks and IRAs and other tax-deferred accounts. That made sense at the time, but tax-deferred does not mean tax-free. It means the tax bill will be pushed into the future. I think of retirement savings in three different tax buckets. The first bucket is taxable money, like brokerage accounts, savings accounts, investment accounts, where you pay tax along the way.

The second tax bucket is tax deferred money. Like 401ks, traditional IRAs, and TSPs, that money went in pre-tax and grew tax-deferred, and it’s taxed as ordinary income when it comes out. The third bucket is tax-free, like Roth IRAs and Roth 401ks. Most goods savers are heavy in bucket two, and that is where the planning opportunity lays. The problem with tax-deferred accounts is that the government is your silent partner.

You do not know what tax rate you will pay when the money comes out once you reach age 73 or 75, depending upon the year you were born. The IRS requires you to start taking money out through required minimum distributions or RMDs. Those withdrawals count as ordinary income. As you get older, the required percentage generally increases. So the larger your IRA is, or 41K, becomes, the larger you’re forced to withdraw.

That income can create a chain reaction. The IRS can tax up to 85% of your Social Security benefit, depending upon your provisional income. That number includes your taxable income, tax-deferred distributions, and 50% of your Social Security benefit. If you’re single and your provisional income is above $34,000 or married filing jointly and above $44,000, up to 85% of your Social Security can be taxable.

Danny (41:17.366)

For many retirees with a pension, IRA income, Social Security, and maybe rental income, those thresholds are easy to cross. And taxes are not the only issue. Higher income can also increase your Part B and Part D premiums through something called IRMA. So when your income goes up, your taxes go up and your Medicare costs can go up as well.

Danny (41:50.955)

Now, there’s something called the new senior bonus deduction from the recent tax law changes, and it’s meaningful. For tax years 2025 through 2028, qualifying individuals aged 65 and older get an additional $6,000 deduction. And for married couples where both spouses are $65 and older, that is $12,000. For 2026, when you stack that with the current standard deduction and the existing age-based deduction,

That couple could have $47,500 in total deductions. That is a major planning window. There are phaseouts though for singles. The deduction begins phasing out over $75,000 of income and it begins phasing out over $150,000. And at $250,000, it disappears completely. But this deduction is not permanent. It is currently scheduled to last through 2028. So we’re in a rare window with very historically low tax rates.

Plus this temporary senior bonus deduction. If you’re not planning around the window, you may be leaving a real opportunity on the table. Now, let’s talk about what happens when we do not plan for this. There are two problems I see with real clients all the time. The first is what we call the widow’s tax trap. A husband and wife may be collecting Social Security, drawing from IRAs, and paying taxes that are manageable on those joint filing rates.

Then one spouse passes away, the survivor now files as a single taxpayer, which much narrow tax brackets. The surviving spouse may still have the larger Social Security benefit, the pension, and all of those IRA distributions from required minimum distributions. Now, all of that income is taxed at those single filer rates. That can push them into a much higher tax bracket and keep them there for the rest of their life.

It can also increase your Medicare premiums and other different charges. The second problem is the tax torpedo. This is what happens when RMDs, Social Security, pensions, and all other income are stacked on top of each other. As you get older, your required minimum distributions generally increase. And that means more forced IRA income each year, whether you need it or not. And that income can make more of your Social Security benefits taxable, raise your tax bill.

Danny (44:15.454)

And also increase your Medicare premiums. The people who are hardest hit are often the ones who did everything right. They saved well, built a large IRA, and then found themselves forced to withdraw money at tax rates they never planned for. Both problems are fixable, but usually only before they happen. This is why your gap years matter so much. These are the years between when you retire, but before RDs begin.

Often in your early 60s till age 73 or 75. During this window, your income may be lower, your tax brackets have room, and you may be able to move money from tax-deferred accounts into tax-free Roth accounts at the lowest cost possible. This is what a Roth conversion does. The issue is that many CPAs look backward at last year’s tax return, while many financial advisors avoid the tax side of things at all.

That gap between financial planning and tax planning is where real money gets lost. And filling that gap is exactly what our firm does. Here’s a real example of what a Roth conversion math looks like. I worked with a client who had $1.5 million sitting in his IRA, and we looked at converting $500,000 of dollars of that over several years into the Roth, assuming a modest 5% annual growth rate and a 20% current tax rate.

Here’s where the numbers showed. If he did nothing and just let the IRA grow and took his RMDs, his required total tax liability for that account over his lifetime came out to about $434,000. If we ran a Roth convergence strategy over time and moved $500,000 in that tax-free account, his total tax liability dropped to $125,000. That’s a difference of over $300,000.

On the same pile of money. And here’s the part that matters most. The $125,000 is locked in at today’s tax rates. If tax rates go up in the future, the IRA option gets worse. The Roth option stays the same because taxes are already paid.

Danny (46:33.578)

Now I want to be clear about something. Roth conversions are not right for everyone, and converting everything to zero is also not the goal. There’s a sweet spot there. You want to fill your current tax brackets without pushing it too high. The math can be ran on your numbers, your social security income, your RMD projections, and your beneficiaries tax situation. Your current and future tax rates will also be a big part of it. Anyone who tells you to convert everything and convert nothing is not doing the math.

Speaking of your beneficiaries, here is a piece that I think is underappreciated. The Secure Act changed the rules with inherited IRAs, and when your children inherit a traditional IRA, they have about 10 years to empty that account, usually during their peak earning years. And those distributions stack on top of their income and can push them into really high tax brackets. A large inherited IRA can be 35 or 37% of taxes paid.

Danny (47:52.001)

Also, we also have to think about where tax rates are headed. On a higher note, I believe, and not to scare anyone, but because the numbers point in the direction and you deserve an honest read of the situation. We have an aging population and a shrinking workforce, about 10,000 baby boomers retire every day, and at that place holds for another seven years, the national debt will be approaching $39 trillion.

We roughly spend $2 trillion each year more than we take in, and the interest alone runs over $1 trillion annually. Medicare, Medicaid, Social Security, and debt interest are projected to nearly double over the next 10 years. Something has to give, and we do not know the exact form or timing, but the direction of travel is looking like it’s heading towards higher taxes, not lower. That’s why this window we’re sitting in right now.

with these historically low tax rates and the new senior deduction is worth taking a look at.

Danny (49:10.75)

Alright, so let’s pull this all together because everything we’ve covered today connects to a bigger picture. Social Security is just one piece. It’s an important piece, and getting it right matters, but it does not operate on its own. It connects your taxes, it connects your investment accounts, it connects your Medicare. Everything connects together.

Danny (49:54.145)

But it does not operate on its own. It connects to your taxes, it connects to your investment accounts, and it connects to your Medicare, and it connects to what you will leave behind for the next generation. At our firm, we have something we call our limitless retirement system, and it covers five key areas: taxes, income, investments, health care, and legacy. When those five areas are planned separately, you get gaps.

You get a CPA who’s looking backwards at last year’s return, a financial advisor who will not go near tax questions, and nobody is talking to the estate planning attorney, and you end up being the one trying to coordinate all this while also trying to live your life in retirement. When those five areas get planned together, you get a real retirement plan. You get efficiencies that show up as actual dollars, and you get the confidence to spend and live the way you intended.

And that is exactly why we created our free retirement assessment. It’s designed to take everything we talked about today and apply it to your specific situation, your income, your accounts, your tax picture, your healthcare cost, and how you go about claiming Social Security. Here’s how it works it’s a three step process that gives you clarity on your own specific situation. Step one is a 20 minute call. This gives us both a chance to make sure.

That your situation matches our expertise. You would not see a cardiologist if you needed foot surgery. This quick call helps us find out if we’re the right fit and what you actually need help with. Step two is what we call our team meeting. Just like a doctor, it’s important to diagnose before we prescribe. We’ll meet with you either in person or virtually for about an hour. And during this meeting, our team will get clear on your retirement goals, your needs, your concerns. We will also gather information.

That we need to give you real answers. Step three is where we review your retirement assessment with you. We’ll have another one-hour meeting to go over our findings and recommendations. We’ll put everything up on the big screen and in plain English, we’ll explain exactly what you can do to improve your retirement plan, lower your taxes, optimize your investments, and make that final Social Security claiming decision. And when we ask you to think about it, we mean it.

Danny (52:18.912)

We’re looking for long-term relationships, not quick transactions. If we decide we’re not a good fit, we’ll happily find you another advisor or professional who has the right expertise. There’s never a hard sell or pressure to say yes. But if you’re ready to get started and see how these strategies play,

Danny (52:43.798)

But if you’re ready to get started and see how these strategies apply to your own specific situation, click the link below to schedule your 20-minute intro call. And thanks for joining me today. Have a great day.

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