Social Security: Things to Consider Before Tapping into Your Benefits

Social Security benefits are adjusted for inflation every year. After the unusually large 8.7% cost-of-living adjustment (COLA) for 2023, increases have returned to more typical levels: the COLA for 2026 is 2.8%.1 The maximum benefit for a worker who claims at age 70 in 2026 is $5,181 per month, while a worker claiming at 62 in 2026 tops out at $2,969 – a gap that shows how much the timing decision matters.

This news has many wondering when they should start tapping into their Social Security benefits. But before you decide whether or not to start receiving your monthly checks, there are a few things you may want to know.

What are Social Security Benefits?

Officially known as the Old-Age, Survivors, and Disability Insurance (OASDI) program, Social Security benefits are a monthly payout provided to qualified retirees, disabled workers, and the dependents and survivors of these groups. The program aims to partially replace income lost as a result of reaching retirement age, the death of a spouse, or a disability. While you can start claiming Social Security checks as early as 62 years old, there are some potential advantages to delaying these benefits and planning out your claims more carefully.

How are Social Security Benefits Calculated?

Social Security benefits will differ from person to person, as the amount you receive is based on factors such as the year you were born, the age you start claiming benefits, and your average indexed monthly earnings. Benefits are also adjusted to reflect the trajectory of general wage levels during your 35 highest-earning working years. However, these monthly payments could be reduced if you enter retirement early.2

What to Consider Before Dipping Into Your Benefits

Social Security benefits play a vital role in providing or augmenting income for retirees, dependents, and those with disabilities. But, before you start applying for payments, it’s important to understand the strategies you might consider deploying to help maximize these benefits. That way, you can enjoy your Golden Years in peace knowing that you’ll have a cash flow sufficient to cover your expenses and haven’t left money on the table.

Full Retirement Age

Upon turning 62, it might be tempting to dip into your Social Security as soon as benefits become available, but doing so could mean missing out on the full amount you’re entitled to. To receive 100% of your benefit, think about waiting until full retirement age before applying. The full retirement age for anyone born in 1960 or later is 67; for those born between 1955 and 1959 it falls between 66 and 67.

Earning Limits

Some people choose to continue working even after they’ve started tapping into their Social Security benefits. While this is certainly an option, there is a maximum limit on the amount you can earn if you’re between the minimum retirement age of 62 and your full retirement age. For 2026 the limit is $24,480 ($65,160 in the year you reach full retirement age), and it rises annually. If you earn income in excess of the allowance, you may see a portion of your benefits withheld. But don’t worry – any money withheld will ultimately be returned to you upon reaching full retirement age.

Tax Implications

While Social Security regulations allow you to continue to work and maintain other sources of income concurrently, there are potential tax implications associated with this course of action. Depending on your other income, federal tax can apply to up to 50% or 85% of your benefits, and the income thresholds that trigger this tax are not indexed for inflation. The 2025 tax law did not repeal the tax on benefits, but it did add a temporary $6,000 deduction for taxpayers age 65 and older (tax years 2025 through 2028), which phases out above $75,000 of modified adjusted gross income for single filers and $150,000 for joint filers. For help navigating these Social Security taxes, consider partnering with a financial professional.

How to Maximize Your Benefits Payout

If you’re looking to increase the size of the payouts you receive each month, here are a few steps you can take to get the most out of your Social Security benefits.

Increase Pre-Retirement Income

While some people like to scale back on work in the years leading up to retirement, increasing your pre-retirement income during this period can be a way to boost your overall payout. Because the Social Security Administration calculates your benefits based on average monthly income, earning higher compensation may net you a larger benefit amount – but only up to the taxable maximum (the “wage base”), which is $184,500 for 2026. Earnings above that figure are neither taxed for Social Security nor counted toward your benefit.

Delay Claiming Benefits

If you were born in 1960 or later, you can begin tapping into your Social Security benefits after turning 62. However, this means you will receive less than you would if you had waited until the full retirement age of 67, at which point you receive 100% of your benefit. The total amount you receive increases by 8% each year between 67 and 70, capped at a maximum payout of roughly 124% of the full benefit.3

Start Financial Planning

There are numerous strategies for claiming Social Security benefits and the one you choose should be based on your own unique circumstances. A financial advisor can help you find the optimal Social Security strategy that suits your individual financial needs.

If you’re looking for help navigating your Social Security benefits, we can help. Schedule a meeting with us here.

This material is intended for informational/educational purposes only and should not be construed as tax, legal or investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Investments are subject to risk, including the loss of principal. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Certain sections of this material may contain forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is no guarantee of future results. Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption of any kind. Please consult with your financial professional and/or a legal or tax professional regarding your specific situation and before making any investing decisions.

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Endnotes

1 “Cost-of-Living Adjustment (COLA) Information for 2026.” Social Security Administration. https://www.ssa.gov/cola/.

2 “Social Security Benefit Amounts.” Social Security Administration. https://www.ssa.gov/oact/cola/Benefits.html.

3 “Social Security Benefits Planner: Delayed Retirement Credits.” Social Security Administration. https://www.ssa.gov/benefits/retirement/planner/delayret.html.