Top 5 Social Security Secrets Every 60-Year-Old Needs to Know

The hidden complexities of Social Security could cost retirees tens of thousands over a lifetime. While it may seem like a simple income source, the right strategy can dramatically improve your financial security.

Claiming isn’t one-size-fits-all. Protecting a spouse, guarding against longevity risk, or maximizing investments each call for a different approach. Traditional breakeven analyses often miss key factors like the opportunity cost of using investments while waiting for benefits.

Spousal and survivor benefits can be game-changers—especially for couples with different earning histories. Even divorced individuals from long marriages may have powerful options.

Taxes add another layer. Up to 85% of your benefits can be taxable, but with smart planning, that burden can shrink. And if you work while claiming early, your benefits may be reduced, erasing the advantage.

Most importantly: retiring and claiming benefits are separate decisions. Your Social Security continues to grow whether you work or not, creating opportunities for better coordination across income sources and better after-tax income.

Discover how mastering these Social Security secrets can transform your retirement strategy and your peace of mind.

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Episode Transcript

Speaker 0 (00:00):
If you're 60 years old, then it's what you don't
know about Social Security thatcould cost you tens of thousands
of dollars over the course ofyour lifetime.
That's why, in today's video,I'm talking to you and I'm going
to share five secrets, fivethings that you need to know
about Social Security that couldhelp you dramatically improve
the way you utilize thisincredible tool in your own
retirement strategy.
No-transcript what you're usingsocial security to optimize for

(00:29):
.
Now, some people look at socialsecurity and say it's an income
source and it's income is anincome is an income.
What do you mean?
What are you optimizing for?
It's just this one single thingand, yes, different amounts at
different ages.
But what do you mean by that?
Well, what I mean by that isthere's four distinct things you
can optimize for with SocialSecurity.
Number one is longevityinsurance.
You can use it as a hedge toprotect against what if you live

(00:51):
for a very long time, if youlive until your 90s or even
beyond, social Security is anincome source that you won't
outlive.
So if the goal is to minimizerisk in your plan, waiting to
delay Social Security could bethe best thing that you could do
.
By waiting to delay socialsecurity could be the best thing
that you could do.
By waiting to delay, you havethat income floor that will last
for the rest of your lifetime.
That's not the goal for everyone, though.
For some people, they want toprotect a spouse.

(01:14):
Now, protecting a spouse couldlook very different.
Maybe you look at finances andyou're very good, you're very
strong with your financial plan.
You understand how all thepieces interact, but you have a
spouse that's not as involved ordoesn't care as much.
Well as you're thinking aboutsocial security.
It's not just what's best foryou in your lifetime, it's what
if you predecease your spouse?
How do you utilize survivor'sbenefits, spousal benefits, to

(01:34):
ensure that your spouse is welltaken care of even if you
predecease them?
The third thing you might beoptimizing for is legacy.
Social security is wonderful,but that money stops once you
and, if you're married, yourspouse pass away.
That's not money that's gonnacontinue going to your children
or grandchildren and some of youlistening one of your primary
goals with your financial planis to say how do I ensure that I

(01:56):
have money left over that I canpass on to children or
grandchildren?
If that's you, social securitywon't pass to them, but what
sometimes people will do is theywill collect early so they can
invest that social securitybenefit.
They can set that benefit asideso that, when they do pass, the
income discontinues but theinvestment pool, the savings
they've built up, that can passalong to their children or

(02:17):
grandchildren in a tax-free way.
And then, finally, the fourththing that people might want to
optimize for is investmentreturns.
People very rarely take thisinto account, but when you look
at a social security breakevenanalysis, it's typically looking
at how long will you live?
At what age should you collectbenefits so that your lifetime
cumulative benefit is maximized?
That's a good starting point,but it's an incomplete picture

(02:40):
if you're looking at everything.
Let's illustrate this with abasic example.
You're 62 and you're going toretire.
Let's illustrate this with abasic example.
You're 62 and you're going toretire Now.
You can take social securitytoday or you can delay it and
you can maximize your benefit ifyou wait all the way until 70.
So if you do that, thebreak-even age is typically
somewhere in your 80s whereyou're better off doing that if
you live until your early 80s orbeyond.
But what that does not takeinto account is from 62 until 70

(03:04):
, you're going to be drawingdown your savings.
You're going to be drawing downyour investment accounts and
there's an opportunity cost tothat.
Those are investment accountsthat can no longer continue
growing and compounding andbecoming worth more and more for
you over the course of yourretirement.
Analysis must factor in.
If you're going to be retiringand delaying your social

(03:24):
security benefit, what's thelost opportunity cost on what
that money could have done foryou?
Not if you took that money andinvested it, but even if you
took that money, it meant youhad to pull less from your
investment accounts and thatmoney could then grow for you
over time.
So that's secret number one isyes, social security seems
simple, it's just an incomesource.
But what are you optimizing for?
Is it insurance againstlongevity risk?

(03:46):
Is it protecting a survivingspouse?
Is it legacy or is optimizingyour own investment returns?
That number one thing is goingto be the biggest determinant.
And how should you then goahead and collect your social
security strategy?
Secret number two and I touchedupon this a little bit, but
secret number two is spousal andsurvivor benefits can be an
absolute game changer.
This is most important when youhave a high earning spouse in a

(04:09):
low earning or potentially azero earning spouse.
So me, for example I work and Ihave a strong earnings record.
My wife stays at home and sheraises our two children.
If we reach social security age, I'm going to have a strong
social security benefit.
She is not.
In fact, if she looked at herstatement, it would be very,
very low, potentially evennon-existent.
So if you look at that, somepeople assume okay, james, well,

(04:30):
you got to maximize yourbenefit because that's the only
benefit that you're going tohave.
Well, yes, that's going to bethe main benefit.
But my wife Ashlyn would beeligible for.
A spousal benefit is half, up tohalf, of what my benefit would
be at my full retirement age.
As of today, that's age 67.
So if my benefit at age 67 wasgoing to be $3,000, ashley could

(04:51):
collect $1,500 as a maximumbenefit if she waited until her
full retirement age to collect.
Now I have to be collecting forher to collect.
So if at 67, I want to delayuntil 70, something to keep in
mind is she cannot collect aspousal benefit until I have
first collected my own benefit.
But once I do, she is eligiblefor up to 50% of my benefit.

(05:11):
Then survivor benefits are evenstronger Survivor benefits.
Going back to that example, ifI wait until full retirement age
and my benefit is 3000 permonth, but I could delay until
age 70, and let's assume at age70, my benefit would be $3,500
per month.
It's not exactly how the mathwould work out when you look at
delayed retirement credits, butjust to keep the number simple,
if I waited until 70 andcollected $3,500 per month, if I

(05:34):
were to pass away before mywife, she could then collect
that $3,500 per month, not the$1,500 per month spousal benefit
that she is previouslycollecting.
So that can be an absolute gamechanger when you're trying to
build a strategy that not onlymaximizes your lifetime income
when the both of you are alive,but if you are married, how do
you protect the surviving spouse?
How do you do that in a waythat they're well taken care of,

(05:56):
even if you pre-decease themNow, even if you're divorced, if
you're married for at least 10years before being divorced,
you're still eligible forspousal benefits.
You're still eligible forpotential survivor benefits.
So keep that in mind.
You don't have to currently bemarried, but if you were married
at any point for at least 10years, spousal benefits,
survivor benefits, can be a hugepart of your social security

(06:17):
strategy.
Secret number three is socialsecurity can be taxed.
Now, this is confusing to a lotof people, especially because
there's talk of is socialsecurity going to stop being
taxed?
What about this new legislation, this new tax bill?
Social security is taxed.
The upside here is socialsecurity is taxed more favorably
than other types of income,such as IRA distributions,

(06:38):
non-qualified dividends, thingsof that nature.
A maximum of 85% of what youearn from social security will
be included in the income thatyou pay taxes on, which means
that, at a minimum, 15% of yourbenefit will be tax-free.
And then for most states manystates don't tax social security
.
However, social security at thefederal level is still taxed.

(06:59):
This depends on a couple things,though.
Number one is your provisionalincome.
Provisional income is a way ofsaying here's the amount that
you're collecting from SocialSecurity.
How much of this amount isactually going to be taxable?
As I mentioned, a maximum of85% of it will be taxable.
Sometimes, though, none of itwill be taxable, so there's a
calculation for that.
Other videos I've talked aboutthat, and at the end of this

(07:20):
video I'll include a link.
One other videos I've talkedabout that, and at the end of
this video I'll include a link.
One more thing on that note withthe most recent tax legislation
that was passed, there is a newextra senior deduction of
$6,000 per individual who's 65and older.
This deduction is only in placefor taxers 2025 through 2028.

(07:41):
This deduction in many ways wasdesigned to offset whatever
taxes people would pay on socialSecurity, but it's not
exclusively a Social Securitydeduction.
It doesn't even matter ifyou're collecting Social
Security.
That deduction can be appliedas long as you're 65 or older
and those taxes I talked aboutand that does phase out.
So that phases out over certainincome levels.
But that is one thing to keepin mind.
Social Security is not tax-free, but there are some ways you

(08:03):
can plan for this, some taxstrategies you can implement
here to minimize the taxliability as much as possible.
Secret number four when it comesto collecting social security
is continuing to work aftercollecting benefits can reduce
the actual benefits that youreceive.
Now.
This is only true before yourfull retirement age.
So this is true anywherebetween collecting at 62 to your
full retirement age, which formost of you is going to be 67.

(08:24):
If you begin collectingbenefits, then any money that
you earn and by earn I mean as awage.
I'm not talking about IRAdistributions.
I'm not talking about dividends.
I'm not talking about interestany earnings that you have in
excess of $23,400.
That's for tax year 2025.
For every $2 you earn abovethat limit, $1 will be withheld

(08:45):
in social security benefits.
So I hear a lot of peopletalking.
They say I don't know whatsocial security is going to be
like in the future.
There's talk of it's going togo insolvent or the benefits are
going to be reduced.
I want to take what's mine, Iwant to get what's mine.
So they start collecting early.
But what they don't realize isthat, because they're continuing
to work, those benefits thatthey're collecting are mostly or
, in some cases, fully offset bythe earnings they have from age

(09:08):
62 up until their fullretirement age.
So be very mindful of this.
If you are going to collectearly, make sure that you
understand what your earningsmight look like, or what your
potential earnings might looklike.
Some people have stoppedworking.
They've retired at 62.
These are people I've workedwith.
They retired, they got bored,age 64, they went back to work
and what happened was theirsocial security benefit would

(09:29):
have been fully offset basedupon their new earnings record,
but you have the option ofsuspending your benefit or
discontinuing benefits.
Now there are some rules aroundthat.
You have to do so in a certainperiod of time.
Also, there are some detailsaround this where any of the
benefits that are withheld so ifyou earn too much because you
started collecting socialsecurity but you earn a number,
you earn an amount greater thanthe wage limit or the earnings

(09:50):
limit those earnings that arewithheld they do end up getting
paid back to you over timebecause they get refactored into
your social securitycalculations.
But if you know that you'regoing to be exceeding that
earnings limit, you might wantto reconsider.
Is now the right time tocollect your social security
benefit or do you let thatcontinue growing for you?
And then, finally, secretnumber five is you don't have to
collect social security as soonas you retire.

(10:13):
Many people retire at 62,thinking I need to collect
social security at 62.
What else am I going to live onNow?
You could do that, and in somecases it makes sense to do that.
But just because you retiredoes not mean you need to
collect social security.
In fact, even if you stopworking, your social security
benefit continues growing.
And it continues growingbecause every year before your
full retirement age, there'sactually a reduction if you

(10:35):
collect your benefit then, andevery year after your full
retirement age, you get to takeadvantage of what are called
delayed retirement credits.
So just because you're notworking does not mean you have
to collect your social securitybenefit.
This is where a well-designedfinancial strategy comes into
play of what's the coordinationor what are you doing between
social security benefits, livingon cash that you've saved, ira

(10:55):
distributions, pensions, othertypes of investment withdrawals.
When you retire, you get tocreate your own income and
there's a way to maximize thatincome in terms of what's the
most amount of income I cancreate.
But, most importantly, you getto manufacture the type of
taxable income you're going toreceive.
So not just what's the highestincome I can create, but what's
the highest after-tax income Ican create.

(11:16):
And that's where the strategyreally comes into play Combining
Roth withdrawals from SocialSecurity income with IRA
distributions, with living oncash, with all these other
various things.
That is where you can createthe most effective tax-efficient
income possible to support thegoals that you have for your
retirement.
So, for those of you listening,get ready to collect Social
Security.
These are the things that youneed to know.

(11:38):
These are the ways that you canmaximize your benefit, starting
with understanding what's itgoing to look like, what are you
trying to optimize for withyour Social Security strategy,
and understand these otherdetails to make sure that you're
making the most of your benefit.
Now, I mentioned before thatthe taxation on Social Security
is really important to know.
I recorded this video here andin this video, I'll walk you
through.
How is social security tax?

(11:59):
What does provisional incomemean?
Take a look at that tounderstand what that might look
like for you.