How to Maximize Social Security Benefits: Tips for High Earners

If your income has consistently exceeded $250,000 per year, Social Security benefits may not have been your primary focus in retirement planning. Yet for individuals nearing retirement age, Social Security benefits are worth reassessing. A well-timed Social Security strategy can generate thousands of dollars in additional income and support broader goals such as tax efficiency, asset preservation, and legacy planning.

Social Security headlines are making waves, from trust fund concerns to legislative proposals aimed at reform. Even with uncertainty on the horizon, there are ways to optimize your benefits and help ensure that Social Security benefits work in your favor.

Is Social Security going away?

Despite concerns about the trust fund running out by 2035, Social Security will not disappear. The program is largely funded by payroll taxes (FICA), not the trust itself. Even if no new legislation is passed, experts estimate that about 83% of the scheduled benefits will still be payable in 2035, and 73% by 2098.¹

Policymakers are actively exploring solutions to bridge the gap, including:

• Gradually increasing FICA taxes.
• Adjusting benefits for future retirees.
• Raising the full retirement age.
• Slowing benefit growth for higher earners.
• Modifying cost-of-living adjustments.

With millions of Americans relying on Social Security, and political pressure to maintain these entitlements, future reforms are likely to focus on sustainability, not elimination.

Timing your benefits

Delaying Social Security benefits past your full retirement age (FRA) results in higher monthly payments — up to 8% more for each year you wait, until age 70.² This makes postponement an appealing strategy for many high earners.

But consider the tradeoffs:

• You’ll need to rely on other income or assets in the meantime.
• The opportunity cost of withdrawing funds from investments can impact long-term growth.
• Social Security isn’t transferable beyond your spouse, which may influence estate goals.

Timing should depend on your financial situation, risk tolerance, and long-term goals. Let’s look at some real-world Social Security examples:

• Example A: Mary is a retiree eligible for $3,500 per month at age 67. Waiting until age 70 boosts her monthly income to approximately $4,600 — an additional $250,000 over 20 years.
• Example B: Mary delays receiving Social Security benefits and withdraws $125,000 from investments during the three-year gap. If left invested at a 7% return, that $125,000 could grow to roughly $487,580 in 20 years.

Strategies to maximize Social Security’s role in your retirement plan

Beyond when to claim, consider these strategies to make your Social Security benefits go further:

1. Leverage charitable giving for tax efficiency.

• If you’re 70 ½ or older, consider a qualified charitable distribution (QCD) from your IRA. Donations of up to $108,000 (2025 IRS limit) given directly to a charity can be excluded from your taxable income.
• You can also explore charitable remainder trusts (CRTs) or charitable gift annuities (CGAs), which combine current cash flow with charitable giving. These strategies align charitable goals with income needs and estate planning.

2. Coordinate with your spouse. When both spouses qualify for benefits, timing matters.

• The higher earner might delay benefits to age 70, locking in the highest lifetime payout.
• The lower earner could claim earlier, providing income sooner and reducing withdrawals from investments.
• Survivor benefits increase when the higher-earning spouse delays, helping to protect the surviving partner.

3. Be conscious of income thresholds.

• Early retirement or phased retirement years, when income is temporarily lower, can be ideal for converting traditional IRA assets to Roth IRAs. This can reduce future required minimum distributions (RMDs), lower taxable income in later years, and provide tax-free income during retirement.
• Strategic income planning can help you avoid Medicare IRMAA surcharges. These surcharges, which are separate from your total income tax, are tiered based on your income.

Social Security benefit optimization isn’t just about receiving a larger check. It’s about aligning every dollar with your broader goals. Your wealth advisor can provide guidance in evaluating timing, tax impact, and opportunities that best suit your financial situation.

Not a Mercer Advisors client? Let’s talk.

¹ Social Security Administration. “A Summary of the 2024 Annual Reports”.
² LeValley, Donna, and Kimberly Lankford. “Delay Social Security Benefits — Even by a Month — to Boost Your Check.” Kiplinger, Feb. 28, 2025.

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