Social Security Optimization Strategies for Client Portfolios

The difference between optimal and suboptimal Social Security claiming can exceed $100,000 in lifetime benefits for many clients. Here's how to add value with strategic claiming advice.

Quick Reference: The Numbers That Matter

Factor	Details
Full Retirement Age (FRA)	66-67 (67 for those born 1960+)
Early claiming reduction	Up to 30% at age 62 (if FRA is 67)
Delayed retirement credits	8% per year after FRA until 70
Maximum delay benefit	24-32% increase (depending on FRA)

Advisor Tip

The 8% delayed retirement credit is guaranteed. Few investments offer that kind of risk-free return. Frame it this way for clients hesitant to wait.

Strategy 1: Spousal Coordination

For married couples, household optimization often beats individual optimization.

The Basic Framework

Spouse	Recommended Strategy	Why
Higher earner	Delay to 70	Maximizes survivor benefit
Lower earner	Claim at FRA or earlier	Provides income during delay period

When This Works Best

Significant earnings difference between spouses
Higher earner is in good health
Household has assets to bridge the gap

Red Flags

Both spouses in poor health
No assets to cover the delay period
High current income needs

Strategy 2: The Bridge Strategy

Use portfolio withdrawals to "bridge" from early retirement to age 70.

How It Works

Age Range	Income Source	Social Security
62-70	Portfolio withdrawals	Not claiming
70+	Reduced withdrawals	Maximum benefit

The Math

For a client with $2,000/month benefit at FRA (67):

Strategy	Age 62-70 Income	Age 70+ Income	Lifetime Value*
Claim at 62	$1,400/month SS	$1,400/month SS	Lower
Bridge to 70	Portfolio draws	$2,480/month SS	Higher

*Assuming life expectancy of 85+

Advisor Tip

Run the break-even analysis for every client. Show them the crossover point where delaying "wins." For most clients, it's around age 80-82.

Strategy 3: Tax-Aware Claiming

Social Security interacts with other income in complex ways.

Key Thresholds to Watch (2026)

Threshold	Impact
Combined income > $25k (single)	Up to 50% of SS taxable
Combined income > $34k (single)	Up to 85% of SS taxable
MAGI > $109k (single)	Medicare IRMAA surcharge
MAGI > $218k (married)	Medicare IRMAA surcharge

IRMAA thresholds updated for 2026. Based on 2024 tax return (2-year lookback).

Coordination Opportunities

Roth conversions before claiming — Lower future RMDs, reduce SS taxation
Delay SS during high-income years — Avoid stacking income
Claim SS in low-income years — Minimize taxation

Strategy 4: The Restricted Application (Limited Use)

For clients born before January 2, 1954:

Can file a restricted application for spousal benefits only
Allows own benefit to grow via delayed credits
Switch to higher personal benefit at 70

Note: This strategy is phased out. Only relevant for clients currently 71+.

Client Conversation Framework

Client Situation	Key Questions	Likely Strategy
Single, healthy	Life expectancy, other income	Delay if possible
Married, similar earnings	Both health situations	Coordinate claiming ages
Married, different earnings	Higher earner's health	Higher earner delays
Immediate income need	Available assets	Claim when needed
Significant assets	Tax situation, RMDs	Tax-optimized timing

Documentation Checklist

For compliance and client records:

Documented client's health and family longevity
Ran multiple claiming scenarios with projections
Explained trade-offs of each option
Noted client's stated preferences and risk tolerance
Provided break-even analysis

Tools for Analysis

RetireArc's Social Security optimizer provides:

Break-even analysis across claiming ages
Spousal coordination modeling
Integration with overall retirement income planning
Tax impact projections
Exportable reports for client files

Key Takeaways

Always model the household, not just individuals
Run the break-even analysis — clients find this compelling
Consider tax implications — SS interacts with other income
Document everything — protect yourself and your clients
There's no universal answer — optimal depends on individual circumstances

Sources & References

Last updated: February 2026. Social Security rules change annually. Verify current figures at ssa.gov.