Why You Need to Plan for Social Security Benefits

Your Temecula Estate Planning Attorney wants you to understand why planning for Social Security Benefits is vital to your overall estate plan. Social Security Planning comes into play during your life and when a spouse passes away. So, let’s dive in and see what you need to know.

Social Security is one of the most important retirement benefits American households have, and making smart decisions is extremely important.

The average monthly Social Security benefit for 2022 will be around $1,666 per month, almost $20,0000 annually and over a 25-year life span it could add up to nearly $500,000, with annual adjustments to keep up with inflation.

When a spouse dies, the survivor is entitled to receive the greater of her benefit or up to 100% of the spouse’s benefit, including any cost-of-living increases earned along the way. 

Maximizing the survivor benefit is an especially important consideration for women. Men not only tend to be the higher wage earners but also generally die at younger ages than women. In many cases, a delayed filing by a man can be a critical way to boost lifetime retirement security for older women—a time of life when savings may be diminished

Social Security retirement benefits are increased by a certain percentage for each month you delay starting your benefits beyond the Full Retirement Age. If you were born in 1943 or later your benefits should increase by 8% annually until you reach age 70.

Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase by 8.7 percent in 2023. On average, Social Security benefits will increase by more than $140 per month starting in January.

Beneficiaries with combined income equal to or below $25,000 for single filers and $32,000 for joint filers aren’t taxed. Beneficiaries in the next tier of income—between $25,000 and $34,000 for single filers and between $32,000 and $44,000 for married couples filing jointly—pay taxes on up to 50% of their benefits. 

Beneficiaries with income above those levels pay taxes on up to 85% of benefits. Therefore it is critical to review how other income-generating investments impact the taxation of Social Security Benefits.

The interplay of IRA-required minimum distributions (RMD) and future changes in the Medi-Cal rules that deal with asset limits and income will also play a significant role in estate planning for the taxation of benefits.

There are important spousal benefit rules that can substantially boost a household’s lifetime benefits. Special rules apply to divorced people and survivors. 

If you are interested in learning more about Social Security planning speak to our Temecula/Murrieta Elder Law or Estate Planning attorneys. To schedule an appointment at our Temecula office or one of our other offices located throughout the state of California, contact us at  (800) 244-8814

If you have any further questions about estate planning and strategies to shield your wealth, or if you’d like to have your current asset protection plan reviewed to make sure it still meets your needs, please contact us at one of our offices located throughout the state of California 800-244-8814 to set up a consultation.