Social Security is one of those things that most people don't think about until they absolutely must.
By the time they do, the decisions they make are often rushed, misunderstood or just flat-out wrong.
The result? A retirement plan built on a faulty foundation, leaving many Americans short on income and long on regret.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Let's start with a simple truth: Claiming Social Security isn't just about picking an age and filing some paperwork. It's a financial decision with massive implications — six-figure implications.
Once you make that decision, there's no going back. You've locked in your income, for better or worse, for the rest of your life. Most people only realize the gravity of that choice years later, when it's too late to fix.
The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.
Do you understand the math?
Here's the problem: People don't understand the math. They underestimate the consequences of filing too early. They think Social Security is a flat number, something they're "entitled to," rather than a moving target based on timing, coordination and strategic planning.
It's not uncommon for couples to lose more than $100,000 — or more — just because they didn't understand how their benefits worked.
Take Joe and Jane, for example — a composite of actual clients I've worked with over the years. Like most married couples approaching retirement, they've saved what they can, paid their dues and are ready to enjoy the next chapter.
Joe is set to receive $3,000 at full retirement age. Jane's benefit is $2,000. Seems straightforward enough. But once we walk through the different claiming scenarios, the reality gets murky — and expensive.
If they both file early, their combined monthly income drops to $4,000, a permanent haircut. It doesn't bounce back. It doesn't adjust later.
Over 25 years, they leave nearly $200,000 on the table compared with if they had waited. That's without factoring in inflation, taxes or Medicare premiums. Those numbers? They only make things worse.
The mindset is a big issue
The biggest issue isn't just the math, it's the mindset. People treat Social Security like it's this guaranteed, set-it-and-forget-it income stream.
What they fail to realize is that Social Security is also a form of insurance. It protects against longevity and shields against inflation. It provides one of the only guaranteed survivor incomes left for many couples.
And when one spouse passes away, the entire income picture changes — and not for the better.
This is where the second wave of the Social Security problem hits: widowhood.
It's bad enough to lose your partner. But most people don't realize that loss comes with a financial penalty. One benefit disappears. The smaller check goes away, and the surviving spouse keeps the larger one.
For Jane, that means losing her $2,000 check and keeping Joe's $3,000. On paper, it looks like a fair deal. In practice, it's a gut punch.
The income drop is immediate and substantial. And while you'd expect the tax burden to ease with less income, the exact opposite happens.
The widow's penalty
The tax code isn't kind to widows — it punishes them. Standard deductions are halved. Tax brackets shrink. The same income now gets taxed at a higher rate.
Jane finds herself with $24,000 less income and a $3,100 higher tax bill. Her spendable income plummets by more than $27,000 per year. That's not a rounding error. That's life-changing.
It's not an isolated issue. This happens every day to people who thought they'd done everything right. They saved, planned and showed up for work for decades. But they didn't realize that the Social Security decision they made five years ago would come back to haunt them at the hardest moment of their lives.
It seems Social Security is designed to be complex. The rules can be full of traps for the unwary. The timing of your claim affects not just what you get today, but what your spouse lives on tomorrow.
Yet, most people treat the decision as if it's a simple transaction. It's not. It's a fork in the road that will shape the next 25 years of your financial life.
A program under pressure
This doesn't touch the broader issue — that Social Security itself is under pressure. The trust fund is projected to be depleted in less than a decade.
The system faces demographic challenges it was never built to handle — longer lifespans, fewer workers, rising costs — all while retirees depend on it more than ever.
What I see, time and again: People planning for retirement as if Social Security will take care of itself. It won't. The consequences of misunderstanding it are real.
Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.
When life takes a turn — when a spouse dies, when the market dips, when medical bills mount — there's no do-over or mulligan, just a reduced income and a rising cost of living.
Joe and Jane's story isn't rare. It's typical, a scenario playing out in households across America. Unless we start talking about the real cost of poor Social Security decisions without sugarcoating it more families will fall into the same trap.
A tool to be optimized
This is not about scare tactics. It's about honesty. If you don't know how Social Security works, you're playing a high-stakes game blindfolded. When the chips fall, you might not like what remains.
When you stop thinking of Social Security as a box to check off and start viewing it as a tool to be optimized, everything changes.
Social Security is not a stand-alone decision. If you're claiming at 62 because "that's when it's available," or at full retirement age because "that's what my neighbor did," you're likely leaving money on the table — possibly six figures or more.
Let's walk through a better way of thinking.
1. Claiming early isn't 'bad,' but it has a cost.
The system gives you a choice: Take less now or wait for more later. That's not just a monthly difference — it's a lifetime calculation.
By delaying your benefits — even just one spouse delaying — you're not only increasing your monthly income, you're also securing a larger survivor benefit. That's critical when one of you passes away, because income doesn't just shift — it drops.
What people often overlook is that claiming early locks in a permanent reduction. That's not something you fix later. It affects how much the surviving spouse lives on for the rest of his or her life.
2. Coordinated timing is key for married couples.
You don't need both spouses to delay to make a difference. Sometimes, the smart move is having one spouse file early to create income, while the other builds up credits by waiting.
This hybrid strategy can balance current cash flow with long-term protection. It's not about maximizing one check — it's about maximizing the household benefit over time.
Using our example of Joe and Jane, we saw how the difference between filing early and filing strategically added up to nearly $200,000. That's not wishful thinking; it's real math, playing out in real lives.
3. Plan for 'We' and 'Me.'
This is one of the biggest blind spots I see: People plan for retirement as a couple, but rarely think about what happens when one of them is gone. That's a guaranteed eventuality — not a maybe.
Your Social Security strategy has to answer both questions: What serves us now? and What protects the survivor later? Without answering both, the plan is incomplete. It's a guess. Retirement is no place for guessing.
Finally: Taxes matter more than you think
The drop in income after the first spouse passes away doesn't automatically mean a lower tax bill. Taxes often go up because of filing status changes and bracket shifts. The survivor gets less income, but pays more tax. That can be financially devastating if you're not prepared.
This is why integrating Social Security timing with tax planning isn't optional — it's essential.
What do you do?
You need a plan that's more than just about investments or account balances. You need a strategy that connects your Social Security decisions to your broader retirement income picture. You need to model the what-ifs — because life rarely sticks to the script.
The good news? You don't have to figure it out on your own.
I've put together a Successful Retirement Checklist — a practical, easy-to-follow guide that walks you through the critical decisions you need to make before and during retirement, including Social Security planning, tax strategies, survivor scenarios and more. You can download a copy now at BrianSkrobonja.com.
Don't let confusion or procrastination rob you of what you've worked your whole life to build. Make informed, strategic choices — because your future is worth it.
This content is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation.
Skrobonja Financial Group, LLC, Skrobonja Insurance Services, LLC, Skrobonja Wealth Management, LLC are not permitted to offer and no statement made during this presentation shall constitute tax or legal advice. Our firms are not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Skrobonja Financial Group, LLC, Skrobonja Insurance Services, LLC, Skrobonja Wealth Management, LLC.
The content of this video is provided for informational purposes only and is not a solicitation or recommendation of any investment strategy. Investments and/or investment strategies involve risk including the possible loss of principal. There is no assurance that any investment strategy will achieve its objectives. This presentation does not take into account your particular investment objectives, financial situation or risk tolerance and may not be suitable for all investors. Information provided is not intended as tax or legal advice and should not be relied on as such. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it is suitable for your specific situation.
Securities offered only by duly registered individuals through Madison Avenue Securities, LLC. (MAS), Member FINRA &SIPC. Advisory services offered only by duly registered individuals through Skrobonja Wealth Management (SWM), a registered investment advisor. Tax services offered only through Skrobonja Tax Consulting. MAS does not offer Build Banking or tax advice. Skrobonja Financial Group, LLC, Skrobonja Wealth Management, LLC, Skrobonja Insurance Services, LLC, Skrobonja Tax Consulting, and Build Banking are not affiliated with MAS.
Skrobonja Wealth Management, LLC is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Skrobonja Wealth Management, LLC and its representatives are properly licensed or exempt from licensure.
The firm is a registered investment adviser with the state of Missouri, and may only transact business with residents of those states, or residents of other states where otherwise legally permitted subject to exemption or exclusion from registration requirements. Registration with the United States Securities and Exchange Commission or any state securities authority does not imply a certain level of skill or training.
Related Content
- Eight Strategies for Deciding When to File for Social Security
- Five Reasons to Take Social Security Early (and Five Reasons to Wait)
- How Much Would Social Security's 2033 Shortfall Cost You?
- The Five Social Security Blind Spots Retirees Often Miss
- Are You Prepared for the Evolution of Retirement?
-
Stocks End Strong Month on a Down Note: Stock Market TodayThere was likely a bit of profit-taking ahead of a historically weak September.
-
The New Rules for Student LoansWhether you’re paying off education debt now or planning to borrow in the future, get ready for bigger payments and lower loan limits.
-
Stocks End Strong Month on a Down Note: Stock Market Today
There was likely a bit of profit-taking ahead of a historically weak September.
-
Get the Best Car Deal in Retirement: Here's the TrickPlanning on shopping for a new car this Labor Day weekend? Here’s how to haggle for a better price, even though you are retired.
-
Want to Visit Your Favorite National Parks in Retirement? Here's How.Exploring the breathtaking landscapes and diverse wildlife of America's National Parks offers retirees an adventurous way to soak in epic scenery and keep things exciting.
-
If You'd Put $1,000 Into UnitedHealth Group Stock 20 Years Ago, Here's What You'd Have TodayUNH stock was a massive market beater for ages – until it wasn't.
-
Average 401(k) Fund Fees and Expenses: Are You Overpaying?Average 401(k) fund fees and administrative expenses are, in some cases, shockingly high. But don't be misled by gloomy headlines. Here's the skinny.
-
The Seven-Day Financial Reset: A Simple Plan to Get Control of Your Money, From an ExpertSometimes, getting unstuck requires a reset. These practical steps can help you tackle your money issues and feel less overwhelmed by it all.
-
Three Pros (and Four Cons) of Hiring Multiple Financial Advisers: The View From a Financial AdviserThere's nothing to stop you from working with several financial advisers instead of just one. But take a balanced view of the risks and rewards first.
-
S&P 500 Tops 6,500 Even as Nvidia Slips: Stock Market TodayThe world's most valuable company closed lower after earnings, but the S&P 500 managed to notch a new record high.
