10 Surprising Facts You May Not Know About Social Security

Joseph J. Bilello, Certified Financial Fiduciary®, ChFC®, CKA®,CEP®,BPC

January 15, 2025

Whether you're working with clients on estate management, tax strategies, or broader financial matters, Social Security often becomes a key consideration. While it may seem straightforward, the nuances of this program can have a significant impact on your clients' overall financial well-being.

As financial professionals, we often see how a deeper understanding of Social Security can enhance the guidance you provide. Here are 10 insights that might prove valuable in your conversations and help you offer even more comprehensive support to your clients.

1. Social Security Is More Than Retirement Income
It also provides life and disability insurance coverage. For example, a young worker’s Social Security life insurance protection could be valued at nearly $948,000, and about 90% of workers have some disability coverage through the program.¹

2. Delaying Benefits Can Increase Payouts
Waiting to claim benefits past full retirement age increases them by 8% per year until age 70. But the decision isn't one-size-fits-all; factors like health, work plans, and marital status should be considered.²

3. Benefits Adjust for Inflation
Annual Cost-of-Living Adjustments (COLAs) can help maintain purchasing power, with the 2025 COLA set at 2.5%. However, COLA increases aren't guaranteed every year, making strategic preparation essential.³

4. Benefits May Be Taxable
Up to 85% of Social Security benefits could be subject to federal income tax if a client’s combined income exceeds certain thresholds. This can be a surprise for many retirees.^4,5

5. Spousal Benefits Can Enhance Income
Non-working spouses may be eligible for up to 50% of the working spouse’s benefit. Survivor benefits are also an important part of income strategy.⁶

6. Social Security Provides Stability Amid Market Volatility
Because it provides stable income, Social Security offers a steady income stream that is not dependent on market performance. This monthly payment can help cover basic living expenses without tapping into investment accounts during market downturns.

7. Total Benefits May Be Substantial
A high earner could receive over $630,000 in Social Security benefits over their lifetime. It’s worth understanding the long-term impact.⁷

8. High Income Affects Medicare Premiums
Clients with higher incomes may pay increased Medicare premiums, affecting overall retirement expenses.⁸

9. International Benefits Are Available
If you’re considering retiring abroad, you can still receive your Social Security benefits in most countries. However, Medicare may not cover all healthcare outside the U.S., so additional preparation might be required.⁹

10. The Windfall Elimination Provision May Apply
Clients who have worked in government jobs not covered by Social Security could see reduced benefits. Understanding this is crucial.¹⁰

Conclusion
Social Security may seem like just one piece of the financial puzzle, but it’s a piece that can have a lasting impact on your clients’ overall financial strategies. By understanding these nuances, you’re better equipped to guide your clients—or to collaborate with financial professionals like us.

If you’d like to discuss how we can work together to better support your clients or if you have any questions about these insights, I’d be happy to connect.

Looking forward to the opportunity to collaborate and provide even greater value to those we serve.

^{1. Center on Budget and Policy Priorities, May 31, 2024. Several factors affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder may also pay surrender charges and face income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.}

^{2. Social Security Administration, October 2024}

^{3. Social Security Administration, October 2024}

^{4. Social Security Administration, October 2024}

^{5. Social Security Matters, July 15, 2024}

^{6. Social Security Administration, October 2024}

^{7. Urban Institute, July 2023}

^{8. Senior Healthcare Direct, October 2024}

^{9. USA.gov, October 2024}

^{10. Medicare.gov, October 2024}

This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm.