Social Security is a cornerstone of the American financial safety net. Nearly 9 out of 10 Americans age 65 and older — an average of 69 million people — received the benefit monthly in 2024.
But, as more Baby Boomers age into retirement, and Trump administration changes make the news, many are left questioning the security of the program. We spoke with some of Northern Virginia’s top financial experts to get their opinions and advice.
When Should You Start Claiming?
Financial advisers say one of the most common questions they get from their clients about Social Security is what age they should start claiming it.
It’s not always a set answer, says Tracy Shen, founder and managing partner of McLean-based Florin Group. But, for earners who are not currently in a financial bind, she tends to advise waiting until age 70, depending on the client’s situation. “I usually advise age 70 if people are still working since it increases by 8 percent (simple interest not compound interest from original full retirement amount) for each year you delay and you don’t want to be taxed,” Shen says. “However, I have advised age 62 since it doesn’t make sense if clients get into credit card debt and pay a high interest rate if they don’t have enough income.”
“Normally, we’re going to tell the higher income earning spouse, almost always, to wait until 70, unless there’s a major health event or there’s no assets to spend in the interim, because that check [is] the highest check,” says Michael Egan, financial planner and founding partner of Vienna-based Egan, Berger & Weiner, LLC. “The groups who wait until 70 to take it are averaging around 19 percent more in lifetime benefits than those who take it earlier.”
Amy Hoffman, senior vice president of Advisors Financial Inc. in Vienna, says that she usually recommends “that they hold off until age 70 so that they can receive the maximum benefit amount.” But postponing does come with “a certain amount of risk … if you have health conditions or some cash flow issues, possibly you’re worried about death debt and you need to have the guaranteed income, or your family history shows that you don’t have much longevity — maybe postponing benefits isn’t the best scenario for you.” She encourages people to “establish an online account at the Social Security website (ssa.gov) so that they can actually run some scenarios for themselves to see what would be the effect of claiming earlier.”
Social Security Changes
Is Social Security going to run out? This is another common client concern, advisers say.
According to Social Security trust funds report estimates, Social Security will only be able to cover 81 percent of promised benefits starting in 2034. Benefits could be reduced unless Congress acts. Shen says that “Congress will usually do something at the last minute.”
Egan points to the last time any major change was made to Social Security, with legislation under former President Ronald Reagan in the 1980s: “We’ve let the government shut down a few times to actually get deals done. That’s what’s probably going to happen with Social Security. We’re going to get to a line in the sand where there’s got to be a decision point, and that’s the time Congress will take action.”
What about federal taxes on Social Security? Does the Big Beautiful Bill reduce or eliminate them?
“The biggest misnomer might be, ‘Oh, my Social Security income will now be tax-free,’” Egan says. “But the bill doesn’t say that. It’s the marketing of the people promoting the bill that says that, but it’s not necessarily what the bill says. The bill says we’re going to give you an extra tax deduction if you’re over 65 for up to five years, and it’ll be like $6,000. So that could, in some cases, offset your Social Security taxes. But for higher-income earners who’ve delayed and are doing planning, that’s probably not going to be the case. It might reduce some of the total tax paid, but it’s not reducing taxes on Social Security itself.”
Egan says that this is “actually a good thing, because Social Security taxes, a tax on Social Security income, if you hit those triggers, that money goes back into Social Security. It’s segregated from the rest of the tax revenue, so it helps the system stay alive longer.”
Under the Big Beautiful Bill, individuals age 65 and older can claim a $6,000 deduction if their income is $75,000 or less. Couples filing jointly can claim $12,000 if their combined income doesn’t exceed $150,000. This is a temporary add-on until 2028.
Given the bonus deduction, Shen is recommending that until the end of 2028, clients take advantage by doing more Roth conversion, setting them up for more income in the future. “This means converting their IRA to Roth, just in case tax rates go up in the future to fund our national debt.”
Another recent change that may be relevant to some Northern Virginians is the Social Security Fairness Act, which went into effect in January to restore full Social Security benefits to some public sector workers and their families.
“It only impacted about 3 percent of the people drawing Social Security, but a big portion of that 3 percent were pensioners under the old [Civil Service Retirement System] program, which was basically … the old federal government retiree system. So there are a lot of folks around the Northern Virginia area that are in that old system. And for those retirees or their spouse, it could have resulted in their Social Security benefits increasing, sometimes increasing pretty dramatically because the Fairness Act repealed these two pieces of Social Security that withheld benefits for people in those old systems,” says Logan Reed, a financial planner at Egan, Berger & Weiner, LLC. “A lot of those folks, if they haven’t seen increases in their checks already, should be trying to contact Social Security to see if their checks [will] increase.”
Prioritize Planning
Experts stress the importance of planning around retirement and being aware of any benefits they may not know about. For example, Hoffman notes, there is “a one-time death benefit that’s available to a surviving spouse that’s not automatic. People have to apply for that. It’s a small amount, but every little bit helps.”
Hoffman recommends that once you’ve established an account for yourself on the Social Security website, “look at what your benefit projections are, keep track of your earnings, make sure your earnings are being reported correctly, and look at what your projections for retirement income are. And if you have any questions, it’s always good to consult with a tax adviser or a financial adviser for taking a deeper dive.”
This story originally ran in our September issue. For more stories like this, subscribe to Northern Virginia Magazine.
Feature image, stock.adobe.com
