Understanding Social Security: Four Key Facts for Your Retirement Planning
As we navigate our financial futures, understanding Social Security is crucial for effective retirement planning. Today, we’re diving into four essential facts that everyone should know about Social Security with Nicholas J. Colantuono, CFP®.
Social Security as a Primary Income Source
For many retirees, Social Security serves as the primary source of income in retirement. Gone are the days when pensions were a standard offering from employers; nowadays, most individuals rely heavily on the benefits they receive from Social Security. It’s essential to recognize this as you plan your retirement strategy.
The Importance of Timing Your Benefits
A common misconception is that taking Social Security benefits early is always the best option. While it’s understandable for those who’ve worked hard for many years to want to access their benefits sooner, it’s important to be aware of the penalties involved. If you begin withdrawing benefits early, especially while still earning a substantial income, you may face reductions in your monthly payments. Planning the timing of your benefits can significantly impact your overall retirement income.
Medicare Premiums and Their Connection to Social Security
Did you know that your Medicare premiums can be directly affected by your Social Security income? Many individuals pay their Medicare premiums from their Social Security benefits. Therefore, having additional sources of income on top of your Social Security can result in higher Medicare premiums. It’s crucial to consider how your overall income will affect your healthcare costs during retirement.
The Tax Implications of Social Security Benefits
A prevalent misconception is that Social Security benefits are not subject to taxes. In reality, up to 85% of your Social Security income can be taxable depending on your overall income. Understanding the three levels of taxation on Social Security can help you strategize better for your financial future:
- Zero Tax: If you have no other income.
- 50% Tax: When your combined income falls within a certain range.
- Up to 85% Tax: For those with higher combined incomes.
Take Control of Your Financial Future
Social Security decisions are among the most significant financial choices you will ever make, and being informed is key. At Johnson Brunetti, we’re here to help you make the best decisions for your financial journey and give you confidence in what lies ahead.
Information presented in our podcasts is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
Related Resources
-
Podcast Episode 414: What Does the Big Beautiful Bill Really Mean for Your Retirement?
There’s been a lot of noise around the One Big Beautiful Bill Act (OBBBA), an 887-page piece of legislation that just reshaped key elements of the tax code. But what does it actually mean for your… -
Social Security Made Simple
Social Security is anything but simple — but understanding how to make the right decisions doesn’t have to be. When it all boils down, knowing when to take Social Security, how to take it, and how… -
3 Avoidable Retirement Surprises
Even the most carefully crafted retirement plans can go off track if you haven’t accounted for some of the biggest surprises along the way. While many factors can impact your retirement, the good … -
Social Security Myths Debunked
With so many rules and choices involved, it’s easy to feel overwhelmed or intimidated by Social Security. As a key source of retirement income, this decision deserves careful consideration, which … -
Podcast Episode 413: Will Social Security Run Out?
Prefer to watch? Click here to watch and listen on YouTube. Social Security has been making headlines lately, and for good reasons. According to current estimates, the Social Security Trust Fun… -
How Does the Big Beautiful Bill Affect Me?
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, bringing significant changes to the U.S. tax code. But what does it mean for you? What actions should you consider? And… -
Estate Planning First Steps
Getting started with estate planning can feel daunting, but taking those first steps often brings clarity and peace of mind. An estate plan not only ensures your assets are managed and distributed… -
Preparing for RMDs
Regardless of where you are in your retirement planning journey, required minimum distributions (RMDs) are a key factor to keep in mind. Gaining clarity on RMDs now can help you make more informed… -
Tariffs and Your Retirement
With growing concerns about rising tariffs and ongoing trade disputes, you may be wondering how these policy shifts could impact your retirement. While the situation around tariffs has stabilized … -
Making the Most of Your RMDs
Required minimum distributions (RMDs) are a key component of retirement income planning, whether you want them or not. If you’ve saved well for retirement, you might not need those funds to mainta…
