In Part One, we established the foundational framework for Social Security claiming decisions: understanding how your claiming age affects benefits, analyzing break-even scenarios, evaluating personal health and longevity expectations, considering work status implications, and assessing immediate financial needs. These core factors create the analytical foundation every CPA needs before diving into more sophisticated optimization strategies.
But here’s where it gets interesting—and significantly more complex.
John, a 64-year-old CPA with his own practice, has a spouse, Jane, who’s 61 and worked part-time throughout her career. John’s primary insurance amount (PIA)—the benefit he would receive at his full retirement age (67)—is $2,800 per month, while Jane’s PIA is $1,200. Using only the Part One framework, John might lean toward delaying his own claim until age 70, boosting his monthly benefit to about $3,472 (a 24 % increase over his PIA). But once we layer in coordinated spousal strategies, the tax ripple effects of their sizable retirement accounts, and the inflation-hedging power of Social Security over what could be a 25-year retirement, the “best” answer becomes far more nuanced.
This is precisely why advanced Social Security optimization requires sophisticated strategic analysis that goes well beyond the fundamentals.
Are You Married? Coordinating with Your Spouse’s Benefits
For married CPA practice owners, Social Security timing is a joint decision. Coordinating spousal benefits can help maximize the total household income you and your spouse receive from Social Security. Here are a few spousal considerations:
Spousal Benefit Basics
If you’re married, you may be entitled to a spousal benefit of up to 50 % of your spouse’s primary insurance amount (and vice versa). Two timing rules apply: one, your spouse must have filed for their own benefit, and two, you must be at least 62, unless you’re caring for a qualifying child, to start either your own retirement benefit or a spousal benefit. Because of rule one, the timing of one spouse’s claim can enable the other to begin a spousal benefit. For example, a non-working or lower-earning spouse might plan to claim based on the higher earner’s record, but not until that higher earner actually files. If one spouse’s own benefit would be less than half of the other’s, it often makes sense for the lower earner to take the spousal benefit.
Understanding Spousal Benefits
Maximum Benefit Comparison
own work record benefit
$3,000 full retirement benefit
Critical Timing Rule
Spousal benefits cannot begin until the higher-earning spouse has filed for their own Social Security. This coordination requirement means claiming strategies must be planned together, not independently.
Strategic Insight: Spousal benefits stop growing at Full Retirement Age—no delayed credits apply. Once eligible at FRA, there's no advantage to waiting longer.
However, if you qualify for a spousal benefit larger than your personal benefit, note that there’s no added advantage in delaying the spousal benefit past your own FRA. Unlike personal retirement benefits, spousal benefits don’t earn delayed credits beyond full retirement age. In other words, once you’re full retirement age and eligible for a spousal benefit, there’s no benefit to waiting longer; you’d just be foregoing checks.
Sequencing and Split Strategies
Couples can sometimes employ a “split strategy.” One person claims early while the other delays. This can balance immediate income needs with long-term growth. A common approach: the lower-earning spouse claims at 62 or mid-60s, bringing in some income, while the higher earner holds off until 70 to maximize the benefit that lasts as long as either of you lives. This way, you have some Social Security income flow, but you’re still securing a larger amount for the future (and for the survivor).
Split Strategy Timeline
Coordinated Claiming for Maximum Benefit
Strategic Advantage
Provides immediate cash flow while preserving maximum survivor benefit. The higher earner's delayed benefit becomes the foundation for the surviving spouse's lifetime income.
For example, suppose the wife is the higher earner with a much bigger benefit; if she can wait till 70, her husband might start his smaller benefit at 64 or 65 to help cover expenses in the interim. Then, at 70, she files and locks in a 24% higher benefit (if her FRA was 67) for life, which leads into the next point: survivor benefits.
Maximizing Survivor Benefits
Perhaps the most critical reason couples consider delaying the higher earner’s Social Security is the survivor benefit. When one spouse passes away, the survivor keeps whichever benefit is larger—either their own or their late spouse’s amount, including any delayed-retirement credits (DRCs). If John waits until 70, his benefit jumps to about $3,472; should he die first, Jane could step up to that same $3,472 for the rest of her life. By contrast, if John files early at 62, his benefit would be roughly $1,960, and Jane’s survivor check would be limited to the greater of $1,960 or 82.5 % of John’s PIA—about $2,310—far less than the $3,472 she would otherwise receive. Delaying therefore acts as powerful, lifelong insurance for the spouse who is likely to outlive the other.
Survivor Benefit Impact
Claiming Decision Consequences
Lifetime Financial Impact
Additional survivor income over 20 years by delaying vs. claiming early
Higher earner's claiming decision becomes permanent financial protection for the surviving spouse. Delayed retirement credits transfer to survivor benefits.
Thus, a higher earner often delays not just for their own sake but as protection for their spouse. Survivor benefits are calculated on the deceased worker’s retirement amount plus any delayed-retirement credits (DRCs) earned after full retirement age—so every extra month the higher earner waits permanently raises the surviving spouse’s payment (see 20 C.F.R. § 404.313(e)(1): https://www.ssa.gov/OP_Home/cfr20/404/404-0313).
Conversely, if the higher earner claims early and locks in a reduced benefit, that lower amount (subject to the widow’s minimum) becomes the ceiling for the survivor. For couples in which one spouse is likely to outlive the other, letting the larger benefit grow as long as feasible can be a powerful form of financial insurance.
Age Differences
If one spouse is significantly older or younger, that can influence timing. An older spouse might claim earlier if the younger spouse is still many years away from being able to file a spousal benefit, but bear in mind the survivor angle. Alternatively, a younger (lower-earning) spouse might start benefits while the older (higher-earning) spouse delays. Each couple’s age/benefit profile is unique. If there’s a large age gap, the younger spouse could be looking at many years as a survivor after the older passes, which again argues for maximizing the benefit of the one who’s likely to leave the higher survivor check.
Age Gap Coordination Strategy
15-Year Age Difference Scenario
Critical Survivor Consideration
Younger spouse could receive survivor benefits for decades. Maximizing the higher earner's benefit provides crucial long-term financial protection.
Age gaps amplify the importance of survivor benefit optimization. The longer the potential survivorship period, the more valuable maximizing the higher earner's benefit becomes.
Coordinating Social Security as a couple can get complicated, but it’s worth the effort. Small decisions, such as who files when, can mean tens of thousands more (or less) in lifetime benefits for the two of you. We dive deeper into Social Security planning for married couples in another article, exploring various scenarios and strategies CPAs can use (and you can apply to your own situation as well). In short, when one spouse has a substantially larger benefit, it often pays to let that grow, while utilizing the smaller benefit if needed for cash flow. Just be cautious: you cannot receive both your own and a full spousal benefit; you’ll generally get the higher of the two, so plan accordingly.
Weighing Tax Implications
As a CPA, you’re naturally attuned to the tax impacts of financial decisions. Social Security adds a twist to the tax picture. While Social Security benefits enjoy favorable tax treatment compared to other income, taking them at the wrong time can bump up your tax bill under certain circumstances.
Here are the basics: Social Security benefits can be taxable, but it depends on your other income. At most, 85% of your benefits become taxable (federal) if your income is above certain thresholds, and many states don’t tax Social Security at all (though a handful do). If you retire and have hefty IRA withdrawals, investment income, or perhaps ongoing business or consulting income, adding Social Security on top could push you into a higher tax bracket or cause more of your Social Security to be taxable. By delaying benefits, you might be able to execute tax-efficient moves in your 60s, such as drawing down traditional IRAs at a lower bracket or doing Roth conversions, without simultaneously having Social Security income subject to tax. Then later, when Social Security starts, you may find yourself in a lower taxable income situation (especially if those earlier moves reduced your required withdrawals later).
Social Security Taxation Zones
Income Thresholds & Tax Impact
2025 Income Calculation Components
High-income retirees face additional Medicare surcharges. Strategic Social Security timing can help manage total income to avoid IRMAA penalties.
Conversely, claiming early while you still have high income (from work or other sources) can result in a larger portion of your Social Security being taxed and could even push some income into higher marginal brackets. For example, if at age 63 you sell a business or have large earnings and you start SS, a chunk of your benefits (up to 85%) will be taxable, and that income could be layered on top of already high earnings, meaning essentially a higher effective tax on those benefit dollars. By waiting until your high-earning years are behind you, you may keep more of your Social Security.
There’s also the strategic consideration of which accounts to tap first in early retirement to minimize lifetime taxes. One strategy is to use a taxable account or traditional IRA withdrawals in the early years, possibly before Social Security kicks in. This can fill up lower tax brackets with IRA money (which will eventually be taxed anyway) while delaying SS. Then, when you start Social Security later, you might switch to drawing more from Roth accounts (tax-free) or less from IRAs, keeping your taxable income moderated so that perhaps only 0%–50% of your Social Security is taxable instead of the maximum 85%.
Tax-Efficient Withdrawal Sequencing
Strategic Account Coordination
- Taxable Accounts
- Traditional IRA
- 401(k) Distributions
- Roth Conversions
- Bracket Management
- SS Still Delayed
- Maximum Social Security
- Roth Withdrawals
- Minimized Taxable
Strategic Implementation Timeline
Potential Tax Efficiency Gain
Reduction in lifetime tax burden through strategic withdrawal sequencing and Social Security coordination
The end result is potentially lower total taxes paid over your retirement. As our previous article pointed out, waiting can positively impact your overall tax situation and help minimize the tax impact on your Social Security income. This is particularly relevant for retirees concerned with things like IRMAA (Medicare surcharges) and those who live in states that tax Social Security.
In summary, from a tax perspective, when you claim Social Security should mesh with your broader tax management strategy. It’s about timing your income streams to legally keep Uncle Sam’s cut as low as possible. Given the complexity, and since, as CPAs, you may be managing both your own tax situation and perhaps those of your practice or other ventures, it might be wise to run a detailed tax projection for various Social Security start ages. This ensures you’re not inadvertently giving up a big chunk of your benefits in taxes when a different timing could reduce that burden.
Inflation and COLA: The Impact of Waiting
Inflation is an ever-present factor in retirement planning. The good news is that Social Security benefits include Cost-of-Living Adjustments (COLAs) almost every year, which help your payments keep pace (somewhat) with inflation. Whether you claim early or late, once you’re receiving benefits, COLA increases will raise your benefit annually if inflation occurs. However, the absolute dollar amount of those COLA raises will be larger if your base benefit is larger.
For example, imagine two people both get a 3% COLA in a given year. At first, one is receiving $1,500 a month, the other $2,500 a month (because they delayed). The first gets an extra $45/month; the second gets an extra $75. Over time, that difference compounds. In periods of high inflation, having a larger starting benefit can significantly increase the total dollars you receive via COLAs. In recent years, we’ve seen some sizable COLA increases (due to spikes in inflation). If your benefit was locked in at a low amount because you claimed at 62, each COLA boosts a smaller amount. By contrast, if you wait and lock in a higher base, each COLA gives you a bigger raise.
COLA Compounding Impact
Inflation Protection Comparison
Inflation Protection Advantage
Each COLA increase applies to your base benefit amount. A higher starting benefit means larger absolute dollar increases each year, creating a compounding advantage that grows more significant over time, especially during periods of elevated inflation.
10-Year Cumulative COLA Impact
Now, COLAs are not guaranteed to fully match inflation. In fact, in some years, they lag behind true cost increases (like healthcare costs that often rise faster). That’s all the more reason to consider maximizing what you can control: your starting benefit.
For your retirement plan, think about inflation this way: other sources of retirement income (like bonds, annuities without COLA, rental income, etc.) might not increase with inflation, or not as much. Social Security is one of the few inflation-adjusted income streams most people have. So, maximizing it is a hedge against living costs down the road. If you’re worried about the future cost of living (who isn’t, given uncertain healthcare costs), waiting for a larger Social Security benefit could give you more peace of mind that those COLA bumps will amount to something meaningful.
In Conclusion
The advanced strategies we’ve covered in Part Two show just how much more there is to Social Security optimization beyond the basics. When you’re married, dealing with substantial retirement assets, or managing complex income streams, the claiming decision becomes a sophisticated coordination challenge that can make a real difference in your long-term financial security.
Here’s what it boils down to: your Social Security timing isn’t just about Social Security. It’s about how those benefits fit into your complete retirement income picture—coordinating with your spouse’s strategy, managing your tax burden intelligently, and maximizing that built-in inflation protection that’s hard to find anywhere else.
