Retirement is one of life’s most significant financial milestones, so careful planning is essential to living the life you and your spouse envision. Think of how hard you’ve worked to pursue a desirable retirement lifestyle that has the potential to last for 30 or more years. 

One of the cornerstones of a comprehensive retirement plan is understanding how Social Security benefits integrate with other income sources to create a sustainable plan for retirement income and savings that will last 30 years or longer. 

1st Choice Tip: It does not matter how much money you have accumulated for your retirement years. Social Security is a million-dollar resource if you live long enough. 

As retirement planning specialists in Central Pennsylvania, 1st Choice Financial Services, Inc., based in Camp Hill, PA, we can provide guidance and financial advice tailored to assist in the pursuit of your retirement goals.

Whether you’re just beginning to think about retirement, actively preparing to transition in the next three to five years, or are recently retired, the following are some key Social Security and retirement income planning tips to help you build a more secure financial future.

Understanding Social Security Basics

Social Security benefits are designed to supplement retirement income, not replace it entirely. Knowing how benefits are calculated and when to claim them can significantly affect your retirement planning strategy.

1. Know Your Full Retirement Age (FRA)

Your FRA is the age at which you’re entitled to receive your full Social Security benefit amount. This age depends on your birth year but typically occurs between 66 and 67. Claiming benefits before your FRA results in reduced monthly payments, while delaying benefits beyond FRA can increase your payments by up to 8% annually until age 70.

2. Maximize Your Earnings Record

Your Social Security benefits are based on your 35 highest-earning years. If you have fewer than 35 years of earnings, zeros will be averaged in, reducing your benefit. Working additional years at higher income levels can help replace those lower-earning years.

3. Understand Tax Implications

Depending on your total income, including Social Security, a portion of your benefits may be taxable. As your Central Pennsylvania retirement advisors, we can help you navigate the tax implications of your retirement income strategy to minimize any potential surprises.

When to start taking Social Security is a crucial decision that can impact your financial security, particularly late in life. There’s no one-size-fits-all answer, but the decision should align with your long-term retirement plans.

If you’re still working when you begin taking Social Security, there’s an earnings test in play before you reach your FRA. For 2025, your benefits will be temporarily reduced if you earn more than $22,320 ($59,520 if you reach FRA during the year). However, these reductions are recalculated and restored once you reach your FRA.

While predicting how long you’ll live is impossible, estimating your life expectancy can help you decide whether to take benefits early, at FRA, or delay until age 70. Think of your family’s history, lifestyle, and recent health issues. The estimate may be eye-opening if you or a spouse believe you have the potential to reach age 100.

1st Choice Tip: Rising longevity can be a blessing if you are prepared.

Married couples have additional considerations, including spousal and survivor benefits. Delaying one spouse’s benefits can maximize the total lifetime income for both, particularly if one spouse is expected to outlive the other.

Get to know our Camp Hill retirement planning professionals.

Diversify Your Income Sources

Relying solely on Social Security can leave you vulnerable to financial shortfalls. Diversify your income through retirement accounts (like 401(k)s and IRAs), annuities, and personal savings. Your Central Pennsylvania retirement advisors can guide you in structuring these assets to provide reliable sources of income for the rest of your lives.

1. Establish a Withdrawal Strategy

One of the most critical aspects of retirement planning is determining how, when, and how much to withdraw from your accounts. A common approach is the “bucket strategy,” which separates assets into short-term, mid-term, and long-term buckets based on when you’ll need the funds or income from the funds.

2. Account for Inflation 

Even small inflation can erode your purchasing power over time, so it’s important to include inflation-protected assets in your plan. Cost-of-living adjustments to Social Security benefits help, but additional safeguards, like Treasury Inflation-Protected Securities (TIPS), may also be beneficial.

3. Protect Against Longevity Risk

Outliving your savings is a frequent concern for retirees. By working with a retirement planning specialist in Central Pennsylvania, you can develop strategies, such as annuities or delaying Social Security, to ensure your income lasts as long as you do.

Meet Joe Deitrich, our retirement planning advisor.

Ist Choice Tip: An important goal is to avoid spending principal. Instead, you spend investment income (dividends and interest) and capital appreciation.

Avoiding Common Retirement Planning Pitfalls

Even the best-laid plans can face significant challenges. Following are some common mistakes to avoid when planning your retirement income:

• While it may be tempting to claim benefits as soon as you’re eligible at age 62, doing so can significantly reduce your monthly payments for life. Delaying benefits can pay off in the long run, especially if you anticipate longer retirements for one or both spouses.

• Healthcare expenses can be a significant burden in later retirement years. Incorporate Medicare premiums, out-of-pocket expenses, and potential long-term care costs into your financial plan. Your retirement advisors in Central Pennsylvania can help you plan for the expected and unexpected.

• Taxes don’t disappear in retirement. Social Security benefits, retirement account withdrawals, and other income sources can all be subject to taxes. A comprehensive tax strategy is essential for maximizing your income.

• Life is a source of continuous change. Regular reviews with your retirement planner in Central PA ensure that your strategy stays aligned with your goals and changes in your current circumstances.

How 1st Choice Financial Services, Inc. Can Help

At 1st Choice Financial Services, Inc., we specialize in creating customized retirement income strategies for individuals and families across Central Pennsylvania. From our office in Camp Hill, we proudly serve clients in Harrisburg, Hershey, Halifax, Lancaster, Lebanon, Enola, and the surrounding communities.

Here’s what you can expect when working with us:

• Personalized Guidance: Every client’s situation is unique. We take the time to understand your goals, circumstances, resources, and priorities.

• We take a holistic approach to retirement planning, including integrating Social Security, retirement savings, investments, and tax strategies into one cohesive plan.

• Remember that retirement planning doesn’t stop when you retire. We’ll continue to adjust your strategy as needed to address market changes, life events, and new opportunities.

Ready to start your 2025 retirement planning efforts? Connect with one of our retirement planners today.

Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, 1st Choice Financial Services, Inc., and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security, or any security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Foundations deems reliable any statistical data or information obtained from or prepared by third party sources that is included in any commentary, but in no way guarantees its accuracy or completeness.

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