Could Your Lifetime Social Security Benefit Exceed $1.5 Million?

October 3, 2022
Could Your Lifetime Social Security Benefit Exceed $1 Million? Learn More About Your Benefit.

While Social Security may seem like an afterthought compared to other retirement income sources, the benefit could exceed $1.5 million1 over the lifetime of a high earner, so it makes sense to maximize the amount you receive while minimizing the taxes you’ll pay on it.

Q: When Should I Start Receiving Social Security?

A: It depends on your personal and financial situation. You are eligible to start drawing a monthly Social Security retirement benefit as early as age 62. But that amount will be progressively higher in each of the next eight years. For example, let’s say that your monthly benefit at age 67, which the Social Security Administration considers “full retirement age,” is $3,402. This assumes you were born in 1965 and your highest income level was $500,000. If you opt to start receiving benefits at age 62, that amount will be just $2,396. But if you wait until age 70, the amount is capped at $4,194 for 2022.1 The government calculates your full-retirement-age benefit based on your lifetime earnings; it then adds to or subtracts from that amount based on the number of years before or after age 67 you start receiving the benefit. Once you reach age 70, the benefit will max out and it won’t make sense to delay further.

Waiting to file for Social Security isn’t right for everyone. Consider working with your wealth advisor who can do a break-even analysis to determine the advantages or disadvantages of delaying to file. A couple of factors that could weigh into your decision are your health status, the health status of your spouse, if you’re married, along with your expected longevity. In addition, you’ll want to work with your wealth advisor on a strategy for which accounts you’ll rely on to generate income in retirement should you delay. Because there’s no one-size-fits-all answer, we recommend that you speak with your wealth advisor about how Social Security fits into your overall wealth plan.

Q: How Much of My Social Security Payments Could Be Taxed?

A: For high-net-worth individuals and families, up to 85% of your Social Security income could be taxed.2 You can choose to have federal taxes withheld from your payments, and certain states tax Social Security.

Q: How Much Could My Wages Be Taxed to Help Fund Social Security?

A: Wealthy taxpayers could wind up paying more into the Social Security system, which has long faced a funding strain. Currently, such taxes apply to the first $147,000 of income. A recent congressional proposal seeks to apply that payroll tax on wages of $400,000 and up, among other changes, to shore up the program.3

Q: For Married Couples, Which Spouse Should Claim Social Security First?

A: In general, the higher-earning spouse should wait as long as possible to file, up to age 70. That’s because the 8% benefit increase every year after the higher earner reaches full retirement age will be worth more than the lower earner’s benefit. Plus, if the higher-earning spouse delays applying for Social Security, after one spouse passes away, the surviving spouse’s benefits could be higher.

Alternatively, you might consider this “split strategy”: If one spouse’s payouts are more than twice that of the other’s, both spouses may want to collect on the higher-earning spouse’s earnings record. In this case, the lower-earning spouse can file first and apply for spousal benefits later when the higher-earning spouse begins to take Social Security. Work with your wealth advisor, who can model various scenarios for your situation.

Q: What Is the Expected COLA Increase in Social Security Benefits for 2023?

A: This year’s cost-of-living adjustment (COLA) was substantial in historical terms at 5.9%4, but it has failed to keep pace with the rate of inflation. Although the Social Security Administration won’t announce next year’s COLA to Social Security until mid-October, many analysts are predicting an increase of between 9% and 10% based on inflation. This would be the largest jump in more than 40 years.5

If you’re already receiving Social Security benefits, you’ll be notified in December about next year’s COLA. You can also access that information online by setting up an account at My Social Security.


1The hypothetical example assumes making $500K and waiting until age 70 to receive $4,194 monthly for 30 years: $4,194×12=$50,616×30 years=$1,509,840.  “What is the Maximum Social Security Benefit Payable?”

2“Income Taxes And Your Social Security Benefit,”

3Wages Up to $147,000 are Currently Taxed for Social Security. How That Could Change

4,5Cost-of-Living Adjustment (COLA) Information,”

The views expressed are for commentary purposes only and do not take into account any individual personal, financial, legal or tax considerations. As such, the information contained herein is not intended to be personal legal, investment or tax advice. Nothing herein should be relied upon as such, and there is no guarantee that any claims made will come to pass. The opinions are based on information and sources of information deemed to be reliable, but Mariner Wealth Advisors does not warrant the accuracy of the information. Please consult a financial professional before making any financial-related decisions.

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