Social Security for Business Owners: Timing It Right Could Save You from Tax Surprises

You know how to scale something from zero. You’ve led payrolls, weathered recessions, and put your name on a building or client roster. But here’s the twist most business owners don’t see coming:

The way you claim Social Security could cost—or save—you six figures over your lifetime.

It’s not just a check. It’s the retirement asset you’ve paid for in every payroll tax, every year you worked, every 1099 you issued to yourself. And when you finally have the time to enjoy the life you’ve built, the wrong decision here can cascade into higher taxes, higher Medicare premiums, and less long-term income.

This isn’t about fear. It’s about control. And control starts with knowledge.

Let’s talk strategy.

What You Need to Know: Social Security Isn't Just an Age-Based Decision

You’re eligible to start taking Social Security at 62. But your Full Retirement Age (FRA) will likely fall between 66 and 67, depending on when you were born.

Now here’s where things get interesting: for every year you delay past your FRA, your benefit grows by 8% annually, maxing out at age 70.

Example:

If your FRA benefit is $3,000/month at age 67, your monthly check would look like this:

At 62: $2,100/month
At 67: $3,000/month
At 70: $3,720/month

That’s a 77% increase from claiming early to waiting until 70. Or put another way, you get 124% of your full benefit if you delay to age 70.

📚 Source – SSA.gov

But Can’t I Just Claim Early and Invest the Money?

This is a common question from entrepreneurs and investors:

“Why not take the check early, invest it, and grow it myself?”

It’s tempting—but here’s the math:

To outperform the 8% guaranteed annual increase from delaying Social Security, you’d need a 7–8% after-tax, no-volatility return every single year. Forever. With zero drawdowns.

Even with your risk tolerance and experience, that’s a high bar.

Meanwhile, Social Security offers:

Inflation-adjusted payments
Government guarantees
Lifetime income
Spousal survivor protections

If you tried to replicate that in the private market with an annuity, it would cost you a small fortune. Social Security remains one of the most valuable income streams you own.

IRMAA: The Hidden Tax Business Owners Often Miss

Here’s what most people—and even some advisors—overlook:

Social Security doesn’t just add income. It can also push you over the thresholds for IRMAA: the Income-Related Monthly Adjustment Amount on your Medicare premiums.

2025 IRMAA Thresholds (based on 2023 MAGI):

Filing Status	Base Threshold	Highest Tier Begins At
Married Filing Jointly	$212,000	$750,000+
Single / Head of Household	$106,000	$500,000+

(Source: Medicare.gov)

✅ Important: IRMAA uses a 2-year lookback. Your 2023 income determines your 2025 Medicare premiums.

So if you just sold your business in 2023 and had a banner year? Your Medicare Part B and D premiums in 2025 could skyrocket.

That’s why many of my clients delay Social Security, strategically draw down IRA funds in lower-income years, and manage MAGI to stay under IRMAA thresholds. It’s not tax evasion—it’s tax precision.

Case Study: Raj and Anita’s Decision

Raj sold his engineering firm at 65 and walked away with seven figures. His wife Anita never worked outside the home, but managed the household finances.

They didn’t need income right away—but they still wanted a plan.

Here’s what we did:

Raj delayed Social Security to 70, growing his benefit to $3,720/month
In the meantime, he withdrew modest amounts from his IRA (just enough to stay under IRMAA brackets)
Anita claimed a spousal benefit at her FRA, receiving $1,500/month
At Raj’s death, Anita would step up to his higher survivor benefit

One decision protected two incomes—and created nearly $180,000 more in lifetime benefits compared to claiming early.

What About Business Owners Who Are Single or Divorced?

If you’re single or divorced, Social Security still offers valuable tools:

Single? Delaying benefits can reduce the draw on your portfolio in your 80s and 90s—when health costs rise and risk tolerance falls.
Divorced? You may still be eligible for spousal benefits from your ex-spouse’s record if the marriage lasted 10+ years and you’re not remarried. And no—they don’t need to know, and it doesn’t impact their benefits.

These rules aren’t well-known—but they can be worth tens of thousands over time.

Social Security + Exit Planning = Integrated Strategy

Most people treat Social Security like a vending machine: push the button at 62, 67, or 70. But for business owners, it’s one puzzle piece in a much larger board:

When to start IRA withdrawals
When to convert to Roth
How to avoid IRMAA brackets
When to trigger capital gains
How to protect a spouse’s income

A well-coordinated plan could lower your lifetime tax bill, reduce Medicare premiums, and increase net income—all while building in flexibility.

Visual Snapshot: Claiming at 62 vs. 67 vs. 70

Claiming Age	Monthly Benefit	Relative to FRA	Break-Even Age
62	$2,100	70%	~78–80
67	$3,000	100%	—
70	$3,720	124%	~80–82

If you live past age 80 (and statistically, many business owners do), waiting pays off—especially when survivor benefits and IRMAA savings are factored in.

Final Thought: You Earned This—Make It Work for You

Social Security isn’t charity. It’s not luck. It’s not a political gamble.

It’s yours. Paid for in every W-2 and 1099 over the decades. And now, it’s time to turn it into a strategy, not just an afterthought.

You’ve been the CFO of your business. This is your chance to be the CEO of your retirement.

Want Help Getting It Right?

This isn’t about guesswork. It’s about getting every piece of your financial life to work in harmony.

During your Clarity Session, we’ll:

Walk through your Social Security options
Analyze IRMAA risk based on your exit year
Coordinate IRA/Roth withdrawals
Design a spousal benefit strategy
And map out cash flow so you never feel “retired and uncertain”

👉 [Book your Clarity Session here]—and let’s make sure you don’t leave money on the table.