Dolly Parton’s Planning Ahead Lesson, Plus Three Social Security Questions
Dolly Parton's songs and movies will live on forever. But when the 80-year-old entertainment icon passed away last month, she also left behind an impressive financial legacy that we all can learn from.
In a 2020 interview, Parton made it clear that she had no intention of becoming another celebrity cautionary tale about poor estate planning, saying, “You don’t want to leave that mess to your family for people to have to fight over. You need to take care of that yourself." Parton's $450 million estate is protected by a trust with executors and successor trustees, as well as a team of legal and financial professionals. And while one of the benefits of establishing these kinds of protections around your estate is that many details may remain private, I’m guessing a good portion of Parton’s fortune will continue her extraordinary philanthropic mission.
Most of us won't write hit songs and build our own theme parks. But we can follow Parton's example by being proactive about protecting our legacies and giving back what we can to make the world around us a little bit brighter.
Another important part of shoring up your own financial plan is making the most of your Social Security benefits. On today’s show, we follow up Matt Wilson’s recent webinar, Maximizing Social Security Benefits, by answering some questions from our audience.
1. "What are the real trade-offs of claiming Social Security at age 62, at full retirement age, or at age 70?"
"Trade-offs" is a great way of thinking about when to claim your Social Security benefits. As I've discussed in recent blog posts, there are rarely "right" or "wrong" answers in retirement planning. But you do have to weigh priorities. And the choices you make are going to affect other parts of your plan.
For Social Security, the trade-offs begin with how early you start cashing checks versus how big your benefits will be.
If you claim benefits as soon as you can at 62, you're locking in a benefit rate that's 70% of what you would have received at full retirement age.
At full retirement age (67 for folks born in 1960 or later), you receive 100% of your benefits.
And if you delay claiming your benefits, they will grow annually until age 70, when you can collect 124% of your full retirement age benefit.
So, if you delay claiming until age 70, you forfeit eight years of checks in exchange for larger future payouts. Most folks hit a "break even" point in their early 80s where that 124% boost is greater than what you would have collected in reduced benefits.
That means longevity presents another potential trade-off. Folks who are dealing with chronic illnesses or who have a family history of health problems might claim their benefits early if they worry they might not live long enough to hit that break-even point or enjoy full benefits.
“And what if I want to stop working at 59? If I collect my benefits at 62 but keep working, how much can I earn before I lose some of my benefits?”
It sounds like taking reduced Social Security benefits to fund an early retirement goal is a trade-off that this listener is willing to make.
But she's also correct to think about how continuing to work will affect her benefits. Again: making one financial choice is going to affect some of your other options.
If you claim Social Security benefits before your full retirement age and continue to earn W-2 wages or self-employment income, you will be subject to the Social Security "earnings test."
In 2026, the earnings limit is $24,480. For every $2 you earn over that limit, the Social Security Administration will penalize you by withholding $1 of your benefit.
So, for example, if you are receiving Social Security benefits and earn $34,480 ($10,000 over the limit), the government will withhold $5,000 of your Social Security benefits that year.
Also keep in mind that if your taxable income is above certain thresholds, a portion of your Social Security benefits might be considered taxable income as well (see below).
So, judging by the limited information this listener provided, we would probably advise her not to claim Social Security early if her plan is to keep working in retirement.
2. “How do benefits for a spouse and for a widow or widower work when one spouse earned a lot more? When should each of us file?"
"JD" is 62 and he plans to retire at 65 and a half. His wife will turn 70 during the same month. JD's earned benefit is significantly larger than his wife's because she's not working.
A spousal benefit maxes out at 50% of the primary earner's full retirement benefit. Spousal benefits also don't grow if you delay taking them beyond full retirement age.
In this case, JD's wife can't claim a spousal benefit based on his earning record until he retires and starts taking his benefits. If JD's wife does have her own work record, she could start claiming her own benefits now. Then, when JD starts taking his benefits, she's entitled to the greater of her own benefits or the spousal benefit.
When one spouse passes away, the survivor is entitled to keep receiving the higher of the couple's two benefits. So, if the goal here is to get the highest possible spousal and survivor benefits for his wife, then the trade-off is that JD should probably delay taking his Social Security benefits until at least full retirement age.
3. “Does 1099 income count when figuring whether my Social Security is taxable? And once benefits start, should I have taxes withheld from the check?”
For folks who start receiving Social Security benefits before their full retirement age, earned income from contract or self-employment work counts against the earnings test explained in question one.
To determine how much of your Social Security is subject to taxes, the IRS uses a formula called "provisional income": adjusted gross income (which includes things like traditional IRA and 401(k) withdrawals and dividends) plus tax-free interest (such as earnings from municipal bonds) plus 50% of your Social Security benefit.
Here are the taxation thresholds for Social Security benefits in 2026:
Single Filers
- $25,000 or less: 0% of your benefits count as taxable income
- $25,001 to $34,000: 50%
- Over $34,000: 85%
Married Filing Jointly
- $32,000 or less: 0% of your benefits count as taxable income
- $32,001 to $44,000: 50%
- Over $44,000: 85%
Remember: if your income falls in those higher thresholds, that doesn't mean your benefits are taxed at those rates. It means that percentage of your benefit is added to your taxable income.
Withholding taxes from your Social Security check is entirely optional. Many of the folks we work with choose not to, but we account for the withholding on our end to keep everything in order come tax time.
Working 9 to 5 – For You
Dolly Parton often said, “If you want the rainbow, you gotta put up with the rain."
Seniors need a plan that will keep things like lifetime tax liability, reduced benefits, and bickering heirs from raining on retirement.
Click here to get in touch with Keen Wealth and let’s talk about how our comprehensive planning process can give you more time to enjoy your rainbow.
We’ll also put you on our mailing list so that you’ll know when Matt Wilson is delivering his next webinar.
About Bill
Bill Keen is a financial advisor with over 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
KWMG, LLC’s dba Keen Wealth Advisors (“company”) is an SEC Registered Investment Advisor located in Overland Park, KS. The company and its representatives may only conduct business in those states where registered or where excluded/exempt or from licensure. For registration information, please contact the SEC or the state securities regulators for the states where the company is notice filed. A copy of the company ADV is available upon request. Advisory services are only offered to clients or prospective clients where the company and its representatives are properly licensed or exempt from licensure. No advice may be rendered by the company unless a client service agreement is in place. This information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy and is for illustrative purposes only. Clients and prospective clients must consider all relevant risk factors involved with each strategy, including costs or fees, and their own personal financial situations before trading.
The views outlined in the book, Keen on Retirement Engineering the Second Half of Your Life, are those of the author and should not be construed as individualized or personalized investment advice. Any economic and/or performance information cited is historical and not indicative of future results. Economic forecasts set forth may not develop as predicted.
The Amazon Best Seller ranking listed on marketing materials is specifically referring to Best Seller rankings for the Kindle Top 100 Paid Lists under the subcategories of: Budgeting and Financial Risk Management, based on data as of September 5, 2019 and the second edition under Financial Risk Management on October 26, 2022. Amazon rankings although relevant on how a product is selling overall doesn’t necessarily indicate how well an item is selling among other similar items or similar item categories. Amazon may choose the most popular categories or subcategories within which an item has a high ranking to determine its best seller rankings. These rankings are updated hourly and as a result, should be expected to fluctuate as such. Keen Wealth Advisors and Amazon are not affiliated entities.
The Steve Sanduski Advisor Network, Belay Advisor, LLC and other third-party contributors to our blogs and podcasts are not affiliated with Keen Wealth Advisors.
For additional details on Keen Wealth Advisors, please visit https://www.keenwealthadvisors.com/important-disclosures.
20260909-5910419-18841362