Key Point: The ultimate goal of any American nearing retirement age should be to attain the maximum amount of Social Security benefits.

In many cases, however, that is easier said than done.

More often than not, recent retirees are shaken to the core when they eventually learn that Social Security benefits, much like other types of income, are taxable.

“That alone can constitute a major financial blow,” says the Motley Fool, a private financial and investing advice company.

The financial website continues: “To see if you'll be subject to taxes on your Social Security benefits, you’ll need to calculate your provisional income. That’s your non-Social Security earnings plus half of your annual benefit payout. Once that total exceeds $25,000 for single tax filers and $32,000 for married ones, taxes on benefits take effect.”

Dreaded State Taxes

Unfortunately, that’s not the full story. There are also some states that impose their own taxes on money received from Social Security—important information that should come into play if a recent retiree is thinking about a potential move.

Currently, there are thirteen states that impose this Social Security tax: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia.

Retirees, however, should understand that some states, even with the taxes, might offer other perks to them.

“As such, how different states treat Social Security isn’t the only factor to look at when deciding where to call home during retirement. But knowing which states tax benefits could help you narrow down your choices,” Motley Fool writes.

“Also, many of the above states offer an exemption on Social Security taxes if your income isn’t particularly high. If you don’t expect to have a lot of retirement income outside of your Social Security paychecks, then you may be able to avoid taxes on those benefits regardless,” it adds.

How to Get Max Payments

Still, according to many financial planners, the most prudent advice to follow is to wait as long as possible before collecting Social Security benefits—as that will make them eligible to land the absolute maximum benefits, which is currently near $4,000 per month.

“There are advantages and disadvantages to taking your benefit before your full retirement age. The advantage is that you collect benefits for a longer period of time. The disadvantage is your benefit will be reduced. Each person's situation is different,” says the Social Security Administration.

“It is important to remember: If you delay your benefits until after full retirement age, you will be eligible for delayed retirement credits that would increase your monthly benefit,” the agency adds.

Ethen Kim Lieser is a Minneapolis-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters